Super rich investors cautious as markets surge

By Dan Wilchins

GENEVA (Reuters) - Stock markets are soaring to new highs but wealthy investors are not rushing willy-nilly into risky investments as many recall the market declines of the recent past, private banking heads in Europe and the United States said.

The United States' Dow Jones industrial average .DJI reached an all time high on Wednesday, but the days of high net worth investors, industry parlance for the super rich, placing 100 percent of their assets in telecom stocks and venture capital are gone, bankers said.

"There's a growing understanding that returns will be in the single digits, not the double digits over the long term," said Marianne Hay, chief executive officer for global wealth management-Europe at Citigroup (C.N: Quote, Profile, Research, Stock Buzz), speaking at the Reuters Wealth Management Summit.

It wasn't always that way.

"In the dot com era, (high net worth investors) just wanted returns," said Tom Kalaris, chief executive of wealth management at Barclays.

Now, said John Thiel, head of the private banking and investment group at Merrill Lynch (MER.N: Quote, Profile, Research, Stock Buzz), "the focus is more on capital preservation, and achieving more moderate gains with lower volatility."

In short, wealthy investors are a different breed now: they think more about longer term financial objectives and diversification, and less about generating outsized returns each quarter.

"Ten years ago, if you tried to talk to a client about risk, it was very difficult to make it clear to them exactly what markets can do. But now they are more willing to say to themselves: 'How much risk do I need to assume to meet my life objectives?,'" said Tom Dicker, head of portfolio management for high net worth individuals in New England at the Mellon Private Wealth Management Group in Boston.  Continued...