Financial Planning for High Net Worth Families

Financial Planning for High Net Worth Families

Hi and thank you for stopping by today. Today I’m going to talk about financial planning for high net worth clientele.

My name is Tina Anders and I am the Fee Only Certified Financial Planner for my wealth management firm here in Petaluma, California, Anders Wealth Management, serving primarily clients in Sonoma and Marin and Napa counties.

Again, thank you for stopping by. Financial planning for high net worth clientele. While some clientele may need to think about and consider and plan for paying off student loans, saving for retirement, buying or refinancing a home, things of that nature – very important. High net worth clientele oftentimes, think about things like estate planning, how to plan for the wealth of future generations, how to avoid paying more tax and absolutely necessary. A financial plan can help deal with all of those issues.

A financial plan is a comprehensive breakdown of your goals, but also how to make them happen. The methodology to which you can achieve your goals. Your financial goals, the makeup of your investment portfolio, your age, even where you live, and your lifestyle choices play a part in making your financial situation, excuse me, situation unique.

On top of those, high net worth individuals are even further in a category of their own. Having more wealth than the average person means you’ll fall into a different tax bracket. And you’ll have to consider additional types of tax like capital gains tax. A unique situation requires a unique approach. Financial plans are especially important for the extra wealthy and so is finding the right Fee Only Certified Financial Planner.

For individuals with particularly high net worth proper tax planning is even more important. Without intelligent tax strategies, you run the risk of missing out on crucial tax benefits, which can mean paying much more than you need to. Most especially, wealthy people benefit from capital gains. And the associated tax is something you’re probably familiar with. It’s the tax imposed on earnings made from investments. One thing that’s good to be aware of is the different ways the tax applies to short term gains, and long term gains. If you have holdings that you need to take out, before you’ve held them for at least a year, you’re going to be taxed or the earnings, you’re going to be taxed at ordinary income tax rates. Which are generally speaking quite high for high net worth clientele. If you are able and willing to hold your investments for at least a year if not longer, when you go about taxation, when you pull those assets out, you will only have to pay long term capital gains rates. Which are typically 15 to 20%. Quite a bit lower than your ordinary tax rates. Now, these tax rates do not apply to individual retirement accounts such as traditional IRAs, Roth IRAs, employer sponsored plans, things of that nature. But for taxable accounts, very important information.

Good tax planning involves planning accordingly to these two different classes of capital gains – important. The tax cuts and JOBS Act passed by the Trump administration meant quite a few changes to the tax code. Many of which have a significant impact on high net worth individuals. One of the things that changed is the exclusion limit on gift and estate taxes. The exclusion limit has doubled since 2017, meaning you can leave more money to others while getting your tax break when you pre decease them. Taking advantage of this change is just one way you can make tax planning work for you.

The fundamental approach to a strong investment portfolio doesn’t change much with a net worth of you the investor. You need to take into account your financial goals, your risk tolerance, your time horizons. Then you need to remember to strive for diversifying in every step of the way. High net worth individuals tend to have goals that could be directed toward a state planning and providing wealth for future generations also avoiding paying taxes beyond what you’re required to pay. Investing in any capacity involves some risk, how much risk you’re comfortable with is up to you. Of course, keep in mind that the risk return trade optics dictates that higher risk brings higher returns. I am known for being a conservative, yet also assertive investor for my clients.

Thank you for stopping in today. I do appreciate it. If you are a high net worth individual, please find a Fee Only Certified Financial Planner. Tina Anders, Anders Wealth Management here in California. Happy to take care of you. If you have comments about this video or questions of any kind, please comment below and I will address them. If you’d like a topic on a video, let me know I will do that as well. Tina Anders again, in your corner. Thank you