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  • Writer's pictureBespoke Financial Advice

Why High-Net-Worth Individuals will benefit from wealth management

How quickly can you identify each of your assets? Do you understand how their success relates to your short-, medium-, and long-term goals? In every investment decision, do you consider tax efficiency? Is your investment portfolio prepared to withstand market volatility and manage risk? If you are a high-net-worth individual, these questions may be tough to answer, which is why you should work with a wealth management team. 


A high-net-worth individual (HNWI) is typically defined as a person or household with liquid assets greater than €1 million. Their wealth provides some independence, but they also present a unique set of challenges. Failure to overcome these challenges is a widespread problem, and it leads to disaster more often than you may expect. 


To identify and overcome these issues, HNWIs usually work with a financial consultant, specifically a wealth advisor, to assist them. However, choosing a financial consultant who is capable of handling large amounts of wealth necessitates a specialised approach and careful study. Before you begin your search, we recommend that you identify your needs, establish your goals, and determine which services your wealth management business should provide. Although the objectives and aspirations of HNWIs differ depending on their lifestyle and situation, the services necessary for successful wealth management are consistent. 


Key Aspects of High-Net-worth Wealth Management 


Just as effectively owning a grocery shop differs from maintaining a produce stand at a farmer's market, managing the finances of an HNWI necessitates a more developed skill set than that of an average-net-worth individual. While the two have similar guiding principles, their ultimate goals and techniques for success can be very different. To satisfy their specific demands, an HNWI should seek out a wealth manager who provides the following services: 


  • Tax Planning 

  • Alternative Investments 

  • Charitable Giving Strategy 

  • Estate Planning 

  • Tax Planning 


One of the most difficult issues that high-net-worth individuals have been increasing their fortune while minimising tax liabilities. High-income individuals have a higher tax bracket, and taxable events like retirement income can complicate your taxes even more. A good tax planning strategy can help you manage this complexity and reduce your tax liability. Maximising deductions, tax loss harvesting, and deferring capital gains are three tax-efficient methods (among many others) for high-net-worth accounts. 


  • Maximising Deductions: One of the most prevalent ways to reduce taxable income is to maximise deductions. High-net-worth individuals may benefit from charitable donations, mortgage interest deductions, and retirement plan contributions. 

  • Tax-loss harvesting: In a volatile market, tax-loss harvesting can help lower investment tax obligations by offsetting gains and losses. This method involves carefully selling investments at a loss to balance gains in other areas of your portfolio, lowering your overall tax burden. 

  • Deferring Capital Gains: High-net-worth individuals may be able to defer capital gains by using investment vehicles such as recognised opportunity zones and like-kind exchanges. These tactics allow for the deferral of tax on realised gains, which could result in substantial tax savings over time. 

Alternative Investments 


High-net-worth individuals have access to a broader range of investing options than just stocks, bonds, and cash. These opportunities are typically not available to the public, nor are they appropriate for the average person's requirements. They often provide less liquidity than ordinary securities, have a high entry hurdle, and may be more volatile. Individuals and families with a high net worth are more risk-tolerant and can withstand market downturns. This combination of characteristics qualifies HNWIs as great candidates for taking advantage of these potentially profitable possibilities. 


According to a recent survey, high-net-worth individuals with at least €5 million in investable assets devote roughly 10% of their assets to alternative investments. Aside from the possibility for higher returns, alternative assets like private equity, real estate, and hedge funds provide essential diversification. These investment categories also help to protect against inflation and might be part of your wealth management strategy. 


Charitable Giving 


Charitable giving is an important part of high-net-worth financial management. Charitable gifts not only allow you to give back and support organisations that are important to you, but they can also bring considerable tax benefits.


Estate Planning 


Estate planning is one of those things that is easy to postpone. Nobody likes to think about the eventual end that we all face, yet failing to plan for future generations can have a significant influence on your legacy. Less than half of people have end-of-life plans outlining their estate management desires. The remaining majority faces the possibility of dying intestate, which is a legal term for someone who dies without a will. The courts oversee the estates' financial fate. 


Many HNWIs have wills in place, but creating an estate plan is a multi-step process. An out-of-date will might cause just as much grief, particularly if your family situation has changed. Births, deaths, weddings, and divorces can all disrupt your estate planning. The complexity of high-net-worth estates necessitates a more cautious approach. Make sure to review these records every few years. 


However, estate planning encompasses more than just writing and maintaining a will. Unwanted taxable events, such as changes in ownership of life insurance policies and misaligned beneficiaries, might impede the fulfilment of your final desires. A high-net-worth estate planner will help you navigate the complex tax landscape and ensure that your beneficiaries are up to speed on your retirement savings. 


Advantages of High-Net-Worth Wealth Management 


As an individual's net worth increases, so does the demand for specialised wealth management. Failing to optimise your plan may result in costly mistakes, misdirected finances, and missed chances. Working with a skilled wealth advisor allows you to create a complete plan to reduce your tax liability, take advantage of alternative assets, incorporate charitable giving into your strategy, and guarantee that your legacy continues. 


A family-office-style organisation offers access to high-net-worth financial advisors, estate planning attorneys, certified public accountants, tax specialists, and other financial professionals for HNWIs who the time, knowledge, or inclination do not have to manage their fortune. This holistic approach consolidates a complete wealth management arsenal under one roof, reducing the burden of service coordination and harmonising the overall strategy. 


At Bespoke Financial Advice, our fiduciary wealth advisers prioritise our clients' requirements. We recognise the specific problems that come with managing considerable wealth, and we possess the knowledge and experience required to navigate this complicated landscape. Our mission is to give you peace of mind while guiding, protecting, and growing your wealth.


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