As an HNI, Should You Manage Your Own Wealth? Risks & Rewards
Equirus Wealth
13 Jul 2023 • 5 min read
High-Net-Worth Individuals (HNIs) have unique financial requirements and goals that often require careful attention and expertise. While some HNIs opt for a hands-on approach to managing their wealth, others may prefer to partner with wealth management firms. The decision depends on various factors such as the individual's financial literacy, risk appetite, and investment preferences.
The Art of Self-Managed Wealth
On the one hand, managing one's wealth can be incredibly rewarding. It can offer a sense of control and personal fulfillment, especially for individuals who enjoy the nitty-gritty of the financial world. This approach demands an excellent understanding of financial markets, investment products, tax laws, and estate planning. Moreover, the self-managed route offers flexibility and saves costs that would otherwise go toward management fees.
The Flip Side of Self-Management
However, the self-managed route is not without its pitfalls. The dynamics of global financial markets, evolving investment opportunities, tax regulations, and economic indicators require constant monitoring and understanding. This can be a daunting task even for the most financially savvy HNIs, not to mention time-consuming.
Remember the economic downturn of 2008, when markets turned into a terrifying roller coaster? Or more recently, the economic repercussions of the COVID-19 pandemic? During these challenging times, wealth management professionals served as financial lighthouses, guiding wealth through the storm, and spotting opportunities amidst chaos. And the result? As per the Capgemini World Wealth Report 2023, despite an overall global wealth decrease, astute financial navigation led to profitable paths for the informed and the guided.
As an HNI, the key to dealing with market uncertainty is not to avoid risks but to understand and manage them effectively. That's where the expertise of a financial advisor becomes essential. These experts diligently assess market trends, evaluate financial risks, and craft personalized strategies that ensure wealth preservation and growth, even amidst economic turbulence.
The Capgemini World Wealth Report 2023 noted a -3.6% global change in HNWI wealth in 2022, with regions like North America seeing a decline of -7.4%. This is a cautionary tale about the risk of self-management. For instance, a significant number of HNIs not using wealth management services have missed out on emerging market trends and investment opportunities, leading to wealth erosion.
| HNW Population & Wealth (2022) | Global | North America | Europe | APAC | Middle East | Latin America | Africa |
|---|---|---|---|---|---|---|---|
| HNW Population (Millions) | 21.7 | 7.4 | 5.6 | 7.1 | 0.9 | 0.6 | 0.2 |
| HNW Wealth (Trillions $) | 83 | 25.6 | 18.2 | 24.7 | 3.4 | 9.2 | 1.9 |
| HNW Population Change (%) | -3.3 | -6.9 | 2 | -2 | 2.8 | 4.7 | 4.3 |
| HNW Wealth Change (%) | -3.6 | -7.4 | 3.2 | -2.7 | 1.5 | 2.1 | 1.6 |
Meanwhile, those who have partnered with wealth management firms have often seen better preservation and even growth of their wealth. These professionals have the expertise and resources to closely monitor market trends, identify potential investment opportunities, and quickly react to changes. This difference becomes especially evident during volatile market conditions.
Embrace the Expertise
As an HNI, you've worked hard to accumulate your wealth, and you deserve to see it grow and be preserved efficiently. This is where Equirus Wealth can make a significant difference. Our team of expert wealth managers understands the complexities and challenges of managing wealth in an ever-changing financial landscape.
We provide tailored wealth management solutions that align with your unique financial objectives. From identifying the right investment opportunities to providing robust risk management strategies, our team is dedicated to securing and enhancing your wealth.
One of the key areas where Equirus Wealth stands out is portfolio diversification. We offer a broad range of investment opportunities, including equities, fixed income, real estate, and alternative investments. More importantly, we have a strong focus on Environmental, Social, and Governance (ESG) investments. The Capgemini report highlights that 63% of HNIs now prioritize ESG investments, further signifying their importance in a comprehensive investment strategy.
Equirus Wealth goes beyond just managing your investments. We offer value-added services, which were cited by 56% of HNWIs as influential in choosing a wealth management firm. These include estate planning, tax consultation, and legal advice - services that are essential to comprehensive wealth management but can be challenging to handle on your own.
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Conclusion
Managing wealth as an HNI is a demanding task that requires time, knowledge, and constant attention to market shifts. The risks of missing significant investment opportunities or suffering wealth erosion during market downturns are real and substantial. By partnering with a dedicated wealth management firm like Equirus Wealth, you gain the benefit of expertise and personalized services. This allows you to stay ahead of the game, safeguard your wealth, and secure your financial future.
