Those who qualify as high net worth individuals (HNWIs), which is usually those with liquid financial assets of $1 million or more, may benefit from a special type of financial advisor who caters to such clientele. High net worth financial advisors can provide assistance tailored to the needs and interests of high net worth individuals, such as asset protection, charitable giving and estate planning. Finding a high net worth advisor skilled in working with high net worth individuals starts with understanding your unique needs and requirements as a HNWIs. After that, it’s a matter of getting referrals and vetting potential advisors to ensure they’re suited to your financial situation. Whether or not you’re a HNWI, a financial advisor can be of assistance to anyone interested in making better financial decisions.
High Net Worth Advisor Basics
The financial services industry generally defines a high net worth individual as anyone with liquid assets of $1 million or more. Liquid assets typically include checking and savings accounts, securities such as stocks and bonds, and shares of mutual funds and exchange-traded funds. The value of other assets, such as real estate, vehicles and collectibles, probably won’t be included when determining whether someone is considered a HNWI.
Financial advisors help clients with all sorts of financial concerns, including budgeting, debt repayment, investment management, saving for retirement, paying for college and more. Some financial advisors are fiduciaries, which means they must put their clients’ interests above their own.
Many financial advisors have minimum investment requirements, which may range from a few thousand to hundreds of thousands of dollars. Advisors who specialize in serving high net worth clients tend to have minimums on the high end of this range. High net worth advisors are usually able to offer some more specialized strategies and benefits to their clients:
- Asset protection to help clients who have accumulated significant wealth protect their assets against loss.
- Philanthropy, such as using charitable trusts and private foundations, to effectively support worthwhile causes.
- Estate planning to allow affluent individuals to create legacies and direct the disposition of their wealth.
- Tax management to minimize liability with strategies such as tax-loss harvesting to offset capital gains.
- Advanced investment strategies, to maximize returns and minimize risk, perhaps including hedging and options.
- Succession planning to help clients who own businesses and want to prepare the next generation of owners.
Finding a High Net Worth Advisor
High net worth individuals can follow this step-by-step process to find an advisor best suited to their financial situation:
- Assess your needs. First, make sure you meet the usual definition of a high net worth individual by having $1 million or more in liquid assets.
- Decide what type of financial advisor you want. Advisors can be split into three broad categories:
- Independent financial advisors may typically attract less-affluent individuals due in part to relatively low fees and modest minimum investment requirements, but some offer the same services as an advisor focused on HNWIs.
- Wealth management firms are more likely to restrict their client base to HNWIs, whose needs they address with a team of professionals including financial planners, accountants, tax specialists and attorneys attuned to the special requirements of affluent individuals. They will often have higher minimum investment requirements and charge higher fees.
- Family offices offer many of the same services as wealth management firms, but typically work with a single HNW family or a small group of families. They may provide boutique services such as lifestyle management in addition to more typical offerings such as investment, estate, tax and philanthropic planning.
- Get referrals. Friends, family and professional colleagues can be a great source of referrals. For a more structured approach, financial advisor-focused referral services such as SmartAsset can help. SmartAsset can provide curated lists of top financial advisors in the nation, by state and in many cities. Large financial service companies such as Fidelity, Schwab and Vanguard also have their own in-house financial advisors, many of whom specialize in HNWIs.
- Vet your selections. After gathering your referrals, check their credentials, as well as to see if any have been involved in investigations or disciplinary actions using FINRA’s Broker Check or the SEC’s Investment Advisor Public Disclosure.
- Interview for details. Sit down with your candidates and ask them about their business and what they can do for you. Suggested questions include:
- Are you a fiduciary?
- What certifications do you hold?
- How many years of experience do you have?
- How are you compensated?
- Are you fee-based or fee-only?
- Do you charge performance fees or other fees?
- What is your minimum investment?
- Do you specialize in HNWI clients?
- Do you specialize in any type of financial advice or services?
- What is your philosophy toward investing?
- How often do you meet with your clients?
- Have you been the subject of any regulatory discipline or other actions?
- Be sure you understand the costs you will be charged. Try to be confident that you understand whether the advisor gets money from investment providers or will only be compensated by fees you pay. Nail down the percentage of assets under management you’ll pay, as well as other fees for services such as creating a financial plan and managing a portfolio.
When you’ve identified and vetted your candidates, you may want to select the one with whom you feel is the best communicator, has the best investment record or offers the best value on costs. Be sure to read the client agreement carefully and clarify any questions before signing.
Bottom Line
High net worth individuals often have unique needs when it comes to their financial affairs, and can benefit from specialized high net worth advisors. These advisors may have higher minimum investments and provide services that go beyond those supplied by typical financial advisors. HNWIs are likely to want help with asset protection, estate planning, tax management and other concerns, in addition to the budgeting, debt management and retirement saving that are the bread and butter of other financial advisors.
Money Management Tips
- If you need help managing your finances, a financial advisor can guide you in creating a financial plan based on your goals and needs. Finding a financial advisor doesn’t have to be hard, either. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Use SmartAsset’s Federal Income Tax Calculator to estimate your tax liability for the current year.
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