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Top 5 Mistakes UHNW Investors Make

Ultra-High Net Worth investors have an entirely unique set of challenges and opportunities compared to the average investor or even High-Net Worth investors. Considering the unique needs and financial goals that come with enormous wealth requires a specialized approach, which is why we believe it is critical for these clients to leverage the skills and resources of a vetted Ultra-High Net Worth wealth management team. Here are some of the common mistakes we see Ultra-High Net Worth clients make when left to their own devices — and how to avoid them.

5 Mistakes Ultra Wealthy Investors Make In Their Financial Planning

1. Comparing Themselves To Other UHNW Investors

When you’re surrounded by affluent, successful and intelligent people who are discussing their investment strategies, it’s easy to feel you could be missing out by not jumping in on whatever the latest hot stock or trend in the market that you’re hearing about on the golf course. The fact is: you don’t know what you don’t know. You have no idea what the rest of their financial picture looks like, whether they’re diversified across domestic and international markets, precious metals, real estate and 16th century Dutch masters — or whether they’ve got a box of treasury bonds buried in their backyard.

When you follow the crowd, even the very wealthy crowd, it’s incredibly difficult to time your entry and exit and you are likely to miss the big wins on either side.

What’s less sexy and comes with much, much higher returns: exhaustively researching and analyzing forgotten sectors and being painfully patient. It may sound like a tremendous amount of work and brain power, and it is; that’s why clients entrust us to do it for them.

2. Assuming They Can Do It Better

You’re at the top of your field, an incredibly successful professional who has managed corporations the size of small kingdoms and accrued as much as said kingdom’s GDP. This might make it difficult for you to entrust something as important as your wealth to someone else. We get it, and we’re here to tell you: it’s critical that you do. Personal finances, particularly those that are as nuanced and complex as an Ultra-High Net Worth investor’s, requires knowledge that is an inch wide and a mile deep. Chris Weber, the founder of Weber Global Management, has built his careers researching and comprehensively understanding the markets down to sectors most people haven’t even heard of — and accrued enormous wealth for his clients as a result.

So, can you do it? Maybe. Should you? Definitely not. Hiring someone to serve as a trusted expert and advisor gives you the mental space to focus on the areas in which your intellect and skills are invaluable and irreplaceable, and helps you continue to build enormous wealth with the power of global resources behind you.

3. Believing Markets Are Rational

Markets are driven by people and people are irrational. Most people, Ultra-High Net Worth investors included, do not have the patience, or stomach, to embrace the uncertainty and volatility of the markets, particularly during a financial crisis, and panic; perhaps even less so because of the enormous stakes that come with investing massive wealth.

A seasoned Ultra-High Net Worth wealth manager should provide clients with a sense of reasoned calm and a rational approach to investing that builds in the resilience needed to weather downturns and unprecedented events. Part of having a plan is executing on that plan — not perpetually making micro adjustments that eat into your profits and position your portfolio in a defensive posture.

4. Ignoring Tax Planning

Tax planning is not an optional component of your financial strategy. Part of building a legacy is creating a sound estate plan that ensures your wealth is passed to your beneficiaries and not tied up in probate or turned over to the government. Tax planning is also important during your lifetime, when considering how you utilize tools like gifts, trusts and tax-deferred retirement accounts to maximize your tax efficiencies.

An Ultra-High Net Worth wealth manager will have the ability to guide and direct you through the process of tax and estate planning by understanding your comprehensive financial picture, and continue to optimize it over time.

5. Being Unrealistic About Income 

Your plan for enjoying the wealth you have accrued and maintained throughout your life is based on an assumption of what you expect to spend annually in the years where your earning potential is narrowing. Like any investor, Ultra-High Net Worth clients have a changing financial picture over time, with new interests and expenses, and they face the realities of an economy that is constantly in flux.

Part of the financial strategy designed by your Ultra-High Net Worth Wealth Manager should be optimized frequently in light of new information, goals and opportunities, and the reality of what the accompanying costs will be, with the goal of preserving capital to ensure you are realistically able to continue to enjoy the life you’re accustomed to.

It’s okay to live large as long as you’ve planned for it.

We’ve seen it all.

Not everyone is equipped to handle the unique challenges, or capitalize on the unique opportunities, that come with managing wealth for Ultra-High Net Worth clients. In order to avoid critical, and all-too-common, mistakes, an Ultra-High Net Worth wealth manager provides seasoned, rational guidance and a watertight plan designed to continue to build enormous wealth throughout your financial journey, even in the face of a volatile market.