8 Services Every UHNW Investor Should Consider
Ultra-high-net-worth (UHNW) families face a wide range of financial complexities, investment challenges and tax liabilities that require a specialized approach. Without the help of a team of trusted professionals, you could be missing opportunities and efficiencies.
At Creative Planning, we believe UHNW families are best served by a comprehensive approach to planning that includes the following types of support.
#1 – Wealth advisory
It’s important to make sure your wealth advisor has the experience, focus and credentials to help navigate the unique challenges of UHNW families, such as concentrated holdings, large taxable events, business succession decisions, etc. In addition to services, you may need access to advanced investment solutions, such as private investments, hedge funds, real estate and other alternative investments.
It’s important to work with a wealth advisor who serves in a fiduciary capacity. Fiduciary advisors are legally obligated to act in clients’ best interests at all times and typically charge a percentage fee based on the assets they manage on your behalf (which means their fee has the potential to increase as your assets grow). The benefit of this fee structure is that it aligns your advisor’s goals with yours, which can provide you with the extra confidence of knowing that your advisor is working on your behalf.
#2 – Family office
A family office is a wealth advisory team that supports UHNW families with a total, comprehensive solution to managing their financial needs. It’s typically staffed by dedicated professionals focused on supporting all aspects of the family’s wealth. Family office services often include financial planning, investment management, budgeting, risk management/insurance, charitable giving, estate/wealth transfer planning, tax planning and filing, bill pay services, wealth education for younger family members, concierge services, lending and business consulting.
#3 – Strategic tax planning
UHNW families face additional tax planning challenges and can be especially vulnerable to unnecessary tax liabilities. That’s why it’s important to seek the support of an experienced tax advisor who can help you take full advantage of tax-saving opportunities with the ultimate goal of minimizing your tax exposure and maximizing your wealth building potential.
Your tax advisor should strive to align the following tax planning strategies with your overall financial plan:
- Tax bracket optimization
- Year-round tax planning
- Estate tax planning
- Strategic withdrawals
#4 – Legacy planning
The terms “legacy planning” and “estate planning” are often used interchangeably. However, estate planning has come to refer to the transfer of monetary assets and personal belongings following someone’s death, while legacy planning typically refers to financial bequests, as well as a strategy for passing along one’s personal values and closely held beliefs. Many UHNW individuals choose to take a legacy planning approach.
In addition to the important “blocking and tackling” of estate planning (wills, trusts, powers of attorney, etc.), a qualified advisor can help you take concrete steps to pass along your values, encourage a spirit of giving, have a lasting impact on the charities that matter to you, and protect your family’s privacy following your death.
#5 – Risk management
It’s not enough to grow your wealth; you must also protect it. That’s why it’s important to incorporate asset protection strategies into your overall financial plan. A qualified insurance professional can review your existing insurance policies and evaluate how various risks may impact your financial goals. Then he/she can implement a custom risk management strategy that helps ensure your wealth is protected from unexpected threats.
#6 – Charitable planning
Working with a qualified advisor to optimize your charitable giving strategy can help maximize your charitable impact while also reducing your tax liabilities. It may make sense to consider a combination of the following charitable giving strategies:
- Donor-advised fund (DAF)
- Charitable remainder trust (CRT)
- Donation bunching
#7 – Business liquidity and succession planning
If you’re a business owner, it’s important to take steps to achieve sustainable success, capitalize on growth opportunities, access ongoing liquidity and, eventually, exit your business. A qualified business advisor can help you navigate a wide range of challenges to access opportunities, avoid potential risks and enhance your core business capabilities.
In the years leading up to retirement, it’s important to start making plans to exit your business. A well-executed transition can take between three to five years, which is why it’s important to start planning early. Your succession planning team should include the following professionals:
- Accountant – Works to minimize your personal and business tax liabilities
- Corporate attorney – Drafts, executes and reviews all documents to help ensure they’re in order from a legal perspective
- Estate planning attorney – Creates or amends your will, trust and other important estate planning documents in preparation for selling one of your biggest assets
- Wealth manager – Provides guidance on decisions related to the long-term management of your sales proceeds and retirement assets
#8 – Family governance
One of the biggest challenges faced by many UHNW individuals is managing the expectations and complex interactions of family members. Consider working with an advisor who can help establish a framework of rules, processes and decision-making structures to guide the smooth functioning of family dynamics and business decisions. This approach to family governance can help align your family members’ values around common goals and strategies that help ensure your wealth is preserved and effectively passed down to future generations.
Creating an effective family governance structure can help:
- Clarify the decision-making process
- Reduce the potential for family conflicts
- Create a shared sense of responsibility
- Foster a sustainable legacy for future generations
