High-Net-Worth Financial Planning

Key takeaways

• Financial planning for high-net-worth individuals includes investing, tax strategy, estate planning and risk management.
• Financial advisors can help high-net-worth individuals stress-test their portfolios to see how they might hold up against market volatility, recession or early retirement.
• High-net-worth financial plans should be reviewed at least once per year.

In the last 10 years, the number of high-net-worth individuals (HNWIs) in the U.S. has grown by 78%, according to the 2025 Henley Private Wealth Migration Report. Today, there are more than six million Americans with at least $1 million in liquid assets who might require more in-depth financial planning. With potentially more assets, capital gains and streams of income than the rest of the population, high-net-worth individuals often face complex tax situations, riskier investment strategies and higher-stakes legacy planning. 

If you have more than $1 million in liquid assets, the best financial advisors and wealth management teams can help you navigate these obstacles and preserve your wealth for generations to come.

What defines high-net-worth financial planning?

High-net-worth financial planning is the process of creating a plan to help wealthy individuals strategically navigate their finances. This type of planning requires a significant understanding of taxes and investments, as well as more holistic wealth management services that might include estate and legacy planning.

“[Financial plans for HNWIs] really depend on the structure of their wealth and what their aspirations are,” says Josh Brehm, senior vice president and wealth management advisor at Merrill Lynch. But there’s one strategy that he recommends for all investors: having a holistic plan that puts their interests and needs at the forefront and referencing it with their entire financial planning team, including certified public accountants (CPAs) and estate planning attorneys.

Investment strategies for high-net-worth individuals

“For high-net-worth individuals, we really focus on diversification across different asset classes and building a portfolio that’s balanced for growth preservation, blending equity, fixed income and alternatives,” says Brehm. “We’re also looking at liquidity to make sure they have access to cash for opportunities or unexpected needs they might have [throughout their lives].”

Asset diversification helps guard against significant loss from having all your eggs—or money—in one basket. With a higher net worth, you have more money to purchase a greater mix of assets and can absorb a greater loss without it affecting your ability to meet your basic needs. You can also access unique investing opportunities, like private markets. Because of this, your portfolio might include the following: 

• Traditional investments: Stocks, bonds, mutual funds and exchange-traded funds are considered common, publicly traded assets for most investors, regardless of their net worth, and typically provide steady growth. You can also sell them more easily than other assets, providing liquidity.
• Private investments: To access hedge funds, venture capital funds, angel investments and private equity funds, an investor must have at least $1 million in assets excluding their primary home, per Securities Exchange Commission rules.
• Global equities: Investors can further diversify their assets by investing in companies worldwide, so their money isn’t relying on the economy of just one nation, protecting their portfolio from catastrophic loss if that nation’s economy collapses. 
• Real estate: This investment can provide a steady rental income and appreciating value, as well as tax advantages, like mortgage interest rate and property tax deductions. 
• Precious metals: You can buy metals like gold, silver and platinum to protect against inflation and economic instability, since they are physical assets that have historically held their value. 
• Cryptocurrency: The explosion of growth crypto has seen in the past decade hasn’t erased its reputation for pricing volatility and complexity. Despite these potential risks, investors are gaining interest due to the possibility of high returns, the potential to hedge against inflation and the portfolio diversification that it offers.  
• Luxury items: Items such as fine jewelry, classic cars, rare art or collectibles can hedge against inflation and market volatility and often maintain their worth or appreciate in value. You can also pass these items down to heirs, helping preserve generational wealth. 
• Cash and cash equivalents: The most liquid of all assets, cash and cash equivalents include physical bills, traditional checking and savings accounts, high-yield savings accounts, treasury bills or money market accounts. Certificates of deposit (CDs) with maturities of three months or less are also considered cash equivalents. You can access the cash in a CD before its maturity date, but you might incur an early withdrawal fee. 

Tax optimization and advanced planning techniques

Your income is divided into tax brackets that are assigned a specific income range and tax rate that increases with each bracket. The more money you make, the more your income is portioned into different rates as you move up tax brackets. Moving up tax brackets means some of your income will have higher tax rates and you’ll owe more money to the government. And if you have substantial liquid assets, the yields and short-term capital gains that these generate can push some of your income into some of the highest tax rates. Keep in mind, long-term capital gains (held for more than one year) are not taxed as ordinary income and fall into different tax brackets.

In an effort to lower your taxable income and minimize your tax burden, Brehm recommends optimizing your taxes with the following strategies:

• Maximizing retirement contributions: Some retirement accounts can reduce your taxable income or provide tax-free withdrawals in retirement. If you’re a high-income earner, you can contribute to traditional IRAs. However, you won’t be eligible for a tax deduction if a work retirement plan already covers you or your spouse. High earners are also not allowed to open Roth IRAs, so another strategy is using backdoor Roth IRAs, which convert traditional IRAs into Roth IRAs. To maximize contributions, high-net-worth individuals should consider using a mix of accounts to reap all tax advantages, contribute up to the 401(k) and IRA limits and take advantage of the full 401(k) match offered by their company. 
• Leveraging tax-loss harvesting: To help offset your capital gains, you can sell assets that are worth less than what you initially paid for them through a method called tax-loss harvesting. Because you’re selling these assets at a loss, it lowers the taxable amount of your capital gains. You can deduct up to $3,000 each year and carry any remaining loss over to the next year.
• Using tax-advantage accounts: Along with retirement accounts, other tax-advantaged accounts you can leverage include 529 plans that grow college savings tax-free and health savings accounts that set aside pre-tax dollars for future medical expenses.
• Donating to charities: You can deduct up to 60% of your adjusted gross income in charitable contributions, which can include cash, property or investment donations. 
• Syncing with your wealth management team: You might have multiple people working with you on your finances and taxes, likely an advisor and tax attorney or CPA, so it’s important to keep everyone up-to-date. You need to make sure everyone is on the same page and your team is working toward the same goal, not negating each other’s work.

You might also reduce your taxable estate by placing your assets into an irrevocable trust. This can be part of your estate plan, which should be completed with the assistance of your advisor and an estate planning attorney. Along with trusts, your estate planning might also include charitable giving, which optimizes your taxes.

Aside from strategic tax moves, estate planning should also factor in your goals, such as transferring wealth to future generations, keeping your financial information out of the public eye and ensuring business continuity through a succession plan. 

Risk management and asset protection for the wealthy

Brehm suggests stress-testing your portfolios for different situations such as market volatility, recessions, large purchases and early retirement, to estimate potential losses, spot any risky investments and ensure you can still reach your financial goals despite any potential changes to earnings. 

For example, an advisor can project the effect on your portfolio assuming a below-average rate of return, simulating recessions, testing an early retirement or calculating an unforeseen large expense. When stress-testing your portfolio, Brehm recommends keeping your objectives in line. Your financial advisor can use their expertise and financial tools and software to run the various scenarios, interpret their findings and make recommendations.

FAQ

What net worth level typically requires high-net-worth financial planning?

To be considered a high-net-worth client in financial planning, you need at least $1 million in liquid assets. However, just because you don’t reach that minimum doesn’t mean you don’t need assistance with some of the same issues. It’s best to speak with your financial advisor about what type of guidance you need for your specific situation.

Should high-net-worth individuals work with specialized advisors?

When it comes to choosing an advisor, you should consider your goals and needs. Based on those factors, you might need an advisor with specific training and expertise or a team of individuals who can each focus on one of many complex areas of your finances.

“I think it’s important to vet your financial advisor and make sure you have a good working relationship with them,” says Brehm. He also recommends looking for someone with specific credentials such as certified financial planner (CFP), certified public accountant (CPA) or certified senior advisor (CSA). Certified financial professionals have completed the necessary education and experience requirements to make financial recommendations and, depending on the certification, might be legally bound to act in your best interest. 

According to Brehm, high-net-worth individuals might need a team of financial professionals that includes a tax professional—preferably a CPA—and a trust and estate planning attorney, with the financial advisor at the center. 

“The job of a financial advisor is to be the cog in the wheel that helps rally the team to make sure all the client’s aspirations are being met across all the different people [they’re working with],” he says.

How do tax strategies differ for high-net-worth clients?

High-net-worth individuals might have multiple streams of income and typically find themselves within some of the highest income tax brackets that exist, so tax strategies might include more advanced ways to minimize income and capital gains and reduce their tax liabilities. This can include tax-loss harvesting, strategic charitable giving and opening an irrevocable trust.

What role does philanthropy play in high-net-worth planning?

Philanthropic giving can provide tax advantages, new streams of income and legacy building. Tax-savvy philanthropy is usually part of high-net-worth financial planning and might include cash donations that lower your taxable income, a family foundation for a chosen cause or a charitable remainder trust that transfers the remaining trust amount to a charity when you pass.

How often should high-net-worth financial plans be reviewed?

“A good standard practice is to touch base once a year, but that frequency can change based on what’s going on in the client’s life,” says Brehm, who adds that the consistency of plan reviews is customized to each client, what they’re looking for in terms of service and what phase of life they’re in. 

According to Brehm, reviews are an opportunity to make sure all of the client’s goals are documented and their portfolio is set up appropriately to achieve those goals. Clients might want to conduct reviews more frequently to stay informed and ensure they are on the same page as their advisor, while others are content with the standard annual review.