Key Wealth Management Strategies for High-Net-Worth Individuals
Posted on January 22, 2025
Managing wealth effectively is not just about keeping track of your budget. It involves creating a plan that aligns with your goals, values, and legacy. High-net-worth individuals (HNWIs) face unique opportunities and challenges that demand a closer look. Unpack the essentials of wealth management and explore the best strategies to protect and grow your wealth.
What Does It Mean to Be High Net Worth?
If your liquid assets exceed $2 million, you’re officially in the high-net-worth club. Liquid assets include cash and investments that can quickly be converted into cash, such as stocks and bonds. Illiquid holdings like real estate and art collections are not included in this total.
The higher the net worth, the more tailored financial services are needed.
The Goals of Wealth Management
Wealth management is about achieving broader life goals through smart financial planning. The stakes are higher for high-net-worth individuals, and so are the opportunities. Wealth planning aims to:
- Preserve wealth: The more you have, the more you stand to lose if markets shift or tax policies change. A robust plan ensures your wealth is shielded from volatility and inflation.
- Grow your assets: Growing wealth requires a clear investment strategy. Advisors can identify growth opportunities that align with your risk tolerance.
- Plan for the future: You want your wealth to last, not just until the end of your lifetime, but for generations to come.
- Optimize taxes: Smart planning can turn taxes into an advantage rather than a liability.
Wealth Management Strategies for High-Net-Worth Individuals
Achieving the above goals takes more than a few lucky investments—it requires a comprehensive strategy and enough time for your assets to grow. Here are some of the wealth management strategies we often recommend at the Trust Company.
Diversification
They say you shouldn’t put all your eggs in one basket, and nowhere does this apply more than with your investment portfolio. Diversification spreads your investments across different asset classes so that when one sector dips, others might rise, cushioning your losses. Some unique markets in which HNWIs may want to invest include:
- International markets
- Fixed Income (Bonds)
- U.S. Small Cap
Tax Planning
Taxes can erode your earnings if left unchecked. Strategic tax planning includes:
- Tax-efficient investments like municipal bonds
- Tax loss Harvesting
- Charitable donations to reduce taxable income while supporting causes you value
- Trusts to transfer wealth with lower estate tax burdens
Estate Planning
Estate planning is vital for anyone with significant assets. The goal is to ensure your wealth is distributed according to your wishes while minimizing taxes and avoiding probate. Some popular estate planning tools include:
- Revocable trusts to retain control of assets while simplifying the inheritance process
- Irrevocable trusts to protect assets from creditors and reduce estate taxes
- Powers of attorney to ensure your financial affairs are managed if you become incapacitated
Insurance
Even with significant wealth, risks like lawsuits, health emergencies, or natural disasters can threaten economic security. This is where insurance comes in, providing a safety net without disrupting your broader financial strategy. Types of insurance worth considering include:
- Life insurance to increase your financial legacy, cover estate taxes, and provide peace of mind for your family
- Long-term care insurance to cover medical expenses that aren’t included in standard health policies
- Umbrella insurance for additional liability coverage beyond what standard policies offer
Consult with your insurance advisor for the best policies for your circumstances.
Philanthropy
Philanthropy is your chance to give back while reducing tax liability, making it a win-win for the community and your finances. Options for high-net-worth philanthropy include:
- Donor-advised funds (DAFs), which let you donate now and decide later where the money goes
- Private foundations for more control over how your contributions are used
- Charitable remainder trusts, where you receive income while donating assets
Final Thoughts
High-net-worth wealth management is no small feat. While you may have a strong grasp of finances, you could benefit from working with an advisor if your financial life is complex and you value the expertise of someone whose profession is to manage and build wealth for their clients.
The Sanibel-Captiva Trust Company, and its divisions The Tampa Bay Trust Company & Naples Trust Company are ready to serve you with individualized wealth management strategies. We provide thoughtful estate planning and trust services, outstanding personal attention, and consistent communication to help you achieve your goals. Let us help you preserve and grow your wealth while building a brighter future for the next generation. Contact us today to request our services in Southwest Florida & Tampa Bay.
My Account