Having a high net worth does come with its own set of challenges, one of which is the effective management of your money. While there are basic principles to help guide your high-net-worth wealth management strategy, there are specific actions you might want to take to try to grow your fortune.A financial advisor can also help you create a financial plan for your future.
High Net Worth Definition
A high-net-worth individual must have liquid financial assets of at least $1 million. Liquid in this case means able to be accessed – relatively quickly – as cash. Owning a home with a value of $1 million, for instance, would not qualify someone as a high-net-worth individual by itself, because that can’t be easily converted to cash and used for investment.
There are two levels above this: a very-high-net-worth individual has at least $5 million in liquid assets, while an ultra-high-net-worth individual has at least $30 million.
At an individual level, becoming a high-net-worth individual doesn’t impact you that much. To a potential financial advisor, though, you will be counted separately for the purpose of SEC filings.
Common Services for High-Net-Worth Individuals
There are some financial planning services that everyone needs, regardless of your financial situation. That said, there are some things that are especially important for those with a high-net-worth. Here are four services to look for in an advisor if you’re a high-net-worth investor:
Estate planning:Estate planning is important for everyone, but it takes on a special resonance for those with a lot of money because they’ll likely end up with a sizable estate that they want dealt with efficiently after they pass. This financial planning servicecan help you take the right steps now so that your money and assets are divided up as you see fit after you’re gone. And in a way, that minimizes the tax burden and the work needed from your family.
Charitable giving:Giving money to charity is great no matter how much you can give. Even donating $10 to a cause you believe in can give you a solid rush of endorphins and help out people who need it. When you have a high net worth, though, charitable giving grows in both scope and importance. You have more money to give, so it becomes important to be intentional and careful how and when you give it. Furthermore, charitable giving can be deducted on your tax return, so making sure you keep diligent records is important.
Tax planning: Everyone has to deal with taxes. But for those with a high net worth to manage, tax planning is also a crucial part of investing. This financial planning servicecan help high-net-worth individuals save money on their tax bill by maximizing deductions, selling investments for the purpose of tax-loss-harvesting and other engaging in other tax-saving strategies for high-income earners.
Succession planning:If you’re a small business owner or have a successful family business, succession planning is an important part of financial planning. This is a contingencyplan that can replace your leadership and maintain the right balance of experience and institutional knowledge for the success of the business and your family.
Bottom Line
A financial advisor can be useful for all people, but it is especially important for those who need high-net-worth wealth management. If you have a high net worth, an advisor can help you with investments, obviously, but also with taxes, estate planning and other concerns especially relevant to those with a lot of money.
High-Net-Worth Wealth Management Tips
- A financial advisor can be helpful for those with a high net worth, and finding one doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you canhave a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- No matter how much money you have, it’s important to make sure you have a strong portfolio. Use SmartAsset’s asset allocation calculator to start planning.
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FAQs
A high-net-worth individual (HNWI) is someone who generally has liquid assets of at least $1 million after accounting for their liabilities. 1 (Liquid assets held by HNWIs include cash and investments that can be easily liquidated or converted to cash, including stocks.)
What is wealth management for high networth individuals? ›
What Is High Net Worth Wealth Management? Wealth management is a comprehensive, high-level financial service that helps affluent individuals with everything from investment advice and retirement planning to debt management and estate planning.
How much money do you need to be a high-net-worth individual? ›
A high-net-worth individual is typically defined as someone who has liquid assets of between $1 million and $5 million, although there's no firm definition of the amount as some institutions may define the range differently.
Is $20 million a high-net-worth? ›
Needless to say, a $20 million net worth is a substantial amount of money. It firmly places you within the top 1% of net worth, with the current minimum threshold around $13 million.
How many people have $5 million net worth? ›
Out of a population of 8.1 billion people, just 62.4 million are millionaires. That's 0.8% of the population. There are 8.4 million people globally with a net worth of $5 million or more. Having this level of wealth would put you in the top 0.1%.
What net worth is considered multi millionaire? ›
Dated ways of describing someone worth n millions are "n-fold millionaire" and "millionaire n times over". Still commonly used is multimillionaire, which refers to individuals with net assets of 2 million or more of a currency.
What is the best wealth management salary? ›
Wealth Manager salaries in India
The estimated total pay for a Wealth Manager is ₹7,50,000 per year, with an average salary of ₹6,00,000 per year. This number represents the median, which is the midpoint of the ranges from our proprietary Total Pay Estimate model and based on salaries collected from our users.
At what net worth should I get a financial advisor? ›
Very generally, having between $50,000 and $500,000 of liquid assets to invest can be a good point to start looking at hiring a financial advisor. Some advisors have minimum asset thresholds. This could be a relatively low figure, like $25,000, but it could also be higher, such as $500,000, $1 million or even more.
What net worth is considered upper class? ›
If you're in the upper class, you're sitting pretty. The top 10% of earners have an average net worth of $2.65 million. Even if you're squeaking into the upper class (the 80-90% range), you're looking at about $793,000. Moving down to the middle class, things get a bit more varied.
Is a net worth of $400,000 good? ›
People tend to underestimate “high net worth,” citing $400,000 as the median average, which is significantly less than the broadly accepted definition of a HNWI: someone with at least $1 million in liquid assets. Getting clarity on your net worth is an important step toward financial wellbeing.
Annual World Wealth Report
The World Wealth Report defines HNWIs as those who hold at least US$1 million in assets excluding primary residence and UHNWIs as those who hold at least US$30 million in assets excluding primary residence.
What percentile is a $3 million net worth? ›
Interestingly, the 90th percentile is pretty flat, around $2.5M to $3M, from one's early 50s to one's 80s.
What is top 1% net worth by age? ›
Top 1% net worth for ages 18-24: $435,076.59. Top 1% net worth for ages 25-29: $606,188.36. Top 1% net worth for ages 30-34: $956,944.74. Top 1% net worth for ages 35-39: $4,034,486.45.
What is the net worth of the top 2%? ›
According to Kiplinger, by 2025, entering the top 2% of America's wealth will require a net worth of approximately $2.7 million, marking the threshold for elite economic status. Last year, the Schwab Modern Wealth Survey revealed Americans believe it takes $2.2 million to feel wealthy.
How much money should you have to get a wealth manager? ›
Any minimums in terms of investable assets, net worth or other metrics will be set by individual wealth managers and their firms. That said, a minimum of $2 million to $5 million in assets is the range where it makes sense to consider the services of a wealth management firm.
Where does the net worth of 3.5 million rank? ›
The 95th percentile, with a net worth of $3.2 million, is considered wealthy, facilitating estate planning and possibly owning multiple homes. The top 1%, or the 99th percentile, has a net worth of $16.7 million and represents the very wealthy, who enjoy considerable financial freedom and luxury.
What net worth is considered super rich? ›
While there's no legal standard when it comes to defining who is an ultra-high-net-worth individual (UHNWI), they're often defined as those who have $30 million or more in assets.
