Menu

Find High Net Worth Financial Planning in Akron-Canton, Ohio

There is no such thing as a one-size-fits-all approach to your financial life. This is especially true if you are financially independent. For example, a high net worth (HNW) Akron-Canton resident may need more complex financial planning due to their greater assets and potentially longer life expectancy.

The term “high net worth” refers to people with personal assets in excess of $1 million (excluding their primary residence). As a result, another difference between HNW individuals and other clients can be the complexity of your goals. 

This guide explores some common benefits of wealth management for high-net-worth individuals, as well as the unique challenges you may face when setting up a financial plan.

This article answers the following questions:

Chapter 1

The Importance of Financial Planning

black drawing of a line with arrows pointing to a destinationWe should begin with the basics: a financial plan is a roadmap to achieving your lifestyle goals. 
Similarly, financial planning is a process; not a product. In other words, it isn’t something you buy once and then throw into a drawer until you need it again. The idea is to create your roadmap, tailoring it to adapt as your life changes over time (and adjust it along the way, as necessary).

The first step in creating this roadmap is answering two simple questions: “What do I want?” and “How much money do I need to get (and stay) there?”

Both of these are important because—believe it or not—even the affluent can experience financial hardships at times. The truth is that people who’ve spent most of their lives in financial independence are as vulnerable as anyone else to things like the effects of rising interest rates, high inflation, a volatile market, and/or a portfolio that isn’t balanced periodically. 

Similarly, the wealthiest people on the planet are not there by accident. Many of them consciously maintain substantial savings/earnings by working with a wealth manager to prevent negative impacts ahead of time. This is what financial planning is all about: taking a long-term view of your finances, including how they will change over time as you make investments, purchase assets and incur new debts. 

Our Methods’ Advantages

At McGervey Wealth Management, we have created an asset-based approach to wealth management to help you achieve your goals by building on your current assets. We believe this is better than relying solely on your income or other change-prone sources for funding. 

Using it also allows us to take advantage of opportunities during tax seasons, when there may be potential tax benefits available from selling stocks at a loss or buying appreciated stock from an employer at a discount (e.g. an employer’s stock options).
We start by looking at where you are today. Next, we examine your current assets, investment portfolio, income, and expenses. It is never too early to start looking for optimal tax and estate planning strategies, as well.
We then look at their financial future: what will happen to them when they retire? How can they best prepare for the future? These are all questions that need to be answered in order to develop an effective plan for your client’s future needs.

Financial planning for HNW individuals is about more than just wealth management services (the administration of your assets and liabilities). There are many other aspects to an optimal comprehensive financial plan. For instance, it should include adapting-and-developing strategies to—not only protect your wealth but to—increase its value over time through prudent investments.

Discerning both where you are and where you want to go is the first step in developing a personalized roadmap for your unique situation. We normally ask questions about your current financial situation and long-term goals as well. This helps us make certain that your plan will meet your needs over time.

Chapter 2

HNW Saving & Investing Are Different

man on a ladder painting in the circles of 3 different sized circle drawings

You eat, breathe, and sleep like anyone else. Nevertheless, as someone of high net worth, your financial needs are not the same as everyone else’s. They are inherently more complex. For example:

  • You may have multiple sources of income and wealth.
  • You may hold complex investments.
  • You probably have complex tax planning needs.
  • You also may have complex cash flow planning needs.

None of these is a simple endeavor. The scale, alone, in some cases, can make them seem like monumental undertakings. Hiring an expert financial advisor with extensive management experience is more than intelligent. It can help preserve the sanity of those who are already overworked (with, for instance, the daily demands of running the family business). 

Play the Long Game

Again, these are not set-it-and-forget-it tasks. A wealth manager can take much of the heavy lifting from your shoulders, but consistent success depends on your (at least periodic) attentiveness. This is why you want to work long-term with a specific, trustworthy advisor.

We cannot overemphasize the importance of this. The longer your working relationship with a wealth manager goes on, the more opportunities there will be to benefit from a big-picture approach to your financial planning. For example, if your advisor has been working with you for years and knows all of your needs, then he or she can make sure that they’re looking at 100% of the potential ramifications before making recommendations or adjustments.

This, in turn, means that you get far more effective insight; potentially more accurate advising than you might working short-term with a financial planner is likely to generate. Just as a physician comes to know your physiological characteristics and needs through continuous interaction with you, the benefit of a financial advisor increases through recurring visits.

This is because it allows us to develop a more and more accurate picture of your overall financial health. Additionally, as we said earlier in this article, your ideal wealth management strategy is almost certain to change over time (even if the differences are subtle at first). Maintaining ties long-term helps ensure that an advisor who knows you will be available when those changes occur.

Chapter 3

Comprehensive Tax Strategies For High Net Worth Individuals

tax spelled on scrabble pieces sitting on top of Ohio Tax formsHaving a high net worth makes an eventual need for more comprehensive tax planning extremely likely. For example, you may need to plan for estate taxes. The federal estate tax exemption has been increased under the Tax Cuts and Jobs Act. 

As a result, if you’re married or in a joint filing situation, your spouse may be able to offset any unused portion of their own exemption against any unused part of yours. That might leave your family with an estate worth as much as $11.2 million—without paying any federal estate taxes at all (and this example doesn’t even factor in relevant state taxes).

You also may need to plan for gift taxes and inheritance taxes that are not linked directly to death but occur when property changes hands during the benefactor’s life (including lifetime gifts made between spouses). Planning ahead now makes it possible to ensure that these transfers go smoothly without unnecessary penalties down the road.

This planning differs from strategies used by clients lacking a high net worth. For instance, someone with very little wealth might want most of it tied up in real estate investments or more liquid investments (like stocks and bonds). 

Uncertain Whether You Need Financial Planning or Retirement Planning? We Have Answers Here

Chapter 4

Detailed Cash Flow Planning

You are nearly as likely to need detailed cash flow planning as you are to need advanced tax planning. This is because it’s vital to make sure you have enough money on hand to cover the expenses that come with a high net-worth lifestyle. Large, unforeseen costs do not wait for us to anticipate them. 

Taller expenditures like buying a home or paying for college should always be tracked. The same can be said for larger streams of income, like an inheritance. You never want to find yourself awaiting an audit from the IRS and discover that you’ve forgotten to account for a large charitable donation or the prior year’s estate taxes. 

The IRS loves auditing HNW individuals, in particular. So, you cannot afford to be lax in your documentation. Depending on your situation, you could find yourself responsible for making large tax payments every year (which gets expensive), as a result.

Chapter 5

Extended Estate Planning

wooden play house with open windows and sunlight coming through on grassEven for those of everyday means, estate planning is all about ensuring that your assets go where you want them to after your passing. This can be as simple as having a will and naming someone to act as an executor of your estate (the person who distributes the assets). 

However, for people of high net worth, it may be considerably more complex: estate planning can involve creating a living trust, naming a power of attorney, naming guardians (or a conservator) for children, and more. Your will names the person who gets everything you own, should something happen to you. 

A living trust, meanwhile, allows the assets it lists to pass directly from the trust’s creator (sometimes called the “grantor”) to another person or entity. This can spare grieving loved ones from having to go through probate court after your death.

A power of attorney is something entirely different: it gives someone else permission to make decisions on your behalf, should you become incapacitated. In other words, your selected representative becomes authorized to sign checks (and perform other financial tasks), make healthcare decisions, or communicate with creditors on your behalf.

Chapter 6

Tax Management

Ohio tax forms with a calculator and a pen laying on topJust as we mentioned above, for high net worth individuals, there is an extra layer of complexity with regard to taxes. You may be subject to additional taxes on top of US federal income tax and state or local taxes, depending on where you live or work. 

Put another way, the focus of tax management for the affluent is generally minimizing taxes, but the considerations are more involved. Likewise, the solutions are often less clear-cut. For instance, if you have a portfolio of $25 million or more, it’s not enough to simply allocate assets based on your expected returns and risk profiles. 

We would need to take into account the impact of taxes on each of your asset classes. One example could be municipal bonds, which have historically been one of the most tax-efficient investments around. They are typically issued by state and local governments, and their interest income is generally exempt from federal income taxes (and thus eligible for favorable capital gains treatment). 

Also, if you have taxable income above $250,000 or $300,000 (dependent on your filing status; married filing jointly or married filing separately), you may be subject to higher marginal rates than in previous years.

Chapter 7

Retirement Planning

HNW couple in Ohio enjoying a day at the golf courseThis is one of the most important aspects of financial planning for high-net-worth individuals. Retirement planning is not just about your savings: it is also about what you will do once you retire and how you will live from there. The first step in creating a plan for your golden years is to figure out when and how you want to leave the workforce. 

Do you want to stop working at 65, age 70, or perhaps age 75? Do you have plans to start a business or go back to school? It might be helpful to create a timeline or flowchart that outlines all the steps needed to get from where you are now to your desired retirement age.

Chapter 8

Advanced Investing

All investors need an understanding of their risk tolerance and goals. You should also know the time horizon for your investment (or how long you want to keep your money in as equity), as well as what type of investment you want to make. It’s always wise to keep an eye on investment fees, as well.

These can vary greatly, depending on the type of fund or product in question. Therefore, it is important to understand exactly what you are paying for when your money goes into them. Some, for example, may have higher returns than others but come with higher fees.

Just as importantly, you want to understand how your investments are being managed. A trustworthy wealth manager (particularly a fiduciary financial advisor) will make a point of keeping things as transparent as possible. He or she will also help you understand how your investments perform over time in comparison with other similar products or funds in your portfolio.

Chapter 9

Strategized Insurance

ohio financial advisor cupping his hands on top of a small wooden play house

Insurance, as a financial tool, can be used to protect yourself against many different risks. That’s why insurance companies provide policies covering loss of life, property, and health risks. When you buy it, you’re paying a premium (the cost of the coverage), so you can expect a claim check if something happens that results in an insured loss.

People sometimes talk of using insurance as a substitute for planning, but this is a mistake: it’s not designed or intended to function as a replacement for wealth management. While a life insurance policy can help pay off debt or cover sudden unexpected funeral costs, it cannot prevent you from having those kinds of expenses altogether.

Chapter 10

Asset Protection

The best way to think of asset protection may be to consider it as a legal strategy for protecting your property from lawsuits, judgments, and creditors. For instance, imagine that a neighbor has a heart attack and dies on your sidewalk—after screaming at you for an hour about how much he hates your dog barking in the middle of the night.

Especially if they know you have deep pockets, his family could decide to sue you for negligence (among other things). Similarly, what if a driver ran into one of your rental properties with his car while texting and driving… and suddenly they want $10,000 in damages from you?

In either case, the likely result is a lawsuit or litigation in which someone files papers against you (or your company) asking you to pay compensation. From there, a sympathetic court could rule in favor of seizing your property as part of the outcome.

Unfortunately, high-net-worth individuals face greater risks of this nature because there’s more at stake, financially speaking. So, before you are sued or otherwise involved in litigation, it only makes sense to have asset protection measures in place.

Chapter 11

Anti Bankruptcy Measures

gold piggy bank underneath a black umbrellaAgain, even high-net-worth individuals are sometimes at risk of filing for bankruptcy. It doesn’t matter if you own assets, including real estate, cars, and stock in companies with shares that can be held as investments. If you have substantial wealth, you need to understand these risks.

If someday you had to file for bankruptcy protection, your assets could become vulnerable to creditors’ claims. This makes it direly important to protect your assets, and even yourself, from bankruptcy, in the first place. Hopefully, this never happens to you, but a quality financial advisor can help you plan against such a turn of events. 

For example, they might recommend that you formalize agreements with relatives who want an ownership stake in a family business. A holding company might be another option, but this strategy can incur risks of its own.

Chapter 12

Conclusion

As you can see, financial planning for high-net-worth individuals goes beyond traditional wealth management. It’s not simply about investments or about insurance. When it is done well, it involves creating a customized plan that’s personalized to you, reflects your unique needs, and helps you achieve your goals.

At McGervey Wealth Management, we understand the challenges of navigating this sometimes complex financial world (because you might say, we live here). That’s why we specialize in providing the tools, expertise, and experience you need to help you navigate the complex world of high-net-worth financial planning. Contact us today to learn more.

McGervey Portfolio tips eBook