People turn to financial advisors for help on how to invest their money, but for high-net-worth clients, wealth management is more than investing money. Those advisors who specialize in working with these types of clients must know how to handle issues that traditional brokers and financial advisors usually aren’t equipped to address.
Motley Fool’s recent article, “High-Net-Worth Wealth Management: 5 Tough Issues Most Advisors Can't Handle,” provides us with a look at issues that frequently arise for high-net-worth individuals and that an expert in wealth management must be comfortable addressing.
Insurance. Once a person has enough money, the greatest challenge is managing the risks that threaten to take it away. Traditional insurance products can only help high-net-worth individuals to a certain extent. That’s because the high policy limits required for true protection, often require customized underwriting from insurance companies. In addition, special kinds of insurance are necessary to provide full protection against the wide variety of risks that high-net-worth individuals can face.
Asset Protection. High-net-worth clients, like all of us, want to protect their assets from potential creditors and other claims. However, for high-net-worth wealth management, there’s no need to make risky investments. Therefore, threats such as litigation, theft, and damage are even more significant. This is particularly true for those in risky professions, like medical professionals. Creating creditor-protection trusts and understanding the protection bankruptcy and debtor-rights laws grant to high-net-worth individuals can ensure that they retain their wealth.
Estate Planning. With the estate tax exemption at about $5.5 million, the threat of estate taxation isn’t an issue for many wealthy individuals. However, high-net-worth individuals still face the potential for estate tax rates of up to 40% on the federal level, plus some state estate and inheritance taxes. That’s where access to a qualified estate planning attorney comes into play.
Family Interpersonal Relationships. High-net-worth can create opportunities for discord and misbehavior that can threaten family relationships. Consulting with trained professionals allows wealth management advisors to play a deeper role in working with high-net-worth families. It enables them to become a type o family counselor to help create a unified vision of the strategic goals and what's necessary from each member of the family to make that vision a reality in the future.
High-net-worth individuals need an advisor who can give more than simple investment advice. He or she must be able to address these challenging issues.
Reference: Motley Fool (September 8, 2017) “High-Net-Worth Wealth Management: 5 Tough Issues Most Advisors Can't Handle”