If you are a high-net-worth individual (HNWI), it’s important to work with financial experts with deep training and experience in portfolio management.
You may have heard the term HNWI in passing but aren’t sure what it means. Is this a label given by the government? Is there an exact dollar amount you need to meet to qualify as an HNWI?
This article will define high-net-worth investors and provide some helpful tips for making smart financial decisions with asset management firms in Ontario.
What is a High Net Worth Investor?
Sometimes classified as an individual with at least $1 million in investable assets, HNWIs are individuals who can afford to invest high amounts of money into assets such as stocks, bonds, and real estate.
Consequently, they can generate more wealth than the average person, allowing them to diversify their assets and reduce risk in many market conditions. HNWIs need to know the difference between investable assets and liquid funds: investable assets refer to resources that can be converted into cash quickly, which translates to a higher amount of money available for purchasing other assets.
In essence, HNWIs are individuals who have the flexibility and freedom to invest as they please because they believe this will ultimately provide them with a better quality of life or make a positive impact on society.
What is High Net Worth Wealth Management?
Once you receive confirmation that you’re an HNWI, it’s good to start thinking about how your money is working for you and what type of investment strategy would be best.
Many HNWIs choose to work with wealth managers who can help them make smart financial decisions and improve their chances of meeting long-term personal and professional financial goals.
A wealth manager who has discretionary authority is called a Portfolio Manager (PM). A portfolio management firm often has access to a financial planner who may be a Certified Financial Planner (CFP) and can:
- Offer Investment Advice
- Identify tax-efficient opportunities and reduce your overall tax burden. This may include finding ways to lower your annual income taxes, capital gains taxes, or estate taxes.
- Financial Planning for HNWIs
- Once you’ve decided to work with a CFP, it’s important to have an honest conversation about your long-term goals. Your financial advisor will help you determine which asset classes fit into your portfolio and provide you with the best way to accumulate wealth over time.
Many different investments are available to HNWIs, including stocks, bonds, mutual funds, exchange-traded funds (ETFs), and more.
CFP’s can help HNWIs decide between investing in individual stocks or bonds. They can, help predict future returns and global trends that may affect their portfolio’s value over time.
Last but not least, a CFP can help HNWIs determine their risk tolerance, which means they’ll be able to understand how much risk is appropriate for their current financial status.
Consequently, if you’re a more conservative investor, your CFP may suggest that you stick with low-risk investments in the short term. If you have a higher risk tolerance, you may be able to invest in high-risk strategies that can help grow your wealth over time.
As an HNWI, it’s essential to work with a CFP who has experience working with clients from all economic backgrounds and will take the time to understand your unique situation.
What Are Ultra High Net Worth Wealth Management Firms?
These firms focus on serving the ultra-high net worth segment. This may include individuals who have assets of around $30 million or more.
Ultra-high net worth individuals (UHNWIs) might be entrepreneurs, business owners, and high-level executives. Or they could be company founders. These people often work with specialized advisors who can help them manage their wealth efficiently by investing in alternative assets such as property, private equity, and hedge funds.
These individuals should work with portfolio managers who are well-versed in the countries’ tax laws where they live. UHNWIs often have international business interests and can implement effective tax-avoidance strategies.
These clients usually require more complex services than HNWIs because they not only need help with investments but also with setting up trusts, forming companies, and executing other legal and accounting strategies.
Getting Started with Enriched Investing
If you’re a high net-worth individual, the time to work with a financial professional is now. If your goal is to become a UHNWI, the first step is to build your portfolio and diversify your investments.
Then you’ll want to find out what we can do for you at Enriched Investing so you can work towards reaching your financial goals. We’re one of the asset management firms in Ontario that can manage high-net-worth investments.
If you’re interested in finding out how our portfolio management can benefit you, contact us today. Enriched Investing is here to answer your questions and get you started on the path toward personal enrichment!