I’ve been advising successful clients for over two decades now.
For all the knowledge gathered from my formal education and ongoing professional development over all these years, it’s fair to say I have learned more from interacting and watching great people lead great lives and make great decisions. I have been privileged to work closely with some truly awesome and successful people; my clients.
Throughout my tenure, I’ve observed that High Net Worth Individuals (HNWIs) face a unique set of challenges and opportunities when it comes to retirement planning and investment strategies. Their complex financial situations, often involving multiple entities, income streams, significant assets, complex affairs and potentially blended family considerations require tailored solutions to ensure ongoing financial security, maximum risk mitigation (not just investment risk), maximised sound commercial returns and long-term legacy planning.
The standard approach to financial planning is okay, if mediocrity is acceptable.
However, it has been my experience that highly successful and wealthy people demand and deserve a vastly different and bespoke approach to their own specific circumstances. (Let’s be honest, how much sense is it to treat a $5million or $10million+ client like you would a $1million client? And yet unfortunately in speaking and dealing and seeing how some planners operate, this is exactly what happens – they just add an extra zero at the end of their standard ‘asset allocations’ from a set menu of investments and pat themselves on the back… without ever extending their own horizon on what is truly required for these clients, oft-times to the clients’ major detriment).
The below are just some simple broad concepts worth considering before seeking your own bespoke professional advice from a suitably qualified, experienced, knowledgeable and capable professional.
Key Considerations for HNWIs
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Preserving Wealth: Protecting and growing wealth is a paramount concern for HNWIs. We all know the standard comment that diversification across various asset classes, (such as shares, bonds, direct property & real estate, private equity and alternative investments), is essential to mitigate risk but just as crucial is knowing what to do, when to do it and what strategies make the most sense to maximise long term returns for substantial family wealth.
- Tax Efficiency: High-net-worth individuals often face significant tax burdens. Implementing tax-efficient investment strategies, such as maximising tax-advantaged accounts like superannuation pensions, insurance bonds and other personally developed strategies can help minimise tax liabilities both for your lifetime and for when assets and wealth get passed down. Additionally, having your adviser effortlessly work with your taxation and legal professionals can provide significant value for your family with tax planning strategies, wealth management, estate planning and intergenerational considerations plus potentially philanthropic/charitable giving.
- Legacy Planning: HNWIs often have a strong desire to leave a legacy for future generations and potentially benefit wider society. Estate planning is crucial to ensure that assets are transferred efficiently and minimize potential tax implications which may involve creating wills, trusts, and other legal documents to outline how assets will be distributed or dealing with other various entities. However, full and proper Family Legacy Planning involves a wider range of considerations aside from just ‘who gets what’ and can set up a success-pathway for generations to come.
- Risk Management vs Return Potential: HNWIs may or may not have a higher risk tolerance and it’s important to balance risk and reward. While a well-diversified portfolio can help mitigate risk, it is just as crucial to not miss sound solid sensible opportunities for growth and assess the merits of various investments that can possibly enhance and compound wealth for generations to come. Remember Microsoft, Apple, Amazon, NVIDIA and even Commonwealth Bank shares were all seen as ‘new’ or ‘potentially risky’ opportunities when they first listed on the stock exchange.
- Lifestyle Planning: Retirement for HNWIs can be a time of travel, philanthropy, and pursuing personal passions. Sometimes highly successful business or professional people can get lost once they step away from the persona and mantle they’ve worn for so long. Proper retirement planning involves not just financial planning to ensure funds are placed appropriately and available, but also identify quite broad and specific lifestyle and personal goals. What makes you excited to still be alive, what are your own bucket list items, what are your aspirations for your family once you’re gone and how will you fill your hours in a way that not only makes you content, but also fulfilled?
Tailored Investment & Wealth Management Strategies for HNWIs
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Family Offices (FO): HNWIs may establish family offices to manage their wealth and provide comprehensive financial services, including investment management, tax planning, and estate planning. There may be dedicated ‘employee’ specialists in each of these areas and an employed General Manager or CEO of family affairs who coordinates it all for the family’s benefit and reports directly to the primary clients/owners of the FO.
- Intergenerational Family Wealth Assistance (IFWA): if a bespoke family office is not realistic (i.e. under $35million in investible assets and wealth not counting home and personal use assets such as cars, contents etc), anyone with investible wealth down to $5million should still seek specific IFWA for comprehensive planning that can benefit all family members in a cohesive, well-structured and sensible way. While they may not be sole employees of the family, a properly qualified and experienced financial planner can act as project manager and coordinate with your other professionals, such as accountants and lawyers etc to ensure your family situation is maximised across all facets.
- High Net Worth Individual (HNWI) Planning: Likewise, if you’re an individual or couple with investible assets including superannuation down to $2million, consulting a qualified, experienced financial planner for comprehensive retirement planning can substantially benefit you with a cohesive, well-structured pathway to achieve what you desire in the most appropriate manner. And again, they can coordinate with your accounting and legal professionals to maximise your own personal situation.
(Of course, others with lower amounts can and possibly should consult with a financial planner, however as per the title, this article is specific to HNW clients).
The Role of Experienced, Knowledgeable Financial Advisors
HNWIs often work with experienced financial advisors to navigate the complexities of wealth management when the clients don’t have the time or possibly inclination to manage and understand all that may be required.
A qualified experienced and capable advisor can provide personalized advice that can extend across intergenerational considerations, develop customized strategies, and help clients achieve their long-term goals – financial, family and personal – all individually taken into account and prioritised in importance as decided by you.
By carefully considering these factors and working with experienced professionals in a well-coordinated manner, HNWIs can secure their financial future minimising undue risk and taxation, preserve their wealth for future generations, and enjoy a fulfilling retirement.
We support wealthy individuals and family groups by working with you to create a direction, structure, strategy and security for your wealth and a retirement that is right for you, your values and your legacy.
If you require further information on how to get started or any of the above has struck a chord with you, feel free to reach out any way you wish (LinkedIn, telephone, email or other). I have clients all over Australia and the world, and always happy to have an initial discussion without cost or obligation.
*The above is general information only and not personal advice. For further information or a confidential discussion, please contact the author directly.
