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Wealth Management, Long Beach: 7 Secrets to Optimal Portfolio Management for High Net Worth Investors
Are you wondering how to get more out of your investment portfolio? Do you find yourself paying a significant sum in advisory fees, taxes, and other hidden costs? As a high net worth or ultra-high net worth investor with over $10 million in liquid assets, you need to make sure you have the right wealth manager on your team for long-term wealth management, Long Beach. An easy way to do this would be to read our exclusive guide for families with a net worth of 10 million and above. Youcan also schedule a call with us to reassess yourwealth management strategy.
At Pillar Wealth Management, we often come across clients working with large investment firms yet struggling to realize the type of returns they deserve. That’s why we offer tailored wealth management solutions that complement the investment priorities of families having $5 million to $500 million in liquid assets. Instead of focusing on arbitrary numbers and chasing after meaningless performance goals, we develop a strategic investment strategy that helps you achieve financial serenity.
Read on as we discuss the common problems surroundingportfolio management, Long Beach,and how for investors inLong Beach, high net worth wealth managementcan be achieved through dedication, risk minimization, cost-efficiency, and asset allocation.
1. Make Sure You Have the Right Goals
The first thing you need to do is decide what your performance goals are. What are you looking to achieve with your investment? Different people have different priorities. For instance, you may want to use the money to:
- Plan for retirement
- Secure your family’s future
- Pursue your interests and hobbies
- Generate a source of income
Give some thought to your unique situation and what you want to achieve through your investment. Without a clear goal, you are just shooting in the dark and trying to emulate what other investors are doing. Even if you happen to earn a return, it won’t be as satisfying because you are not sure what you wanted to achieve in the first place.
Unfortunately, most investment firms that offer wealth management services fail to focus on this particular aspect. They provide standard investment options to you with little variation and accountability for your priorities. What you need is a custom solution from a committed wealth advisor that is willing to go the extra mile to help you achieve your investment goals. That’s precisely what we offer at Pillar Wealth Management. Click here to read our free guide on investment goals and how you can choose the right financial advisor.
2. Don’t Go By Size
For most investors in Long Beach, high net worth wealth management is all about the size of the investment firm they are working with. It’s a natural inclination. You see a large investment firm or bank; you are bound to assume they have the experience required for effective portfolio management, Long Beach.They will show you some fancy charts, crunch some numbers, and voila! You are convinced you are making the right decision by letting them handle your estate.
Unfortunately, the opposite usually holds true. If we take a quick tour through history, renowned institutions, such as Lehman Brothers and Merrill Lynch, either went bankrupt or were acquired by another bank during the Global Financial Crisis of 2008. As it turns out, despite their size, most investment firms and banks don’t have the security measures in place to protect your investments. Instead, you are usually left to the mercy of volatile market conditions and risky investment choices.
To make matters worse, many large banks end up investing your money into proprietary holdings that they own. These holdings are overseen by money managers that charge a high fee for their services. So, not only are you paying more for wealth management in this scenario, but you are also earning a lot less in return.
To learn more about how big banks operate and why your portfolio is likely to underperform in their care, click here to read our complete guideon portfolio performance.
3. Understand What It Means to Have True Security
The risk-return principle suggests that high risks come with high rewards. If you are a conservative investor, then this automatically puts a cap on your earnings. At least, that’s what most financial advisors will have you believe. They’ll encourage you to take more risks to grow your net worth. While it’s true that you can’t become an investor without assuming some level of risk, it’s also essential to determine which risky investments will pay off.
You see, the risk-return tradeoff doesn’t have to be as volatile as you may expect. As an experienced wealth manager will tell you, strategic risk-taking can contribute to your security and help you reach financial serenity.
At Pillar Wealth Management, we can analyze your portfolio to identify your risk appetite and develop an optimal portfolio that balances your risks while still maintaining financial security. To learn more about what our portfolio analysis process entails, feel free to schedule a call with us.
4. Carry Out an In-depth Risk Review
It is also vitalto ask your wealth manager to conduct an in-depth review of your portfolio’s health and how resilient it is to risk. Multiple types of risks need to be considered here. According to FINRA (Financial Industry Regulatory Authority), you need to account for:
- Political risk – Arises frompolitical instability within the country
- Market risk – Arises from changes in the market condition
- Business risk – Arises from an organization failing to generate profits
- Currency risk – Arises due to fluctuations in the exchange rate for foreign currencies
- Concentration risk–Arises when multiple securities or investments move in a particular direction to generate losses
- Liquidity risk – Arises when an investor is unable to meet their financial obligations due to lack of cash and other liquid assets
Analyzingthese risks and how they affect performance is essential for enhanced portfolio management, Long Beach. To do this, you can examine historical data and build relevant hypothetical situations. Most investment firms go back 20, 30, or 40 years to examine past trends. This approach is insufficient and fails to provide you with a complete picture.
What you must do is use market data that includessignificant events such as the Second World War. You may underestimate it now, but shifting your perspective on the importance of historical data can be very impactful. You will uncover a large amount of information that may render all of your current predictions obsolete.
If your current wealth management firm doesn’t have access to such extensive data, it’s time to make a change. Of course, that’s not the only change you need to make. Click here to read our guide on the 5 critical shifts that every ultra-high net worth investor must make to achieve financial serenity.
5. Opt for Strategic Wealth Management, Long Beach
As an investor, you have probably debated over active vs. passive portfolio management. Both types offer a series of advantages that make them appealing.
Active managers tend to monitor the market and make real-time changes to your portfolio, meant to help you outperform the market. Investors believe this approach can help them capitalize on market trends and earn more. While that is a perfectly logical conclusion, most high net-worth investors don’t realize that it can quickly increase their costs, as well. Think about it. You are paying a significant chunk of your money to an active manager. Over time, this can translate into a substantial sum.
Even if you justify the cost by focusing on the returns promised to you, you must understand that most active managers underperform the market 90% of the time. You need to ask yourself then, what exactly are you paying for? Vigilance is great, but if it’s not boosting the value of your investment portfolio, then you need to look for a better option.
Compared to active managers, most passive managers cost you less and can still help you generate sustainable returns. Which way is better, though?
Truthfully, there are disadvantages to both approaches. While active management costs you more in the long run, passive management can be complacent. That’s why at Pillar Wealth Management, we opt for strategic management that combines elements from active and passive management to provide you with a more holistic solution.
To learn more about active vs. passive management and how strategic management can help ultra-high net worth families, order a free hardcover copy of our book, The Art of Protecting Ultra-High Net Worth Portfolios and Estates – Strategies For Families Worth $25 Million To $500 Million.
6. Cut Your Costs Where You Can
Most investors stress over returns and the performance of their portfolio but ignore the actual costs of an investment. As the adage goes, there is no such thing as a free lunch. If you want to work with a wealth management firm, then yes, it will cost you. The question is, how much? Where do you draw the line and know you are being exploited?
For optimal wealth management, Long Beach, investors must also identify the hidden costs that many large investment firms and banks tend to charge. We have already discussed a few of these costs in earlier sections of the blog and how smarter investment decisions can help you avoid them.
That’s not all, though. If you speak to one of our wealth managers, you will be surprised to find out just how much money you are losing in the form of services fees and other charges. Even more so, the investment strategy you choose can also increase your costs.
For instance, if you generate short-term capital gains, you will also lose a lot of money in taxes. The tax rate for this income can go as high as 37%. This problem is particularly prevalent in an active management strategy, and you need to make sure you are getting your money’s worth if you opt for it. If the costs overwhelm your returns, then you will have nothing to show for all that expense.
If you are worried about your current investment strategy being too costly and are looking for wealth managers that offer cost-efficient portfolio management, Long Beach, then start a conversation with Pillar Wealth Management.
7. Prioritize Asset Allocation
For many investors in Long Beach, high net worth wealth management revolves around variables such as timing, their fund manager, or the sectors they choose. These variables may matter for your investment strategy, but they can only take you so far if your asset allocation is poor.
As a high net worth investor, you need to make smart choices regarding the type of assets you choose to invest in. A healthy asset allocation makes sure yourreturns vary while reducing the risk associated with concentrated assets.
What is healthy asset allocation, though? Most investors make the mistake of believing their assets are diversified when they are very similar to each other. For instance, if you are buying the shares of 20 companies in the energy sector, then by all appearances, you will seem to have a diverse portfolio. However, if the energy sector suffers, then the stock value of all these companies will drop, and so will the net worth of your investment.
You need to invest in bonds, equities, and cash to truly diversify your investment portfolio. These assets rarely move in one direction, which can help you avoid heavy losses. The quality of your asset allocation will also depend on the investment firm or wealth manager you are working with. Make sure you ask them how they plan to invest your money and whether these assets are interlinked with each other.
The Bottom Line
Optimizing portfolio performance doesn’t have to be a matter of trial and error or paying an obscene amount of money to large firms and banks. A strategic approach to wealth management, Long Beach can do wonders for your investment portfolio and help you boost your net worth to realize your investment goals. The right wealth manager can make that happen for you.
At Pillar Wealth Management, we specialize in offering strategic portfolio management to high net worth and ultra-high net worth families with liquid assets valued between $5 million to $500 million. With over 30 years of experience in wealth management, we can create a custom investment strategy that keeps your goals at the forefront, ensures your security, and minimizes your risk. Click here to start a conversation with Pillar Wealth Management.
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