Finding a Wealth Manager for the Wealthy

By Brian J. Cunningham, CFP (R)

Like most adages, "The rich are different" is true. The top 2% of net-worth individuals require wealth management sophistication, expertise, and financial acumen that best serves their objectives, which differ significantly from those of the less affluent. 

What You Want

"I don't want to screw up the high quality of my life, and I don't want to worry about what's happening with my money" is a typical sentiment of my prosperous clients. They seek to continue to build their wealth rather than lose what they have through market volatility, inflation, or changing tax laws. Further, their circumstances open doors to investments involving risks an average person cannot afford. The less affluent pay a high price for 100% liquidity, and when they aren't comfortable having money "tied up," some types of investments aren't in their best interests.  Wealthy folks have plenty of liquidity and can allocate funds to investments with a longer time horizon. 

Think Bigger

One of the wealth management industry's dangerous myths is that the investment strategies for those with more significant assets entail simply adding more zeroes to the formula that an advisor would use for those with less. This fallacy can result in high-net-worth clients missing out on opportunities that managers with a less wealthy clientele don't generally access. 

A 60/40 portfolio to manage risk, with 60% invested in stocks and 40% in bonds, has been a universal strategy for balancing investments at the start. However, as an example only, if you invest in a stock that averages, for example, an 11% gain over time and bonds that return 4 or 5%, that 40% in bonds is impacting your overall return. The 60% stock part engine has to work harder to pull that train. That's why I discuss a mixture of opportunities with my high-net-worth clients. Some funds might be invested in stocks with an unlimited upside.  Please note that investing in mutual funds involves risk, including possible loss of principal. Fund value will fluctuate with market conditions, and it may not achieve its investment objective.     

Levels of Opportunity

Several layers of investment are attractive to high-net-worth clients, and I enjoy explaining them and exploring whether they are appropriate for their portfolios. There are investments chosen for their potential to impact tax liability. If suitable, we can also discuss some types of insurance policies paid in advance that might be attractive depending on the circumstances of our wealthy clients. 

Strategies

To sum up, there are many investment opportunities for high-net-worth individuals to consider, and if they are unfamiliar, it might be helpful to be guided by a wealth manager who is adept at explaining them and helping you decide if they make sense for your portfolio.  Don't let your wealth manager's lack of sophistication limit your choices of investments.

Content in this material is for general information only and is not intended to provide specific advice or recommendations for any individual. Stock investing includes risks, including fluctuating prices and loss of principal.​ Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price. This is a hypothetical example and is not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing.

May 18, 2025