Offering Exclusive High Net Worth Portfolio, Estate and Tax Protection Strategies developed over 30+ years
Offering Exclusive High Net Worth Portfolio, Estate and Tax Protection Strategies developed over 30+ years
As a high-net-worth individual or even an ultra-high-net-worth individual, your needs and goals will be vastly different from the average American. You can’t just go to any bank for your investment or other financial matters. As a high-net-worth individual, you need a high-net-worth wealth manager or advisor as well who can expertly handle all your matters and help you achieve all your short and long-term financial goals. We suggest reading our crucial guide, which explains the intricacies behind choosing the right advisor for investors worth $10 million or more. However, before all that, it’s important to understand what high net worth even means and why this is so important.
At Pillar Wealth Management, we deal exclusively with high or ultra-high-net-worth individuals. Moreover, our wealth managers and financial advisors hold more than six decades of combined experience working in this field and serving affluent clients. As a result, we are well acquainted with the unique needs and problems of high-net-worth individuals and use our range of services and expertise to come up with creative solutions. If you’re a high-net-worth investor seeking wealth management services and customized solutions, schedule a free chat with us today to discuss your options.
In this blog, we’ll be focusing on what high net worth means, what makes this distinction so important and how you can find the right wealth manager accordingly. Let’s start.
What is Considered High Net Worth?
Your net worth can be a reflection of your financial health and status. It represents the total worth of all your financial, as well as otherwise, assets minus all your liabilities. Think of it this way. If you were to sell everything you own for cash and pay off your debts, the amount you will be left with is your net worth.
To be considered high-net-worth, this amount should be at least $1 million. Similarly, for you to be considered ultra-high net worth, your investable assets minus any liabilities should equal at least $30 million. While it sure sounds great to be a high-net-worth or ultra-high-net-worth individual, the title comes with a lot of pressure and risk.
Why Is the High Net Worth Definition So Important?
If you’re wondering why this high net worth definition is even important or what does difference it makes, it can be the difference between living the retirement you dreamed of and living a retirement full of uncertainty.
It can be the difference between safely holding all your assets and going bankrupt due to market fluctuations. It can be the difference between giving your beneficiaries a financially stable life and passing your debts onto them.
As mentioned earlier, the needs of a high-net-worth investor are exceedingly different from the needs of an average American. A person with $10,000 in their account might be worrying about paying off their student loans or other debts, while you would be worried about investing tens of millions of dollars of your wealth in the stock market. Even though you have a lot more wealth, you also stand to lose a lot more.
That’s why it is so important to define high net worth or ultra-high net worth specifically so that such individuals can partner with the right wealth managers or advisors that understand their specific needs and challenges and deal with them more effectively. Otherwise, affluent individuals and families risk losing hundreds of millions of dollars due to mismanagement and adopting the wrong strategies.
How to Find the Right High-Net-Worth Wealth Manager for Yourself?
It’s easy to define a high-net-worth individual and decide that you need a wealth manager that exclusively deals with high-net-worth individuals. However, finding one is an entirely different story. You can’t simply search for a wealth manager online and choose the first one that pops up.
There is a myriad of factors that you need to consider first to ensure that you’ve got the right wealth manager or advisor for yourself. Otherwise, you’re simply heading towards an uncertain retirement and a failure to meet your life goals. Here are some of the things you should evaluate them on.
For a more detailed description, we suggest checking out this guide on picking the right financial advisor for high-net-worth investors worth $10 million or more.
Experience and Track Record
Checking their experience and track record is a good starting point to help you gauge the level of their ability and services when it comes to wealth management. When measuring their track record and the clients they have served, don’t just focus on the number of clients they have had.
Rather, look into how many clients they have been able to retain over the years. Similarly, experience also matters a lot in this field. The certifications and training programs aside, only the right experience will provide them with the inside knowledge and tips needed to develop smart strategies that can help their clients.
Moreover, when looking at their experience, you should make sure to check their experience in the field as well as their experience in working with high-net-worth clients specifically.
Standard of Care
When you have $5 to $500 million in liquid assets, and you’re handing over some control to a financial advisor, you want to be 100% sure that they are working for your best interests only. This is a common problem that a high-net-worth investor often faces.
Some financial advisors follow a different standard of care, due to which they can face conflicts of interest and start working for their own benefit rather than looking out for the clients’ interests. Therefore, when choosing a financial advisor, make sure they follow the fiduciary standards rather than the suitability standards.
A fiduciary wealth manager or advisor is required to always suggest and guide you towards the best possible financial options. In comparison, advisors who follow the suitability standard are simply required to advise you ‘suitable’ options that may not always be the best for you.Contact Pillar Wealth Management to consult experienced and fiduciary advisors.
Understanding of Costs
You also need to assess the wealth manager’s understanding of costs as this can reveal whether they are the right wealth manager for you or not. By costs, we don’t just mean the taxes and fees you will have to pay.
In reality, there are numerous hidden costs that you will have to bear due to your financial actions. There are transaction charges, capital gains taxes, internal expenses, and a lot more. Learn about the other costs you could incur due to management styles and how to correct them.
Only the right wealth manager will know about these different costs and help design a strategy to minimize their impact on your wealth. If your current advisor is not doing anything about these additional costs, causing you to lose millions every year, or worse, they don’t even know about these costs, it’s a big red flag. You might need to consider changing your advisor right away.
Monitoring and Adjustments
The right wealth manager or advisor will have a firm understanding of your needs and all your short as well as long-term goals and targets. Accordingly, they will plan your strategy in such a way so as to meet those goals as efficiently as possible.
Additionally, they will also know that goals and needs can evolve over time, and therefore, your financial plan also needs to be monitored and adjusted accordingly. For instance, your investment strategy in your 20s or even 30s will be entirely different from your investment strategy in your 50s and 60s. When you’re young, you might aim to grow your wealth aggressively, and that’s why you might invest in stocks and other risky assets with high returns.
However, once you grow older and near retirement, your goal might shift to saving instead. Accordingly, your wealth manager will advise and change your strategy towards safer assets and investments. Your financial plan is not meant to be carved in stone or forgotten about. It has to be constantly adjusted and evaluated against your goals, and only the right manager will do this for you.
Discover other ways to protect and grow your wealth by ordering a copy of our book, The Art of Protecting Ultra-High-Net-Worth Portfolios and Estates – Strategies for Families Worth $25 million to $500 million.
Similar to the standard of care, considering their payment model can also help you make sure there’s no conflict of interest between the two parties. The two most commonly used payment models are the commission and fee-based payment models.
If the advisor is charging you a commission, as is the case with most brokers, there can always be a conflict of interest, as they might suggest you those goods and assets that earn them a higher commission. In comparison, advisors who work a fee-based model charge a percentage of your total assets. Usually, this is around 1% of the Assets Under Management (AUM).
Pillar Wealth Management works on a 100% fee-only basis. Chat with us today to learn why this matters.
Comprehensive Wealth Management
The right wealth manager will also adopt a more comprehensive and holistic approach to your wealth management. While your investments and portfolios certainly make up a significant portion of your wealth, they’re not all there is to it.
In fact, your investments are just a tool to help you meet your other retirement and financial goals in life. Therefore, the right wealth manager will focus on all aspects of your wealth while trying to help you achieve your goals.
Customized Financial Solutions
This is one of the problems you will face at private banks and large investment houses. Such organizations won’t really bother to understand your needs and simply suggest financial solutions that work for them.
That’s why you need the best financial advisor that takes the time to truly understand your life’s aspirations and formulate a customized financial plan accordingly. Only then will you be able to work towards your targets more efficiently.
Frequency of Contact
You also want a wealth manager that is proactive in communication. As a high-net-worth person, you might not have the time or skills to formulate and execute all your investment strategies and update your retirement plan.
However, you should stay updated with everything, how your portfolio is performing and what you can do to maximize that performance, how close you are to achieving your goals, how much you are paying in taxes, etc.
This is only possible when you are working with a proactive manager who provides you with monthly or quarterly reports and keeps you in the loop always. You don’t want a manager that only contacts you once a year and even then, only to ask for more money.
The high net worth definition doesn’t simply classify you into the category of the affluent. It also defines your unique needs and the unique challenges you face for which you need a specialized and dedicated financial partner. That’s why it is important to find the best financial advisors who are well-experienced in dealing with high and ultra-high-net-worth individuals.Read this guide here to learn how to find one for yourself.
Alternatively, you can reach out to Pillar Wealth Management directly. We are a white glove wealth management firm. We have a 100% fee-only policy and follow a fiduciary standard to ensure that we are always serving our clients to the best of our abilities to help them meet their goals and attain financial security. Contact Pillar Wealth Management today to address your high-net-worth needs and goals.
- Portfolio Allocation – As a high net worth or ultra-high net worth investor, you know that investing is no simple task…
- Asset Allocation – As a high net worth individual, your investments and portfolio will make up a big part of your wealth and financial plan…
- Preservation Of Wealth – Everyone aspires to grow their assets and wealth and become financially stable to attain success as well as peace of mind…
- Estate Planning Attorney – Wondering if hiring an estate planning attorney is the right thing to do? Estate planning can indeed be a confusing…