There is a common misconception that wealthy individuals no longer need financial advisors once their wealth and portfolios have grown to a certain level. With greater wealth, there is often more financial complexity, so it’s still critical that you turn to a professional for advice about the best strategies to implement to improve the performance of your portfolio. In fact, TIAA research found that advised individuals have a 14- to 19-percentage-point advantage in financial confidence and preparedness compared to those who manage their portfolios alone. Let’s take a look at why high-net-worth individuals still need financial advisors and the benefits you’ll see from investing in this additional support.
Financial Advice Equals Greater Wealth
Research shows that financial advice is closely linked to greater wealth and offers many advantages for high-net-worth individuals. Advised households averaged $800,000 in net worth compared to $388,000 for non-advised households, more than doubling their net worth over the years. As far as the confidence and support gained from working with a financial advisor, 75% of advised individuals stated they felt financially confident, versus 58% of those without advisors. One of the key reasons to opt for financial advice is to prepare for the future. 68% of advised individuals believe they are making decisions today that better prepare them for the future due to this additional support. The statistics speak for themselves, and it’s clear why this is a good choice to make at any stage of your financial journey.
Why Wealthy Individuals Still Seek Guidance
Financial success does not eliminate the risk associated with building a portfolio. Even if you are comfortable and happy with your current financial level and portfolio, you should always be thinking ahead about how you want to plan for the future. Advisors help coordinate investments, taxes, retirement planning, and estate strategies, all of which are critical to review for anyone working to maintain their current quality of life over the upcoming decades. Professional guidance can reduce emotional investment decisions during market volatility and help to keep you on the right path without making any panic decisions.
Wealth Creates Greater Financial Complexity
With greater wealth to consider, there is more financial complexity when managing your portfolio. These are some of the key areas you can gain support with when you start working with a financial advisor.
Managing Multiple Assets
As a high-net-worth individual, you can get support with managing multiple assets. These support systems could include investment portfolios, business ownership, real estate investments, and retirement and inherited accounts. No matter how complex your financial situation is, an advisor will work with you to gain an understanding of how to manage all of the assets you own.
Tax and Risk Management
Tax becomes more complex as your net worth grows. A financial advisor can support you with capital gains planning, Roth conversions, and insurance and asset protection strategies. They will coordinate with CPAs and estate attorneys on your behalf to ensure that you are in compliance at all times and make the right decisions for your future.
Retirement Risks Still Exist
Even as a high-net-worth individual, retirement risks still exist for you, and it’s something you need to think about by planning for longevity well in advance. A financial advisor can work with you to review healthcare expenses and plan for long-term care costs based on your current and potential future concerns. Sustainable retirement income planning is another service our team can work with you on, as many individuals overlook it. We also offer active portfolio management and proactively map out your current portfolio in light of potential inflation to ensure you maintain the same standard of living for years to come.
Research on Preparedness
The sooner you can start working with a financial advisor, the more prepared you’ll feel for your future. 56% of advised individuals felt prepared for healthcare expenses, compared with 40% without advisors, with very similar figures for their ability to handle emergency expenses as well. 55% of advised individuals said they could manage inflation and rising living costs, versus 38% of those without advisors. These statistics alone should make you consider working with a financial advisor, as inflation and rising living costs are inevitable over the coming years, no matter what we do to protect ourselves and increase our income.
Why Financial Advice Matters After Age 50
Many people underestimate financial risks later in life. Financial advisors help with retirement income planning, estate planning, and protecting wealth in retirement, all of which are critical for individuals over the age of 50 to dig into. It’s never too late to change the course of your life, and we encourage you to really start thinking about your retirement now rather than waiting until your 60s to make decisions.
Estate and Legacy Planning
A financial advisor can support you with a range of estate and legacy planning services, such as trust planning, beneficiary reviews, and charitable giving strategies. Another important service that we offer is family wealth transfer planning. We know that many family situations are complex, and we can work with you to make the best decisions for your unique situation.
Financial Planning in St. Petersburg, FL
Here at Howland and Associates, our team can support you with retirement-focused planning for Florida residents and snowbirds who live in other places. We work with individuals in the local area and those who live out of state to manage investment properties and second homes in the Tampa Bay area. We know that some of the biggest concerns currently for Florida residents are rising insurance and healthcare costs. Our team can help you plan to ensure you are covered for years to come and that your finances will support you, no matter what happens health-wise in the coming years and decades.
Wealth alone does not eliminate financial uncertainty, which is why we encourage high-net-worth individuals who are not working with a financial advisor to begin partnering with one as soon as possible. Financial advisors help high-net-worth individuals to stay organized, tax-efficient, and prepared for the future. Contact us today to learn more about our services or discuss how our team can support you with financial planning.
Frequently Asked Questions
1. Do high-net-worth individuals need a financial advisor?
Yes. High-net-worth individuals often need a financial advisor because greater wealth usually creates greater financial complexity. A financial advisor can help coordinate investment strategy, tax planning, retirement income, estate planning, insurance needs, and wealth protection so your financial decisions work together instead of being managed separately.
2. Why do wealthy individuals still work with financial advisors?
Wealthy individuals still work with financial advisors because having more assets does not remove financial risk. Market volatility, tax exposure, estate planning, business ownership, real estate holdings, and retirement income planning can all become more complicated as net worth grows. A financial advisor helps create a clear strategy for preserving and growing wealth over time.
3. How can a financial advisor help with tax planning for high-net-worth individuals?
A financial advisor can help high-net-worth individuals plan for taxes by reviewing capital gains, retirement account strategies, Roth conversions, charitable giving, asset location, and long-term investment decisions. Advisors may also coordinate with CPAs and estate attorneys to help keep your financial plan tax-efficient and aligned with your goals.
4. What financial risks do high-net-worth individuals face in retirement?
High-net-worth individuals can still face retirement risks such as inflation, healthcare costs, long-term care expenses, market downturns, estate taxes, and poor income planning. A financial advisor helps create a retirement income strategy designed to protect your lifestyle and reduce the risk of outliving your assets.
5. How does a financial advisor help with estate and legacy planning?
A financial advisor can help with estate and legacy planning by reviewing beneficiaries, coordinating trust strategies, planning charitable giving, and supporting family wealth transfer decisions. This is especially important for high-net-worth individuals who want to protect assets, reduce confusion for heirs, and create a clear plan for their legacy.
6. When should high-net-worth individuals start working with a financial advisor?
High-net-worth individuals should consider working with a financial advisor as soon as their financial life becomes more complex. This may happen after selling a business, inheriting wealth, buying multiple properties, nearing retirement, managing large investment accounts, or planning for estate and tax decisions. The earlier you plan, the more prepared you can be for future financial decisions.
7. Where can high-net-worth individuals find financial planning in St. Petersburg, FL?
High-net-worth individuals in St. Petersburg, FL, can work with a local financial advisor who understands retirement planning, investment management, estate planning, Florida residency concerns, rising insurance costs, healthcare expenses, and wealth protection strategies. Howland and Associates provides financial planning support for Florida residents, snowbirds, and individuals with complex assets in the Tampa Bay area.