High net worth families have a unique set of stresses. Seemingly every day, they are faced with a myriad of decisions that could have a long-term effect on their financial stability. In this blog post, we’ll explore the five biggest stressors for high-net-worth families and discuss how to handle them.

1. Learning How to Say “No”

High net worth individuals, more often than most, will generally receive requests from various avenues in their lives. Between private investment requests from friends and acquaintances to monetary requests from family, high net worth clients must develop the habit of saying “no” tactfully to maintain their balance sheet and keep their financial plan in order. Too many “yes” responses to these types of requests can lead to a chaotic balance sheet that is difficult to track– which can weigh on a high-net-worth client mentally and financially. Additionally, any private equity investment request must be vetted in full before proceeding.

So, how does one learn to say “no” to keep their plan well on track? It’s important for high-net-worth individuals to have a trusted team of advisors to properly investigate all requests and ensure that one’s balance sheet remains on track and in alignment with their overall goals.

Delegating the process of “no” to their team of advisors or having an email or response template for the “no” response are two solutions we have seen to be most effective, ultimately helping remove the emotion and decision fatigue associated with these conversations.

2. Balancing Their Time

One common thread between most high-net-worth clients is that there isn’t enough time in the day to properly balance all that is going on in their busy lives. Studies have shown that 80% of a parents’ time spent with children will be when their kids are under their roof until age 18. The remaining percentage is small– being that once kids graduate high school, they will more than likely begin taking shape and ownership of their own lives outside of the home. One major component of a life that is in balance, particularly for high-net-worth individuals, is figuring out how to balance spending time with family and managing the competing time and energy demands of a high stress career.

What does this mean in practice? The answer truly is individualized on a case-by-case basis. For some, it’s ensuring that weekends are sacred for family time, and family time only. For others, it’s configuring a schedule to be home for family dinner some nights or for a child’s sporting event. Whatever the compromise comes out to be, the important idea is that a compromise exists to make sure that the time in one’s day is in balance between professional and personal obligations.

EWA loves the advice:

• Don’t prioritize your schedule
• Instead schedule your priorities

3. Gifting Strategies– Helping vs. Enabling

While lifetime gifting is generally an advisable strategy for high-net-worth individuals, there must be a plan and strategy in place to ensure that the wealth transfer is helping the next generation, while not enabling the next generation. This is a delicate balance that must be treated with utmost care. Most high-net-worth families want to see a successful wealth transfer to the next generation but want to do it in a way that does not deprive the next generation of any motivation or ability to handle adversity by themselves.

This is a paradox—as by helping, sometimes you end up hurting your kids more in the process.

This can be avoided, due in large part, to having conversations about money and initiating this strategy while the high-net-worth individuals are living. Simply leaving the next generation with a large inheritance, with no context or value behind the accumulation strategy, can lead to irresponsible handling of the wealth.

4. Letting Money Dictate Your Life, Instead of Supporting Your Life

Too often, we find with high-net-worth individuals that money is dictating life’s decisions and actions. Our philosophy is the opposite– money should support your life by design.

An exercise that is valuable to most clients is ranking their top five most important values in their life and evaluating these on an annual basis as life changes. It is crucial that one’s financial plan is in alignment with the values that one finds most important in life. Otherwise, finances and life can be moving in opposite directions, not coordinating into one plan

5. Not Having A Coordinated Financial Plan

Most high-net-worth individuals have a trusted team around them to help keep their affairs in order. Likely, an estate planning attorney, a CPA or tax advisor, an investment manager, and / or an insurance agent would qualify as members of this team. Where issues could arise is if these team members are not “coordinated” or communicating with each other to ensure the plan is always moving in the same direction.

For example, if a trust is created, but it is not communicated to the insurance agent or investment manager to update policy and/or account beneficiaries, the trust is completely useless. Having constant communication between team members, or even having one team monitoring all affairs can better lead to full coordination of one’s financial plan.

Ensuring that all five of the above factors are accounted for and in order is vital to a sustained, successful financial plan.

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Equilibrium Wealth Advisors is a registered investment advisor. The contents of this article are for educational purposes only and do not represent investment advice.

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