3 of the Best Financial Tips for High Net Worth Individuals

3 of the Best Financial Tips for High Net Worth Individuals

27 Sep 2022

Whether you are just starting to build your wealth or are already a multimillionaire, having a game plan for your financial future is vital. For example, having an estate plan in place can help protect your loved ones by ensuring that their needs are taken care of after you’ve passed away. 

The same can be said for strategizing your philanthropy: It is essential to know how you want to give to which causes before you start donating. In fact, the longer-term that we plan it, the greater the potential of significant tax advantages for you and your favorite charities.

This article answers these questions:

  • What makes financial planning important for the affluent?
  • Are there potential downsides to disorganization?
  • How do you determine your net worth?
  • Can estate planning keep your legacy out of probate?
  • Why do donors and charities benefit from planned philanthropy?

1. Designate a Financial Advisory Team

When it comes to financial planning for large amounts of savings and assets, you need a team of experienced professionals to help you. In particular, you should consider adding an asset manager or portfolio manager to assist you with investments. A fiduciary high net worth advisor is often an excellent choice in this capacity because conflicts of interest are generally rarer than at a large international firm.

One of the benefits of a financial advisory team is that they can help you avoid potential mistakes in a wealth management strategy. This is often achieved by making sure that all the necessary pieces are in place for you before you make any major decisions. 

Know Your Net Worth

A reputable advisor will also help you understand the difference between your assets and liabilities. To calculate this amount, often referred to as your “net worth,” we start by adding up everything you own (such as your savings accounts, real estate holdings, and investment portfolio). Next, we subtract any debts.

For accurate results, we include only items that are liquid (meaning they can be converted into cash within one year). Inherited money or gifts from family members are normally excluded, since these may be non-liquid assets. Any income you receive factors in, as well. 

This can include money earned through self-employment, wages or salary (along with any bonuses) made from working for someone else, capital gains, dividends received from investments, and more. 

2. Create a Financial Plan

The first step, once you have a team, is creating a personal plan. This differs from the sort of planning you might do with an accountant or any other type of professional—because it will be tailored specifically for your unique situation. The goal is to help you decide what kind of investment strategies are best for your goals, how much money should go into each asset, and how much you should set aside for emergencies or retirement.

Once you have a plan, it is time to start investing. The sooner you do so, the sooner you can potentially begin growing your wealth over time. However, never forget to verify where your equity is currently held (in stocks, bonds, mutual funds, et cetera), beforehand. 

This is another reason why people with a high net worth (HNWs) usually have professionals handle most, if not all of their transactions: Relying on your team avoids having to worry about things like taxes getting paid on certain assets every year, keeping track of which investment has performed well during certain periods, and so on. 

Get Organized

If you do not have your paperwork and financial statements accessible, it will be hard (if not impossible) to see where your money is going and how much tax you need to pay on it. You might even become less affluent, over time by not maintaining a minimum level of documentation (e.g. a folder of the year’s receipts). 

You should also make sure that all your paperwork is filed appropriately enough for someone who needs access to be able to find them. This may seem like an unnecessary step at first glance, but when there are millions of dollars at stake—and if, for instance, you are unexpectedly incapacitated—it can prevent future headaches.


It Isn’t Too Late to Take Charge of Your Financial Life—But Don’t Delay Any Further 


3. Plan Proactively

Professional financial planning can make a night-and-day degree of difference in the ease, efficiency, and profitability of your savings and investing. At the same time, for your loved ones’ sake, it is wisest to plan as much as humanly possible for financial eras beyond your own. 

In other words, if you have a high net worth, you need an estate plan. This should include: 

  • A will. This document ensures that your assets are distributed according to your wishes. In fact, it can help your descendants avoid probate court, should you pass away without naming an executor.
  • A trust. These allow you to protect assets from creditors. They also provide additional help for keeping your estate out of probate court, should anything happen to you or someone else involved with handling it (such as the trustee). A trust can help achieve other financial goals as well, like providing for minor children or making sure that certain assets stay within family lines after your passing.
  • Power of attorney and healthcare proxy forms. These documents give someone else the legal right to make decisions on your behalf, should you be unable to do so due to illness or injury.

Prepare Your Philanthropy

fingers holding a tiny red heart putting it into a slot in a piece of paper

Charitable gifts are one of the best ways to leave a legacy. Whether you want to support an organization that aligns with your values or create a named scholarship or fellowship through a university or college, giving back can be extremely rewarding. However, a key factor in long-term philanthropic success is having a sound plan in place, to begin with.

This facilitates knowing where your money will go after you are gone and how it will be distributed. Therefore, it is important to discuss this with your financial planner before committing to any decisions. Using your financial team as a sounding board can help ensure forming a philanthropy plan that is optimal for both you and your loved ones.

Financial planning can be invaluable for high-net-worth individuals. In the simplest possible terms, it can help you stay more affluent. It is an ongoing process; it involves far more than just how much money you currently have. It also encompasses how you manage your wealth day-to-day, your retirement planning, and what kind of legacy you will leave behind. 

In order to create a plan that works best for your situation, make sure to consult with an expert capable of providing the most effective strategies possible. McGervey Wealth Management has built our reputation on doing this through our full-cycle investment approach and other proven insights. Contact us today.

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More About the Author: Matthew McGervey, CFP®, MBA

As a CERTIFIED FINANCIAL PLANNER™ professional, Matthew has a broad knowledge of personal financial planning strategies and solutions.