Wealth management for high net worth and ultra-high net worth individuals is an intricate process. It is not about fancy offices or people in sharp suits. Wealth management is about making the right decisions when the stakes are high. It is a systematized way of structuring finances so that you can achieve your most desirable goals without stressing out about them. Some promising wealth management Scottsdale firms practice these principles. Pillar Wealth Management is a nationwide firm that works with high net worth and ultra-high net wroth families. It works with individuals who have $5 million to $500 million in liquid assets. But, the key is to first know that such attributes define wealth management and then identify wealth managers who have been following such principles for many years.
When you have a portfolio worth a few million dollars, every right or wrong decision can result in a gain or loss of millions over a 5, 10, or 20-year period. There are many things that need to be considered before making every decision. If you happen to have $10 million or more in liquid investible assets, then this complimentary guide on choosing the best financial advisor discusses all of those considerations. Good wealth management is also about following a system that helps make optimal decisions and allows clients to achieve their life goals.
In this guide, we will first look at what wealth optimization is. We will then touch uponthe5-step wealth optimization process. It is also important to understand what risk management Scottsdale firms practice and what some key best practices are. The same also applies to the investment management Scottsdale firms carry out for high net worth and ultra-high net worth individuals. And lastly, we will discuss some key points on finding a good wealth manager with the right kind of philosophy.
For high net worth and ultra-high net worth individuals who have at least a few million dollars of liquid investible assets, there is a lot to navigate. Pillar Wealth Management recognizes this as it has over 60 years of combined experience working with individuals who have $5 million to $500 million in liquid investible assets. The more money one accumulates, the more far-reaching are the decisions and the more complex are the issues.
Therefore, there is a need to establish a process that allows high net worth individuals and their families to protect and grow their wealth. At the same time, the ups and downs of life also have to be handled carefully. This process is what we consider to be wealth optimization. You can read more about our philosophy in this guide called The Ultimate Guide to Choosing the Best Financial Advisor: For Investors With $5 Million to $500 Million in Liquid Assets.
Imagine that you have planned to sell your business and fund your retirement with the windfall. But, the market suddenly goes kaput and the value of your business halves. What do you do? Another situation could be one of a high net worth individual who invested heavily in a specific industry of the stock market. And then comes the market crash, wiping out more than half his/her net worth.
In such cases, wealth management Scottsdale firms have to practice wealth optimization to either handle the difficult situation or to not get into such difficulties in the first place. Wealth optimization is about making smart decisions and structuring your finances so that you stay on track to achieve everything that you have envisioned come what may. After all, all the high net worth wealth is useful when it allows you to reach your goals.
5-Step Wealth Optimization Process
In order to simplify wealth optimization and break it down into actionable steps, we have come up with a 5-step wealth optimization process. You can gain more insight about wealth optimization in our complimentary guide on 5 Critical Shifts for Maximizing Portfolio Growth Strategies for Families Worth $5 million to $500 million.
Step 1 is to first understand your goals. What is it that you want to achieve in your life?This could be paying for their grand children’s Ivy League education ortraveling around the world.
Step 2 is to prioritize and understand the timing of your goals. Which goals are most important to you? When will those goals be achieved? This second question is critical to understand the timing of distributions. How and when can college money for 2 grandchildren be given without getting into trouble with the IRS or being caught up in the stock market’s volatility?How will these expensesaffect the retirement cash flows?
Step 3 is to work out a plan to achieve your goals and still have enough money to retire. Any good wealth management Scottsdale firm has to structure your finances so that you do not save too little or too much. Being too conservative means don’t spend enough while spending too much can leave you short of money in your old age.
Step 4 is to implement the plan that was created in Step 3.
Step 5 is to revisit the plan every few weeks or months. Step 4 is, perhaps, the most underrated aspect of wealth management. Our goals change and the world around us also changes. Our financial plan cannot remain the same amidst all these changes. The plan also needs to be updated.
Feel free to start a conversation with us to discuss anything about these steps.
More on the wealth optimization process
In order to understand your lifestyle needs, your life goals, and your current financial situation, a good wealth manager has to be a good listener. He/she has to have a personal touch that sets the right conditions for you to be able to freely share your personal information. The wealth manager then needs to be able to connect your financial situation to the decisions and actions which will be recommended in the future.
Many wealth managers tend to focus singularly on generating the highest possible returns without realizing whether that is what the client really needs. Some clients may not want to take high risks and may be perfectly happy with a lower-risk-lower-return approach. In fact, their financial situation may be such that they could achieve all of their goals by being conservative with their investments. For them, saving on taxes or having a lower volatility portfolio may be priorities. It is the job of the wealth manager to recognize this and tailor the financial plan accordingly.
Optimization isn’t just optimizing returns. It is optimizing the connection between the client’s needs and the available wealth planning options. Making the right choices count more than making choices that deliver the highest annual rate of return.
Risk Management Scottsdale
Risk and return are two sides of the same coin. Theoretically and up to a certain point, higher risk results in higher returns. How much risk you are willing to take depends on what your life goals are and what your financial situation is. The more expensive the goals, the greater risk you might need to take with your investments to earn a high enough return to pay for those goals. That is unless you start with a large enough amount so that you can achieve those goals even with a lower rate of return. Feel free to get in touch with Pillar Wealth Management to discuss your goals and their relation to your current financial situation.
Every individual has a certain degree of risk-averseness. There is no right or wrong answer here. It is a personal trait that you cannot really change very significantly. However, what a successful wealth management Scottsdale firm can do is help manage whatever risk theclient is taking on. We have talked in-depth about managing risks in this downloadable guide on improving portfolio performance for investors with $5 million to $500 million in liquid assets.
One way of risk management Scottsdale firms can achieve is through stress testing. Pillar Wealth Management, for example, simulates how your portfolio will perform in 1000 different scenarios. Our stress tests are based on historical data going back to the 1920s. The good thing about our model is that it can incorporate any new goals or developments in your financial life. So, if you wake up one day and feel that you should add a gift to your grandchild which you previously did not, then we can take on-board the new information and re-run the stress test.
Investment Management Scottsdale
Investment management is about asset allocation. It is about not having all your eggs in one basket. For high net worth and ultra-high net worth individuals, it could be the difference between going from $20 million to $15 million and going from $20 million to $5 million during a major market crash.
You can claim to be well-diversified by investing in 10 different tech stocks instead of 2. But, what if the entire technology sector faces some sort of disruption? Asset allocation means spreading your investments across different asset classes like equities, bonds, gold, cash, etc. A good investment management Scottsdale firm’s strategy should be able to point that out as well. If you want to discuss high net worth investment strategies or anything about portfolio management, then schedule your free consultation with Hutch Ashoo.
By working with a reputed wealth management Scottsdale firm, you will realize that investment management is a non-emotional process. It is not about timing the market or outguessing it. Hunches and gut-feel decisions do not always work in investing. A good wealth manager should have a system in place that can generate the returns needed to help you achieve your goals no matter what the market does. This system should define what to invest in, how much to invest, and when to exit.The whole point of investing money is to help you get to your goals. For doing so, a good wealth manager should understand what your goals are and have a process in place that spells out how you will reach those goals.
Lastly, good investment management also means keeping an eye on the cost of investing. Our guide on choosing the best financial advisor for individuals with $5 million to $500 million talks about the significance of this point as well.
Finding options forwealth management Scottsdale
Now that you know what wealth optimization is, what the broad steps are to achieve such optimization, how to view risks, and how investment management is done professionally, you may be thinking of finding a reputed wealth manager to handle your high net worth or ultra-high net worth portfolio.
You can find great wealth managers by doing some research and then speaking to a few short-listed candidates. You can also give Pillar Wealth Management a call and get in touch with Hutch Ashoo. Pillar Wealth Management is not just a wealth management firm, but also a registered fiduciary. It works on a fee-only model which means there are no commissions involved. In our opinion, this ensures that the advice is unbiased, independent, and always aligned with the best interests of our clients.
When you speak to any wealth advisor, it is important to not only ask him/her all your questions, but also get a feel of the personality. You would ideally want to work with someone who you can trust wholeheartedly. Money matters are personal and important. Therefore, you want someone who you can build a relationship with to be handling your money.
Lastly, you can also tap into your personal network and ask if your friends, relatives, or business colleagues know any good wealth manager. It is possible that they may already be working with someone who is experienced and successful.
Hutch Ashoo and Christopher Snyder are the expert founders of independent, fee-only, and fiduciary wealth management firm Pillar Wealth Management. If you would like to speak with them or simply ask any questions about how custom and trusted wealth management advice is offered to highnet worth individuals with $5 million to $500 million in investible assets, then feel free to start a conversation.
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