NEPC’s Karen Harding was quoted in a recent U.S. News & World Report article to provide insight into how advisors work with ultra-high-net-worth clients to preserve generational wealth. View the article on U.S. News’ site here.
Managing a billionaire’s finances may entail intricate financial instruments, such as trusts, foundations, and investments in various industries and asset classes. In addition, tax optimizationand estate planning become paramount to preserving wealth across generations.
While allocating into a balanced portfolio of cost-effectiveexchange-traded fundsis frequently a winning strategy for mass affluent clients, that’s usually not enough for a billionaire’s assets.
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“A trusted advisor will work alongside clients to help create and execute a customized portfolio based on their client’s needs and objectives,” says Karen Harding, a partner in the private wealth practice at Boston-based NEPC.
The factors a billionaire’s advisor considers include goals and objectives, risk tolerance, tax status, cash flow needs and entity structure in order to build an appropriate portfolio, Harding says. Here are some of the criteria billionaires use when selecting financial advisors to handle their wealth:
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“With over three decades of experience working with ultra-high-net-worth clients, we often see a focus on maintaining multi-generational wealth,” Harding says.
“One consideration to keep in mind is that clients often still own the operating business which created their family’s wealth,” Harding adds. “If this is the case, the investment portfolio needs to take the operating business into consideration when decisions are being made for the investment portfolio.”
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Harding says billionaires seek advisors with whom they have a strong alignment and no conflicts of interest.
“They tend to work with advisors who have the deep resources required to successfully execute their desired plan, who have thetechnical skillsrequired to create and implement a sophisticated portfolio,” she says.
Click here to continue reading the full U.S. News & World Report article.
FAQs
The factors a billionaire's advisor considers include goals and objectives, risk tolerance, tax status, cash flow needs and entity structure in order to build an appropriate portfolio, Harding says.
What financial advisors do rich people use? ›
Wealth advisors are a type of financial advisor who typically work with very wealthy clients and offer holistic financial planning, including services such as estate planning, tax help and legal guidance, in addition to investment management.
What percentage of millionaires use financial advisors? ›
The study reveals that 70% of millionaires work with a financial advisor, compared to just 37% of the general population. Moreover, over half (53%) of wealthy individuals consider their financial advisors their most trusted source of financial advice.
Do high net worth individuals use financial advisors? ›
HNWIs Need Dedicated Financial Advisors
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.
Who do billionaires use to manage their money? ›
Keep in mind, though, that billionaires don't typically manage their own money and instead choose to work with a financial advisor to help with their asset allocation. Cash and cash equivalents are common places where billionaires keep of some their money.
What is considered high net worth? ›
Typically, a high-net-worth individual has assets of between $1 million and $5 million. Those with multi-million dollar fortunes, generally assets of at least $30 million, are sometimes identified as ultra-HNWI (UHNWI). The term “net worth” factors in liquid or investable assets.
Who are the top 5 wealth advisors? ›
The top 5 are: 545 Group, Jones Zafari Group, The Polk Wealth Management Group, Hollenbaugh Rukeyser Safro Williams, The Erdmann Group.
Are financial advisors worth the 1% fee? ›
But, if you're already working with an advisor, the simplest way to determine whether a 1% fee is reasonable may be to look at what they've helped you accomplish. For example, if they've consistently helped you to earn a 12% return in your portfolio for five years running, then 1% may be a bargain.
At what net worth should I get a financial advisor? ›
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 $500,000, $1 million or even more.
Can a financial advisor make you a millionaire? ›
A financial advisor can make you rich, but you need to work with him for a very long time if you're not rich already. Anybody who has a reasonable sum of money and is young enough can invest in a way that can turn them into a millionaire over many, many years.
Investors with $1 million to $5 million*
You're a Flagship client at Vanguard, which means you get personalized services reserved for our high-net-worth investors. Helping you look at your wealth holistically is important to us.
What is considered high-net-worth for wealth managers? ›
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.
What is a high-net-worth individual in Forbes? ›
Commissions do not affect our editors' opinions or evaluations. Investment options for high net worth individuals range from the mundane to the glamorous. You need a net worth of $1 million to be considered a high net worth individual—commonly referred to as an HNWI.
Who advises billionaires? ›
Because a billionaire's situation is more complex than the average investor's, a wealth advisor serves as the billionaire's advocate and vets the most appropriate vendors for each situation, he adds.
Can a financial advisor help build wealth? ›
While skilled investors can build wealth on their own, even the savviest benefit immensely from partnering with financial advisors. They can provide the guidance needed to help manage your money and set you on the path to millionaire status.
At what level of wealth do you need a financial advisor? ›
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 $500,000, $1 million or even more.
