High Net Worth Retirement Planning: Proven Strategies + PathFinder’s Management Tools
Retirement planning is never simple, which is why many people rely on professionals to guide them. For high net worth individuals (HNWIs), the retirement planning process includes more unique challenges—and opportunities for those who make thoughtful decisions.
If you leverage proven investment strategies in partnership with cutting-edge tools, you’ll empower your clients to make financial choices (now or pre-retirement) that will best serve them in their golden years.
Explore ACM’s high net worth retirement planning guide to learn more about your options for supporting high net worth clients.
Advanced Strategies for High Net Worth Retirement Planning
Traditional retirement accounts, such as defined contribution plans, make up a significant portion of retirement investments for most people—even for HNWIs.
HNWIs also have other important assets and considerations that average investors might not. Tax-efficient defined contribution investments (including 401k, 403b and 457 accounts), alongside broader strategic planning, are essential retirement management techniques.
Tax-Efficient Investment Planning
Minimizing tax liabilities is crucial in the context of high net worth portfolios. While HNWIs value tax-efficient investments, they may not know all the strategies available.
When putting together investment guidance for HNWIs, speak with them about the difference between:
- Pre-tax retirement accounts: Investments that don’t get taxed until withdrawal, such as 401(k) accounts, maximize investment returns and compounding.
- Post-tax retirement accounts: Investments that are funded with after-tax dollars, such as Roth IRA accounts, grow without additional tax burden.
With your guidance, clients can evaluate their circumstances and decide which type of retirement accounts to invest in. Prioritizing and optimizing these investments allows you to build wealth without significant management lift.
Wealth Preservation & Legacy Planning
For HNWIs, wealth sustainability goes far beyond the retirement years; it is meant to last across generations. To advise clients in this position, you have to think beyond the typical timeline to set up strategies that support ongoing growth and asset transfers.
Discuss generational wealth transfer options with your clients that include:
- Estate planning
- Trust funds
- Lifetime gifts
- Life insurance
These options prepare heirs for inheritance outcomes, including potential tax burdens and administrative considerations. In some cases, these tools allow for transfers of wealth before death, smoothing the probate process logistically and emotionally.
Charitable giving is another common way HWNIs engage in legacy planning. One-time charitable gifts, ongoing donations, or charitable trusts can all offset tax burdens while giving money to meaningful causes close to a client’s heart.
Alternative Investment Strategies
Even with the most tax-advantaged investment plans in place, alternative investments are an important way to mitigate risk and diversify a client’s portfolio. If retirement accounts comprise a percentage of a client’s assets, where can the other money go for the greatest stability and returns?
You may guide clients through their options in:
- Private equity: In the long term, investment in private business or funds offers the opportunity for high-growth returns in options not available on the public market. Note that such investments often involve significant lockup periods and higher risk profiles.
- Real estate: Commercial or rental properties can have unique investment benefits, but second homes or vacation properties may suit some clients.
- Non-traditional assets: Collections, cryptocurrency, and commodities are all non-traditional assets that offer more choice to HNWIs looking at wealth management.
Alternative investments like real estate are relatively stable with good return profiles. Others, like cryptocurrency, may have more variable profiles.
Speak with your clients about their risk tolerance and what types of assets appeal to them. Art or vacation homes, for example, offer fulfillment beyond financial investing that can offset lower measurable ROI for some individuals.
Tools in PathFinder for Customized High Net Worth Investing
For HNWIs, the most advantageous retirement plans are customized to meet their personal needs. Personalization often feels out of reach when it comes to defined contribution accounts like 401(k) plans. Clients are typically offered a list of predetermined investment options curated by their plan administrator. Neither they nor their financial advisors can actively manage investments within these accounts like in other portfolio options.
PathFinder offers an alternative, a service that provides your clients with compliant access to personalized investment advice from you, as well as personalized investment options for held-away accounts without a rollover or in-service withdrawal.
Self-Directed Brokerage Account Management
Here’s the sometimes-hidden option for those hoping to customize their held-away retirement accounts: self-directed brokerage accounts (SDBAs). Within certain plans—including nearly 100,000 401(k), 403(b), 401(a), and 457 accounts—plan participants can self-direct their investments without withdrawing funds from the plan. This means they can choose custom investments and buy or sell based on their timelines.
PathFinder works with financial advisors on these account types to create personal investment portfolios. Depending on your client’s goals, we offer risk-based models for customized investing strategies.
Building investment portfolios is the most time-consuming part of investment management. Our personalized solutions save time while clients gain more control over their money. We do all of this while focusing on the investment qualities that matter most to HNWIs—giving them opportunities to maximize gains and protect when necessary through diverse, risk-assessed models.
Risk Assessment Capabilities
Investing always comes with some risk, but risk assessments give insight into any investment’s potential. This allows clients to customize their investments based on their personal risk tolerance, giving them even more control over retirement investment decisions.
As we build portfolios, we include risk assessments as part of our management. We may look at potential risks with:
- Stress testing
- Scenario modeling
- Volatility forecasting
These offer insight into the impact of market changes, economic conditions, and life events on retirement plans. As clients near retirement age, risk assessments and related investing adjustments give them peace of mind about their financial choices.
Diversification Features
Of course, one of the best protections against risk is asset diversification. With SDBA investing techniques, contributors can access a broader range of investment options to support diversified portfolios. We customize these options with multi-asset class diversification to ensure balanced risk.
Funds may include investment options from:
- The S&P 500 Index
- International companies
- Exchange-trade funds
- Small- and mid-sized companies
Diverse investment options across a variety of company types and locations let us hedge against market volatility for the kind of growth that HNWIs desire.
How PathFinder Aligns with High Net Worth Retirement Goals
Retirement planning for high-net-worth individuals requires targeted strategies. The options available through the PathFinder platform offer financial advisors additional support as they craft plans and portfolio offerings for clients.
When you partner with ACM, we focus on mutual fund strategies and asset management so that you have more time to advise clients and build other investment plans. Our experience with SDBA investing makes this process efficient and can improve investment returns compared to individuals who self-manage or only rely on target-date funds.
Whether you’re looking at self-directed brokerage accounts for the first time or want personalized options, Advisors Capital Management has solutions that help you reach client financial goals, minimize tax burdens, and maximize the value of high net worth assets.
Schedule a consultation with us today to see how PathFinder can help you manage held-away retirement accounts for your high-net-worth clients.