Financial Advisors For High-Net-Worth Individuals – Forbes Advisor - Savings Mastery: Your Guide to Building a Strong Savings Account (2024)

Managing substantial amounts of wealth can pose challenges that individual investors who are not financial professionals might find difficult to imagine. High-net-worth individuals (HNWI) enjoy many advantages, one of which is the ability to make bets on a wide spectrum of investment opportunities.

But that advantage is a double-edged sword. Every opportunity that it offers also entails risk. Financial advisors, many of whom have mastered special financial skills, can help guide wealthy families through this intricate maze.

Finding the right advisor can help HNWIs manage their assets in a way that can not only help them achieve their financial goals but do so in a way that’s consistent with their values and priorities.

HNWIs Need Dedicated Financial Advisors

Wealthy investors usually have intricate financial profiles with multiple income sources and varied investments. Many also pursue significant philanthropic endeavors. Their tax planning can be intricate. A financial advisor can craft a tailored strategy to meet the needs of high-net-worth clients and guide them through complex financial landscapes.

Why Consider a Specialist Advisor?

If you are a HNWI, before looking for an advisor, it’s important to first ask yourself a few key questions: .

• Are you on the brink of a monumental business deal?
• Are you planning major personal milestones like marriage or expanding your family?
• Are you an experienced investor looking to build an even more robust financial footprint?

Your answers to questions like those can be road signs, pointing you to the type of advisor who is attuned to your unique requirements.

The Evolution of Your Financial Needs

As your wealth grows, it’s very likely that the complexity of managing it increases too. Earlier in life you might have had less complex investment needs, but affluence introduces considerations like estate and legacy planning, tax consequences and philanthropic pursuits. Identifying these needs will lay the foundation of your search for an advisor.

The Ideal High-Net-Worth Advisor: A Cross Section

An advisor’s value isn’t confined to their investment acumen. Eventually many HNWIs come to realize that, while capable advisors excel at addressing basic financial planning needs, excellent practitioners also have a knack for macro thinking. That is, they understand how your simple, narrow financial threads get woven into a complex big picture. They can also handle those big, interwoven strategic issues as deftly as they deal with the smaller but no less important nuts-and-bolts tasks.

Wealth is multifaceted, and so is protecting that wealth from taxes. Investing can be like juggling, keeping many different balls in motion all at once. The same can be said of estate planning, of charting insurance strategies and of executing your charitable priorities. Your advisor should be proficient at each of those undertakings—or your advisor should be a ringmaster, adroit at coordinating services by specialist sub-advisors who can address your needs in narrow, individual categories.

The Importance of Collaboration

Indeed, HNW advice isn’t a solo act. It’s a team effort. Top wealth-management firms prioritize hiring advisors who are part of a collaborative network, not lone geniuses.

The ideal advisor can effortlessly sync with attorneys, bankers, accountants, estate planning professionals and philanthropic consultants.

Finding Your Financial Quarterback

Directing where a client’s wealth is headed in a way that fosters robust growth, anticipatory risk management and ample income requires a team of experts.

Your primary advisor should be a combination coach and “quarterback” for your financial team. You are the team owner. But your advisor must shrewdly hatch strategies and game plans. Your advisor must also execute on plays like the star player you envisioned at hiring. It’s up to your advisor/coach/quarterback to see that your team functions as a harmonious whole.

Naturally, this lead advisor should have a deep understanding of both macro and micro financial trends. They should also be someone who knows how to unite a team around a goal.

The Fiduciary Factor

The term fiduciary isn’t just jargon. When an advisor is a fiduciary, they have a legal responsibility to place the client’s interests above all others, especially their own.

That commitment is embodied by the fee-only advisory model, which ensures that the advisor doesn’t steer a client into financial products that are not in the client’s best interests, for the sake of a commission. The fiduciary standard requires—and encourages—transparency.

Figuring Out Fee Structures

A commonplace way that many advisors implement fee-only service for HNW individuals is by way of what’s often called the AUM model. AUM refers to assets under management. The advisor levies a fee on the client assets that they oversee.

Ideally, that means that as your assets grow—presumably through successful investments—the advisor’s fee grows in dollar terms. It’s a win-win for client and advisor. Meanwhile, the advisor is not steering you into products which may or may not serve your best interests, just for the sake of the commission.

Qualifications and Collaborations

Advisors shouldn’t be mere collectors of professional certifications. Ideally, advisors develop versatility. Accordingly, you should look for certified financial planners with expertise in tasks that you need, including tax management and estate planning. You should also look for an advisor who collaborates with other professionals. Those traits are the hallmarks of a top-tier advisor.

How To Find a HNWI Financial Advisor

• Start on familiar terrain. Your financial institution isn’t just for holding accounts and conducting transactions. Most large banks make it their business to cultivate an extensive network of professionals in pertinent fields. Those can serve as springboards for your advisor search. Large financial firms are also likely to have their own private banking division.
• Leverage existing networks. If you have affiliations with CPAs, attorneys or other financial experts, mine these connections for referrals. Professionals familiar with your financial tapestry can pinpoint advisors whose skills match your needs.
• Use word-of-mouth. In wealth management, reputation is everything. Chat with friends or peers who have similar financial situations as yours. They might recommend their own trusted advisors.
• Tap into organized databases. Associations like the Financial Planning Association (FPA), the Certified Financial Planner Board of Standards, the National Association of Personal Financial Advisors (MAPFA) and the National Association of Estate Planners and Councils (NAEPC) curate lists of vetted professionals. While filtering, zoom in on designations like CFP, ChFC, or MSFS, as these credentials tend to serve as markers of expertise. In addition, look for any disciplinary actions against an advisor you’re considering.
• Use search engines. A well-phrased search can yield gold. Keywords and phrases like “HNW financial advisor,” “UHNW wealth manager” and “multi-family office” can speed your search and lead to the best advisors.
• Do your due diligence. When choosing an advisor, whether through personal recommendations or online claims, remember the principle: “Trust but verify.” You should always verify information—if only for your peace of mind. After shortlisting candidates, arm yourself with a rigorous set of questions. When you interview an advisor, ask them about their experience, approach and list of clients. Ask if they have other clients whose circ*mstances are similar to yours. If you do your homework, you can feel secure in knowing that you have entrusted your financial future to a qualified professional.
• Determine how the advisor earns their income. Ask each prospective advisor about their charges. Is their practice fee-only? Would they charge commissions for anything? If the arrangement would be basically fee-only, would the advisor also charge time-based fees—that is, hourly, daily, weekly and so on—for any tasks or services? Would the advisor also charge a one-time fee for any fees or services such as a written financial plan?

Responsibly stewarding significant assets is both an art and a science. While your wealth itself may be a testament to your hard work, diligence or legacy, managing it requires professional expertise. Choosing an advisor specialized in high-net-worth clients can help safeguard your wealth for future generations and align with your aspirations and values.