High Net Worth Financial Planning

Our team of experts at Pillar Wealth Managementworks with clients that own liquid assets between $5 million and $500 million. To learn more about how we can manage your finances, schedule a free consultation with one of our team members.

Who are HNWIs and UHNWIs?

There is no standard for defining HNWIs and UHNWIs, although there are benchmarks. High net worth individuals usually refer to people with at least $1 million in investable assets. This can include cash deposits (so keep cash on hand), but not a personal dwelling or collectibles (which count as wealth but not in this category), only cash and investments.

Imagine you’re in a super exclusive club. To get in, you need at least $30 million in investments sitting around. That’s what separates UHNWIs, ultra-high-net-worth individuals, from regular rich folks. Basically, every super-rich person (UHNWI) is automatically rich (HNWI), but not everyone rich is super rich.

UHNWIs don’t keep their eggs in one basket. They spread their wealth around in stocks, bonds, and all sorts of other things. Having massive buckets of money provides them with access to spaces they could not reach on their own but also makes them particularly susceptible to abuse. Thus, they need to hire an advisor capable of handling the financial requirements of both the HNW and UHNW clients.

Facts about HNWIs

• U.S. households with $1 million to $5 million net worth in 2021: 158,083 > 2020: 149,670 > % change: +5.5%
• The HNWI population has grown year on year over the past decade, up 40% from 13.9 million in 2010 to 20.83 million in 2020. The following chart details the regional trends in growth.

Facts about UHNWIs

• Elon Musk is swimming in a pool of money—that’s kind of how rich he was in September 2023, with $264 billion, according to Forbes!
• There are lots of people out there with that much cash. The club of people with super high net worth (UHNWIs) actually grew by almost 10% in 2021.
• They’re sitting on a massive pile of money – around $26.8 trillion!

While the disparities between HNWIs and UHNWIs are evident, despite how those categories are codified, a significant degree of variance remains within each. HNWIs and UHNWIs have immense purchasing power and understanding of anything related to money, which can offer them unique investment avenues, ideal for holistic financial planning, right from emergency funds to retirement savings.

10 Financial Planning Tips for HNWIs

HNWIs, therefore, need the essential tools for achieving their financial goals so that they can accumulate more money in the future. Here are some crucial considerations for HNWIs regarding financial planning:

1. Develop a Comprehensive Plan

For HNWIs, the first step is to establish an investment framework outlining their risk profile, tolerance levels, and mandates governing their investment plans. This helps them make informed decisions about maintaining a sound financial status. A good plan considers both short-term and long-term goals, ensuring a balanced wealth management strategy. It includes detailed budgets, cash flow analysis, and regular reviews to adapt to personal and market changes. It also incorporates significant life milestones, like college, marriage, and retirement, into one cohesive plan.

2. Diversify Investments

Risk management for high net worth investors should not focus on eliminating risk but rather on lowering overall risk while increasing net wealth. Assets are diversified to avoid becoming too dependent on any one asset class. A mix of equities, commodities, global markets, hedge funds, and private equity in the portfolio distributes the investment across the financial markets far and wide, thus protecting against market volatility. The best thing about diversification is that it keeps your investments moving in concert with your risk tolerance and initial allocation.

3. Define Your Financial Goals

High-net-worth individuals need clear financial goals, whether to create or pass on wealth, generate income, or achieve financial milestones. Clear objectives anchor financial strategies to realistic aspirations. Strategic goals should be both qualitative and quantifiable to track progress. Regular goal reviews allow adjustments based on changing circumstances or market conditions.

4. Choose Tax Strategies

Tax planning is essential to saving money for wealthy individuals. They have some control over how different investments are taxed, which can ultimately reduce their tax bill. This may involve contributing to tax-advantaged accounts, including IRA or 401(k) investing, tax-loss-harvesting, or tax-deductible charitable donations. Tax professionals can ensure tax-efficient after-tax returns and preserve wealth. Complex planning techniques such as estate freezes, family limited partnerships (FLPs), and offshore trusts can be used to achieve additional savings.

5. Estate Planning

Estate planning is essential to transfer wealth to descendants properly and reduce the amount of taxes to be paid. This entails wills, trusts, or other realistic estate planning options. A well-drafted estate plan saves money on taxes, makes sure that assets go to individuals as intended, and keeps family wealth in the family, where it belongs. It should have a durable power of attorney and healthcare directives. Your estate plan must adapt to the changes in the law and your family’s situation and should be updated every 3 to 5 years. The management of the family business and planning a legacy are equally essential to ensure that the legacy lasts.

6. Properly Manage Risk

One of the most significant necessities for a high-net-worth individual is risk management. This includes evaluating the risks involved and making efforts to lower the risks—of an accident, maybe some health issue, or natural disaster. A financial planner can work with you to develop a tailored plan that uses your risk budget to safeguard and grow your wealth, even when markets are wild. The execution of the risk management plan hardly varies regarding the balance of the process, but it needs to be reviewed periodically to ensure that it is effective.

7. Retirement Planning

Saving is only one part of retirement planning. Retirement planning, by its very nature, is a strategic response to the need for financial security. This means, on the one hand, planning the expenses themselves, studying and searching for opportunities for earnings, and choosing safe and profitable investments. Include special considerations such as healthcare, legacy planning/family, and long-term care. The RMD planning and tax-efficient withdrawals from retirement accounts are the most common actions to minimize taxes and maximize planning through retirement.

8. Build Generational Wealth

Generational wealth involves protecting, transferring, and growing the family legacy. This can include trusts, succession planning, and financial education. Establishing clear parameters for wealth transfer can minimize disputes and prepare heirs for responsible inheritance management. Regular family meetings, financial literacy education, and involving heirs in business or investment decisions are essential for preserving generational wealth.

9. Consider Testamentary Trusts

Testamentary trusts, established upon the settlor’s death, allow control over asset distributions and potential tax advantages and ensure wealth is distributed as intended. Trusts can protect assets from creditors or legal actions, ensuring they are preserved for beneficiaries. They can be customized to meet specific family goals, such as supporting minors or charities or managing funds for financially inexperienced beneficiaries.

10. Promote Financial Literacy

Education is crucial for HNWIs to ensure their successors know how to save, invest, and manage wealth. Teaching beneficiaries about financial planning and involving them in financial discussions helps them handle their inheritance responsibly. Working with financial advisors can provide ongoing support and education. Modeling financial literacy at home encourages prudent financial behavior and helps preserve the family’s fortune.

These comprehensive strategies enable HNWIs to manage their financial outcomes better, ensuring financial security for themselves and their loved ones.

Seven Financial Planning Strategies for UHNWIs

There is one factor that HNWIs and UHNWIs have in common: the need to plan their financial future since most are likely to be wealthy individuals who handle large amounts of money for both personal and business purposes while having more often than not sophisticated and higher net-worth financial objectives that require careful planning. UHNWIs should consider the following financial planning tips:

1. Roll Assets to A Trusted Financial Advisor.

When you look at your money, and you have tons of it in terms of stock, property, and other assets, you should realize you need to rely on a respectable financial advisor, who can provide an overview of your financial health and work up a single strategy where all your investments are involved. This helps streamline decision-making, enhance financial collaboration, and marry all the moving parts in your financial plan—a reliable source of professional judgment and nuanced, tailored, risk-free performance maximization.

2. Lower taxation by splitting up the family income.

Effective income splitting—distributing income among lower-tax-bracket family members—will allow for a reduction in taxes paid. A qualified tax advisor can guide you in planning this strategy and determining the tax implications that need to be observed.

3. Put surplus funds into tax-advantaged vehicles or charities.

Excess assets can improve your tax situation and support philanthropic efforts. Making tax-advantaged investments, such as municipal bonds, retirement accounts, and specific life and annuity products, can minimize taxes. Charitable donations can also reduce taxable amounts, with options like donor-advised funds or charitable trusts offering strategic philanthropy and significant tax incentives. This blend of investment and philanthropy helps achieve financial and charitable goals.

4. Plan for business succession

For UHNWIs with a private business, succession planning is vital. A well-designed plan ensures smooth transitions, preserves enterprise value, and provides stability for employees and clients. It involves identifying and grooming future successors, whether family members, key employees, or external buyers, and addressing legal and financial aspects like estate taxes and ownership transfer. Effective succession planning facilitates a seamless leadership transition and prepares for future generations.

5. Transfer a vacation home to a family inter-vivos trust

UHNWIs often wish to pass on valuable vacation homes to their children. Inter-vivos family trusts, or living trusts, allow for controlled and tax-efficient property transfers. These trusts can limit estate taxes and probate costs while protecting the property from creditors and legal issues. Living trusts enable UHNWIs to use the estate during their lifetime and ensure a smooth transfer to heirs.

6. Children Working in Your Enterprise

One of the ramifications of children working in the family firm is the chance to give the kids some real-world experience, a sense of financial responsibility, and even a tax deduction. Income can be paid out to children in lower tax brackets, and children can invest their earnings tax-free into a Roth IRA. This is a way to solidify the family’s financial base and prepare the children for the future leading role.

7. Plan your finances well.

Successful financial planning for UHNWIs focuses on high-net-worth planning, which I define as all the elements of investment management, tax planning, estate planning, risk management, and philanthropy, where there are potential tax implications. A comprehensive financial plan fits the various components together to meet current needs and future goals. For those who have had the opportunity to accumulate significant wealth, a holistic approach to wealth management gives them the tools to plan, protect themselves and their family, and ensure a stable financial future for their children and heirs.

Proper high-net-worth financial planning often requires a skilled advisor. An efficient advisor can manage financial considerations, select and invest assets, and minimize taxes, leading to better protection and growth of your inheritance to achieve your goals and support your loved ones.

Why Do HNWIs and UHNWIs Need Financial Advisors?

HNWIs and UHNWIs demand personalized attention, including a detailed investment plan, asset allocation, and risk management recommendations tailored to their financial requirements and goals. These services enhance asset performance and play a crucial role in retirement planning, ensuring reliable income streams and a stable financial future.

Advisors also help navigate tax laws, keeping your money where it belongs. Benefits include customized advice and strategic planning, offering industry-level expertise that ensures all aspects of your financial life work seamlessly together.

If you are an HNWI or UHNWI, contact us today. We provide comprehensive financial solutions, from health checks to estate planning, safeguarding your future.

7 Benefits of High Net Worth Financial Planning

When it comes to success, the services of a financial advisor are essential for HNWIs as well as UHNWIs. Here are some of the important advantages of hiring a licensed financial advisor:

1. A More Straightforward Way to Manage Your Money

HNWIs have so much going on in life; balancing responsibilities can be challenging, and managing complex financial portfolios on top of that is even more challenging. By simplifying financial information, crystalizing a financial position, and recommending sound financial solutions, a competent financial advisor does the heavy lifting in financial management. They simplify your wealth, align every aspect of your financial life with your goals, and reduce your stress from trying to attend to all the different financial components of your life.

2. Protect Assets, Minimize exposure to creditors

One of the highest priorities for HNWIs is asset protection, for which a financial advisor can create a solid plan to protect your wealth against inflation, market uncertainty, and potential creditor threats. From diversifying your investment portfolio to owning insurance products to setting up legal structures such as trusts, you can always stay one step ahead to safeguard your investments from unpredictable circumstances. The best way to make sure that this happens is to protect your money so that even in case of an emergency, your wealth is safe and protected against risks.

3. Maintaining Your Lifestyle After Retirement

For high-net-worth investors, retirement planning is about far more than saving up enough money to pay for basic needs; it involves many aspects that need to be woven together. It is your retirement, after all, and a major part of it is being able to afford to maintain your lifestyle throughout retirement. A financial advisor can not only help you determine how best to use the investment offerings in your employer plan but also help you build a comprehensive retirement plan that incorporates income generation strategies, withdrawal tax efficiency, and long-term care. It works to ensure you can retire the way you would like.

4. Reducing Tax Liabilities

For the elite among HNWIs and UHNWIs, tax strategies must be worth their weight in gold. A competent and experienced financial planner can help you save money on taxes in various ways, for example, by implementing tax loss harvesting, making a significant charitable donation, deciding which accounts to use and when, and so on. These steps will enable you to retain more of what you earn, which is good for your financial well-being and enables your greater earnings to go toward more investment and philanthropy.

5. Optimizing Investment Returns

This is an art form where you gradually become a master with a massive amount of discipline and good market understanding. Based on your inputs, your financial advisor will assess your risk tolerance, the duration of time before you plan to spend your investment, and the reason for your investment, to build the best investment strategy for you. They handle the continuous management and adjustment of your portfolio to keep it in line with your goals and well-positioned for how the markets operate, earning their fee. This proactive strategy allows you to maximize gains and minimize losses.

6. Transferring Wealth to Heirs

HNWIs frequently take steps to ensure their wealth is appropriately handed down to their beneficiaries. This can be done by working with a financial advisor to draft an estate plan that includes wills, trusts, and other legal devices that make asset allocation a seamless transfer. They also examine the tax consequences and try to eliminate estate taxes to help preserve the total value of your legacy for your heirs. This concerted planning really works. It gives you peace of mind and financial security for your family.

7. Achieving Charitable Goals

Most HNWIs have at least a little gratitude for their community and the causes they value. Engage a financial advisor to launch your philanthropic efforts. This can range from donor-advised funds to charitable trusts to simple outright gifts and many other more sophisticated charitable-giving strategies. They will make sure that you, the person who gives, are tax-effective during the giving season.

Types of Financial Planning for High Net Worth

Financial planning is a broad term regarding your spending, investing, and other uses of your wealth with the purpose of acquiring economic stability, planning for your long-term financial goals, and enabling your short-term financial goals. There are several types of financial planning for high-net-worth individuals, such as:

– Cash Flow Planning

– Wealth Transfer

– Retirement Planning

– Investment Management

Pillar Wealth Management offers these and other types of financial planning to high-net-worth individuals. We also offer those individuals with at least $5 million in assets full-service wealth management and provide HNWIs with complete advisory services. To get more details on our services, book a free session with one of our team members.

Cash Flow Planning

You cannot possibly make plans for your money until you know where your money goes. Knowing what comes into your bank account and what goes out from it will enable you to work out how much you’ll need to support your costs on a monthly basis, where you can look to invest, and what you should be saving for retirement. This will also help you maintain your cash flow in the correct direction, which should eventually ensure you meet your financial goals—that mortgage, that holiday home you want to buy, and the easy life post-retirement you hope for.

Cash flow management is a wealth management service available from Pillar Wealth Management. We study your credit card, checking account, and other statements to know precisely what you spend. We also look into your assets and liabilities to pinpoint cash flow categories to be tweaked. With access to our services, you can make informed decisions about your money, detecting any issue with cash on the horizon and fixing it before it becomes a problem.

Wealth Transfer

Wealth transfer involves giving a certain percentage of your wealth and assets to your children, charity organizations, or other beneficiaries. Though this sounds simple, it is actually a complex process.

Many wealthy individuals underestimate the importance of wealth transfer and try to do it themselves. This often results in problems and significant loss to taxes. In our book, The Art of Protecting Ultra-High Net Worth Portfolios and Estates — Strategies for Families Worth $25 Million or More, we cover many of the complications surrounding wealth transfer.

Our financial planners use wealth management tools such as wills, trusts, estate planning, and life insurance to make this process as seamless as possible for you. We design integrated transfer strategies so that your wealth goes to your chosen beneficiaries in a tax-advantaged way.

Retirement Planning

All high-net-worth investors want to someday retire in peace, comfort, and enjoyment. Planning is the only means we have to pull this off.

There is a lot to retirement planning, and it’s hard to know where to start. The consequence of this can be the mismanagement of a critical area.

Pillar Wealth Management has a long record of crafting robust and flexible retirement plans for our high-net-worth clients with $5 million to $500 million in liquid assets. We have written an e-book, 5 Critical Shifts Required to Activate Your Portfolio Growth Strategies the Right Way, which discusses what you need to do to have a peaceful, carefree retirement.

Investment Management

For HNWIs, this involves the oversight of their investment portfolios, which many believe means buying and selling investments.

Though this may not be incorrect, appearing to be progress toward a goal, it leaves something to be desired as a complete description of investment management. For instance, investment management might include tax planning, budgeting, and banking, as well as a complete financial strategy for the purchase and sale of investments.

Our team at Pillar Wealth Management is knowledgeable about the financial markets. We use this data to complete a thorough analysis of our client’s investments and create strategies to ensure they receive the best returns. You can also read our guide, Improving Portfolio Performance, and get more details on how you can manage your investments to effectively balance your risks with your returns.

Why High Net Worth Investors Should Seek Financial Planning

For several reasons, financial planning is considered crucial for high net worth investors. Let’s focus on a few of these reasons.

Lack of Knowledge

Not all of us have the ability to take on financial planning as a DIY activity, when it may in fact require extensive expertise, education, and experience. HNWIs are among the busiest people, with their schedules for the day commencing when their alarm rings and ending only when they retire to bed. HNWIs obviously cannot invest the time necessary to pick the best investment opportunities, in other words, how to pick which returns to chase and which risks to balance off against the returns.

Thus, it is imperative that HNWIs work with professionals who have the requisite knowledge needed to manage large amounts of wealth. Moreover, financial planning companies have access to insightful data collected over many years. For instance, at Pillar Wealth Management, our financial planners have access to past financial data, starting from 1925, which we use to create financial plans for you.

Personalized Financial Plans

Many financial institutions, including investment houses and private banks, offer plain cookie-cutter solutions to every high-net-worth investor. They fail to acknowledge that every affluent individual is different and needs a different financial plan. This is exactly why wealthy investors must hire a financial planning company that can design a financial plan that relates to their desires and objectives.

High-net-worth investors often have extensive consultations with financial planners, who will work to exhaustively understand their investor profiles and create tailored strategies best suited to their unique financial environments. Unlike the big companies on Wall Street, which are primarily looking out for their shareholders, independent financial planners are more focused on building legacies for HNWIs. At Pillar Wealth Management this year, we took on only 17 new clients so that we could create and offer personalized plans to each client. Click here to speak to our financial planners and start your personalized financial planning now!

When Do I Need High Net Worth Financial Planning?

A popular question regarding financial planning is, “When do I need high net worth financial planning?” So, here are some situations where you need high-net-worth financial planning.

Your Tax Bills are Mounting

Perhaps the only downside of making an investment gain is the accompanying tax bill. Since investments and gains are part of an ongoing process, a comprehensive, well-thought-out tax strategy can save you a lot of money.

You need to pay attention to tax planning because it is a significant means of protecting and increasing your wealth. We have highly experienced financial planners who will review your assets, liabilities, and complete financial situation to provide you with a tax management plan that suits your financial goals. We can guide you through the different tax advantages that the government offers on specific investments, which can lower your tax liability.

You Want to De-risk Your Portfolio

Sophisticated investors trade in different financial markets, such as forex markets, stock markets, bonds, and commodities markets. While this may be an excellent way to go, you might want to take into account the risks of building your wealth using this tactic. The first risk is that markets can turn in an instant and wipe out all your long-term gains in a few seconds.

So, the next time you feel that your investments are unsafe and you need to sell, you should engage the risk management services offered by financial planning firms. Our approach to financial planning is market-swing-proof, and our strategies promise to expose you to minor risks in case the market dips unexpectedly. We will also dive deep into your investment portfolio and inform you of the most critical risks in your investments and what you can do to reduce them.

You Want to Secure Your Future

Imagine that you do not have a comprehensive financial plan, be it in wealth transfer planning, retirement planning, or even investment planning. In that case, your heirs will have trouble inheriting that wealth; you will not have a care-free post-retirement life, and your wealth will not be in the right place. Any planning will go to waste if your future is not covered by a financial plan that suits your every need. This ensures your future income and the education of your children, and you should ensure the future by also investing in thorough insurance planning.

Remember, disasters, as we said before, can affect anyone at any time. There is no warning or heads up, and the only way to handle them is to BE PREPARED. The COVID-19 pandemic, in reality, has been a perfect example of life being unpredictable.

Insurance planning keeps you safe from any surprise disaster (such as permanent disability, incapacitation, or even just dying) and allows you to avoid high risks. Our financial planners at Pillar Wealth Management are experts in developing the insurance plans best suited to our clients’ needs. As a result, in our holistic financial planning services, we offer you insurance planning because you should not use your wealth to purchase insurance that does not give you adequate coverage.

The Best System for Finding High Net Worth Financial Planning Services

If you have made up your mind to go with a financial planning firm, you might be contemplating how to select the top wealth management financial planning service.

In that case, we have compiled a list of steps that you can follow to determine which is the best one for you, in the form of a guide to a financial planning firm or professional. You can check out The Ultimate Guide to Choosing the Best Financial Advisor by our team, which will help you find a reasonable financial planner who will assist you in achieving your financial goals.

Step 1 – Note Down a Few Names

If you are looking for a financial planning service, you can quickly find a few financial planners on Google. This would not be a massive deal as all of them would be certified. However, the first measure of action must be to request referrals from your workmates, family, friends, and private clients in your circle.

Step 2 – Vet Their Background, Skills, and Experience

Before officially hiring a financial planning firm, you need to carry out comprehensive research. The things you should mainly focus on include

– Skills

– Qualifications

– Experience and performance record

– Services offered

You can research databases like the appendix standard of the Financial Planning Standards Board (FPSB), CFP, etc. You can view the LinkedIn profile of a prospective financial consultant and their qualifications, work experience, recommendations, etc.

Step 3 – Schedule a Preliminary Call or Meeting

After you’ve put together a list of credible financial planners, you should contact each one to arrange a preliminary meeting, which you can either hold in person or over the phone. This way, you can evaluate their character and how you feel about giving them your money.

You will ask a lot of questions regarding financial planning at this first consultation to test their knowledge. This is a list of some questions you can ask:

– Do you use a passive or active approach to financial planning?

– Have you previously worked with individuals with high net worth?

– How frequently will we meet, and what will be our mode of communication?

In our guide, you can find additional questions to ask a financial planner before making a final decision.

A Few Last Words

Selecting the right financial planning firm or financial planner can lead you to having effective control over your finances. Sparking a conversation with a financial planner from Pillar Wealth Management means getting into a detailed discussion and being guided on how your goals can act as achievable targets of reality. Why wait any longer? Head over to our website and connect with our financial planners TODAY!

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