Guide to High-Net-Worth Wealth Management - SmartAsset

Having a high net worth does come with its own set of challenges, one of which is the effective management your money. While there are basic principles to help guide your investing strategy, there are specific actions you can take if you are a high-net-worth individual to grow your fortune. A financial advisor can help you create a financial plan for the future.

High Net Worth Definition

A high-net-worth individual must have liquid financial assets of at least $1 million. Liquid in this case means able to be accessed – relatively quickly – as cash. Owning a home with a value of $1 million, for instance, would not qualify you as a high-net-worth individual by itself, because that can’t be easily converted to cash and used for investment.

There are two levels above this: a very-high-net-worth individual has a least $5 million in liquid assets while an ultra-high-net-worth individual has at least $30 million.

At an individual level, becoming a high-net-worth individual doesn’t impact you that much. To a potential financial advisor, though, you will be counted separately for the purpose of SEC filings.

Common Services for High-Net-Worth Individuals

There are some financial planning services that everyone needs, regardless of your financial situation. That said, there are some things that are especially important for those with a high-net-worth. Here are four services to look for in an advisor if you’re a high-net-worth investor:

Estate planning: Estate planning is important for everyone, but it takes on a special resonance for those with a lot of money because they’ll likely end up with a sizable estate that they want dealt with efficiently after dying. This financial planning service can help you take the right steps now so that your money and assets are divided up as you see fit after you are gone. And in a way, that minimizes the tax burden and the work needed from your family.

Charitable giving: Giving money to charity is great no matter how much you can give. Even donating $10 to a cause you believe in can give you a solid rush of endorphins and help out people who need it. When you’re high net worth, though, charitable giving grows in both scope and importance. You have more money to give, so it becomes important to be intentional and careful how and when you give it. Furthermore, charitable giving can be deducted on your tax return, so making sure you keep diligent records is important.

Tax planning: Everyone has to deal with taxes. But for high-net-worth investors, tax planning is also a crucial part of investing. This financial planning service can help high-net-worth individuals save money on their tax bill by maximizing deductions, selling investments for the purpose of tax-loss-harvesting and other tax reduction techniques.

Succession planning: If you are the owner of a successful family business, succession planning is an important part of financial planning. This is a contingency plan that can replace your leadership and maintain the right balance of experience and institutional knowledge for the success of the business and your family.

Bottom Line

A financial advisor can be useful for all people, but it is especially important for high-net-worth investors. If you have a high-net-worth, an advisor can help you with investments, obviously, but also with taxes, estate planning and other concerns especially relevant to those with a lot of money.

Financial Planning Tips

A financial advisor can be helpful for those with a high net worth, and finding one doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
No matter how much money you have, it’s important to make sure you have a strong portfolio. Use SmartAsset’s asset allocation calculator to start planning.