For high-net-worth-individuals (HNWIs), wealth management is a key consideration, and requires a strategic approach to ensure they get the very best out of their money and that all potential eventualities are accounted for.
With each new year comes new challenges and opportunities, with the financial landscape one that rarely stands still for long. 2024 is no different, and if you’ve promised yourself that this will be the year you finally get all of your ducks in a row then you might be wondering where exactly to start.
Here, we take a look at all of the need-to-knows, and some simple financial solutions and planning tips that all high-net-worth individuals can leverage to optimise their fortunes.
Holistic wealth management
Whilst it’s easy to get hung up on just one element of financial planning, such as investments, in reality, there’s a much bigger picture that needs to be looked at, which is why a holistic approach to financial planning is key. Tax planning, risk management and estate planning should all be part of your strategy, and if you’re a philanthropist, then this, too, should come into it. By taking a broad view of all pieces of the puzzle, you’ll be able to ensure that all elements are working together synergistically in alignment with both your short-term and long-term goals.
Tax efficiency
Tax regulations are constantly evolving, which means keeping abreast of them to ensure you’re continuing to fulfil the necessary rules is essential. For high-net-worth individuals, the picture can be considerably more complex than it otherwise would be, but the good news is that by exploring tax-efficient strategies and implementing them going forward, you can optimise your money.
Doing so might include looking at tax-efficient investment opportunities, taking advantage of deductions and tax credits, and managing your income carefully to keep your tax liabilities to a minimum. There is no one-size fits all approach with this bit, as everyone’s set-up looks different – so it’s wise to enlist the help of tax professionals to improve tax outcomes whilst ensuring compliance.
Diversification and risk management
Diversification is crucial for investors of all kinds, and a fundamental facet of effective wealth management. Some asset classes can be subject to a huge amount of market volatility – take cryptocurrency, for example – and so HNWIs should avoid putting all of their eggs in one basket and instead take advantage of a variety of different investment opportunities to hedge risk and safeguard their money.
A comprehensive risk management strategy may include diversifying across a range of different industries, geographic regions and asset classes, and managing risk further by taking out a robust insurance policy is also a clever move that can provide additional peace of mind.
Legacy and estate planning
A good financial planning strategy isn’t just about making your money work harder for you, but also safe-guarding the financial future of your loved ones. Estate planning is an integral part of this strategy. HNWIs should regularly review their estate plans and will to ensure that if the worst were to occur, your spouse, children and any future generations will be taken care of, and if and when family dynamics change, your plans should be updated accordingly.
As tax laws change and your financial goals evolve, you might find yourself needing to revisit this several times over, but doing so will give you confidence that your money will go to the right people and places when you’re no longer around. If you have children or grandchildren, it’s worth considering setting up trusts for them or looking into tax-efficient gifting strategies to create a lasting legacy that can be passed on to those who mean the most to you without them having to deal with any stressful admin themselves.
Making a positive impact through philanthropy
If you’re passionate about using your fortune to give something back and to leave a positive impact on the world, then there are myriad ways in which this can be achieved – but it should always be integrated into your financial planning strategy rather than done on a whim. One way to go about it is to establish your own charitable foundation or donor-advised fund, which is a more tax-efficient way to give whilst maintaining a structured approach – but ultimately, it depends on what your personal goals are in this area. Again, each case is unique, so if you’re in need of some guidance then be sure to consult a wealth management specialist who can help you to get an effective plan into place.
Disclaimer: Investing money carries risk, do so at your own risk and we advise people to never invest more money than they can afford to lose and to seek professional advice before doing so.
