They Concentrate Equity<\/h3>\n
Those who have a large portion of their portfolio invested with a single company have concentrated equity. It\u2019s a precarious position to be in. Putting all of your eggs in one basket. Diversified investment portfolios can better respond to market disruptions and fluctuations.<\/p>\n
They\u2019re Too Self-Reliant<\/h3>\n
Many wealthy investors consider themselves “self-made.” Managing a wide range of assets and resources takes different skills than it took for you to claw your way to the top. Accept your limitations and seek wealth management advice when appropriate.<\/p>\n
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They Don’t Hire the Best Advisors<\/h3>\n
Who gets even more attention than the attractive blonde sitting alone at the bar? Wealthy people, that’s who. They receive hundreds of marketing letters and phone calls from financial planners, CPAs, private bankers, and other professionals. A lot of these folks talk a good game, but not all of them are truly top-notch.<\/p>\n
Related: <\/em><\/strong>The Investor\u2019s Complete Guide to Finding & Hiring a Perfect CPA Match<\/a><\/em><\/p>\n Some of these \u201cprofessionals\u201d are actually:<\/p>\n So, how do you distinguish the competent advisors from the bad? Get referrals from other high-quality professionals. For example, an eminent money manager probably knows elite wealth planners and outstanding insurance specialists.<\/p>\n Of course, you want to keep costs low, but getting the best results sometimes means paying higher fees. The goal is to determine a provider\u2019s ability to produce value year in and year out\u2014not just run a quick price comparison among vendors.<\/p>\n Ensuring that decisions are both worthwhile and sustainable means detecting problems before they become critical issues. For many high-net-worth investors, stress testing is similar to an annual doctor\u2019s visit for a checkup. Something is not necessarily amiss, but you need to check the vitals from time to time.<\/p>\n That’s why wealthy people don\u2019t just rely on one expert or money manager. They consult with a range of professionals to evaluate a strategy or financial plan.<\/p>\n So, we’ve discussed the importance of getting help, getting the best help available, and getting a range of professionals to stress test your approach.<\/p>\n Related: <\/em><\/strong>How to Hire Amazing Team Members for Every Real Estate Process\u2014From Finding Deals to Renting Them Out<\/a><\/em><\/p>\n Once you’ve found the right advisors, who will do what? You’re not just looking for an avalanche of “second opinions.” You’re looking for a group of people whose skills and ideas complement one another.<\/p>\n Put another way: large portfolios need risk management strategies, and these need to be tackled from the top down. Investors that diversify their advisors are basically playing them as pieces on a board. The best approach is to have one advisor that can see the entire board, rather than multiple advisors who are strategizing from different angles with a limited perspective.<\/p>\n High-net-worth individuals want better annual returns for their portfolios and assets, sure. But according to Rich Henry, managing director for Hawthorn, PNC Family Wealth, high-net-worth families should measure success according to what they are trying to achieve. Philanthropy and long-term security for your family may be your real motivators, with higher returns being simply a means to that end. You want to reach your goals and live your values, rather than \u201cjust having a portfolio benchmarked to an artificial number,\u201d Henry said.<\/p>\n No one wants to pay Uncle Sam more than they have to. But you can be overzealous with your tax avoidance strategies. Here’s another area where it pays to get competent legal and tax advice. Some people become so focused on reducing their tax bill that they cross the line into participating in illegal schemes (intentionally or not). Ultimately, it can be very costly.<\/p>\n\n
They Don’t Stress Test<\/h3>\n
Their Team Isn’t Working Together<\/h3>\n
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<\/p>\nThey Define Success By Returns<\/h3>\n
They Are Too Obsessed With Taxes<\/h3>\n
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