Ultra-high-net-worth individuals have incredibly complex portfolios and balance sheets. Experienced financial planners such as those at independent financial advisory Avestar Capital are crucial to managing their assets. Xerxes Mullan, Global Advisor for Avestar Capital believes that ultra high net-worth financial planning creates far superior returns as compared to investments. The most effective financial plan is the one that puts your needs and goals at the forefront and works towards achieving them.
Financial planning for ultra high net-worth can be described by two main factors- Income Tax and Trust & Estate Planning. Both the factors mentioned previously are heavily taxed in the US. However, there are specific strategies and creative options that can dramatically help reduce the tax drag on these portfolios. One of the approaches that Avestar Capital takes is to create a laser focus on the UHNW financial planning elements by creating a virtual team with a tax advisor, and a financial planning attorney. Next, a structure is set up for the balance sheet so that it can withstand growth for multiple generations. The aim is to do this in a tax-efficient manner. Once these entities have been set up, only then should one worry about asset allocation. Asset allocation is putting the right assets in the right entities to ensure that you are reducing risk through diversification and so that the assets are focused on growth and meeting the financial objectives.
Asset location is equally important, if not more. Asset location is a derivative or sum of all the asset allocations. This tax-minimization strategy makes use of the fact that different types of investments get different tax treatments. From an optimal tax perspective, this bottoms-up approach is used to derive ultra high net-worth asset portfolios. This custom strategy is based on client-to-client situations, objectives, and needs. Avestar Capital, an independent financial advisory, creates powerful personalized solutions for each client as opposed to larger firms where the top-down approach is boilerplate-driven and nothing novel.
It is important to remember the basics- net worth is equal to assets minus liabilities. While most people tend to focus on their assets, a healthy combination of assets and liabilities ensures the best results. If one is able to take the liabilities and reduce the liabilities, the assets do not have to work as hard and this results in reducing your overall risk on your balance sheet.
When it comes to high net worth vs ultra high net-worth, no two financial plans are bound to be alike. Taking into consideration your circumstances and goals, financial advisors will ensure that you are in an optimal position, given your assets and liabilities. Therefore, if you want to pass along your wealth to protect future generations, it is important to have a long-term strategy. Your financial well-being will also include saving for retirement. Tax-advantaged retirement accounts will fortify your investment plans and build your savings. As an ultra-high-net-worth individual, you need to ensure that you maintain sufficient funds to accommodate your lifestyle.
A well-constructed financial plan will account for all the complexities that increase as your wealth increases. Highly experienced financial planners such as those at Avestar Capital will ensure that you are covered from an ultra high net-worth asset allocation perspective and have a solid and strategic financial plan in place as well.
