What Is High-Net-Worth Financial Planning?

What Is High-Net-Worth Financial Planning?

Financial planning is a necessary step along the road to financial independence. However, for many millennials, the phrase “high-net-worth financial planning” may seem alien. When you throw in other terms, such as “asset allocation” and “estate planning,” it’s easy to get lost in the details. 

Here’s the thing, though: If you want a retirement as comfortable as the lifestyle you currently enjoy (or better), you should learn the basics. That’s why this blog breaks down the meaning of high-net-worth financial planning and explores why you should leverage its advantages now rather than later.

This article examines the following:

  • What is high-net-worth financial planning?
  • The process of high-net-worth financial planning
  • Key components of a high-net-worth financial plan
  • Benefits of working with an independent financial planner

What Is High-Net-Worth Financial Planning?

If wealth management is the ultimate goal, then high-net-worth financial planning is the key to success. If you aren’t familiar with the term “high net worth” (HNW), it refers to people having more than one million dollars in liquid assets. If you’re in this category, you’re considered a high-net-worth individual. 

Meanwhile, basic financial planning involves goal-setting, budget planning, investing, tax strategies, and more. For multiple reasons, it is not considered interchangeable with the variety developed for those with a high net worth. Financial planning for the affluent often involves far more moving parts. 

Generally speaking, high-net-worth financial planning tends to be geared more toward helping you:

  • Make well-informed decisions that can impact your financial situation
  • Build your savings over time to, ideally, increase your wealth
  • Manage your tax liability
  • Seek to protect your assets (from things like potential lawsuits)
  • Compensate for inflation and stock market volatility
  • Optimize your charitable gifts (if you’re so inclined)
  • Prepare a legacy for your loved ones after you pass

The Process of High-Net-Worth Financial Planning

Sometimes referred to as “wealth management,” Bay Area comprehensive financial planning is both a noun and a verb: It starts, after a meeting(s) with your financial advisor, with identifying your most-desired monetary goals. From there, you and your advisor create a financial roadmap for you to follow in pursuit of them. 

This isn’t the end, however. It’s just the initial phase. Once you have your financial plan made, the work toward your objectives begins. This is the real nuts-and-bolts of wealth management. We’ll go more in-depth into the core aspects of this phase in a little while. 

Again, the main thing to note, for now, is that financial planning is both an object, your financial roadmap, and an ongoing activity. People who don’t fully understand this sometimes mistakenly show up for the first couple of meetings and develop a financial plan. However, they may not communicate with their advisor or implement it

It may be because they lose enthusiasm and interest. Other times, it’s because they’d instead attempt a D-I-Y approach. In either case, underwhelming results may follow—due to all those additional moving parts I mentioned earlier.

Concerned About Inflation Impact on Your Savings & Assets? We Can Help Fortify Them.

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Key Components of a High Net-Worth Financial Plan

For high-net-worth individuals and families seeking to develop and sustain growth, establishing a roadmap is a must. This plan may incorporate goal setting, risk assessment, diversification, and estate planning. The steps, you might say, are your short-term and long-term goals.

Short-term goals are typically two years or less. For example, you might implement a newer service model at your business. Let’s say allow yourself two years to get the necessary technology fully installed at every location. 

The same goal, once you reach it, can also serve as a celebratory milestone. This is a place for catching your breath and tracking how far you have come from where you began. Acknowledging your smaller victories can build a positive association to help propel you the rest of the way toward your primary objective(s).

Long-term plans, conversely, span out over more extended periods. For instance, you might plan your retirement over a 12- or 15-year span. By carefully strategizing how much money you pay into an IRA or employer-sponsored retirement plan, such as a 401(k), and timing future withdrawals (distributions), you may lower the amount of taxes you pay, overall. 

The longer the period over which you do tax planning, the more you can potentially save year-over-year. Please note that your financial plan isn’t a contract with anyone except yourself. You remain entirely in charge of your wealth. 

Nevertheless, it takes self-discipline to gain ground steadily—and one of the many hats a suitable wealth manager wears at times is that of an encourager. 

Benefits of Working With an Independent Financial Planner

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A good advisor will strike a balance, pivoting as needed between multiple roles to help you stay on track. One day he or she may be a sounding board for bouncing investment ideas off of. On another day, they might be your financial cheerleader, helping you to stay motivated when (you know you want to reach your goals but) you’re having trouble keeping productive.

Many happily serve as tutors, as well, helping you to pursue growth in—not just your wealth but—your financial literacy. This can mean anything from question-and-answer sessions to sitting down with you to review the latest data on a company whose stock you’re thinking of buying into. 

Ideally, the professional relationship becomes a long-term one. That’s why we emphasize the benefits of a comprehensive approach to planning your business and personal finances. This allows you, potentially, to reap greater returns from your investments and more. 

How To Get Started on Your Own High-Net-Worth Financial Plan

When you’re ready to get started developing your high-net-worth financial plan, Humanity Wealth Advisors is here to help. We have the certification and experience to be your financial advisor in the Bay Area. 

If you’re looking for financial planning in San Ramon, we’re here for you, too. Contact us today.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. Diversification does not protect against market risk. There is no assurance any strategy will meet its objective.
Humanity Wealth Advisors and LPL Financial do not provide tax advice or services.  Please consult your tax advisor regarding your specific situation.

More about the author: Harry Sherdil

As a fiduciary financial advisor at an independent firm, Harry strives to offer the same resources, tools, and research as bigger firms while serving new and existing clients' best interests.