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Key Moves for High-Net-Worth Investors in 2024

A high-net-worth businesswoman embarking on her luxurious private flight

A study conducted by Envestnet and The Center for Generational Kinetics reveals key insights into the mindsets of high-net-worth (HNW) investors in the U.S. across different generations. This study focused on the financial wellness and outlooks of these investors. It provides important data for financial advisors to help them enhance their wealth planning service quality and align their strategies with the needs of their clientele.

The study was conducted online between March 29 and April 25, 2023. It involved 1,500 U.S. participants aged 25–65, with two-thirds having an annual household income or net worth of $100,000 or more. It also included oversamples of 250 Higher-Earners and 250 High-Net-Worth individuals.

What are the financial concerns of high-net-worth investors?

A sense of financial insecurity become a concern among many Americans, particularly HNW individuals. A significant drop in the sense of financial security was observed among affluent Americans, with only 59% feeling financially secure in 2023. This marked a decrease from 72% in 2022. Additionally, concerns about future financial security rose from 46% in 2022 to 62% in 2023, mirroring the uncertainties and market instabilities experienced over the past year.

The study highlights a generational split in investment strategies in response to market fluctuations. While older affluent generations are cautiously sticking with their investments, younger ones are diversifying and seeking more financial knowledge. The study also highlights a heightened sensitivity to tax impacts among HNW and higher-earning individuals.

What role do financial advisors play?

Different generations seek financial advice for varied reasons. Older generations predominantly seek guidance on life stages, wills, or trusts, whereas younger generations consult for major life changes and financial decisions. Notably, 79% of affluent Gen-Xers prioritize retirement planning, while 33% of younger affluent investors focus on business development.

Why planning for retirement is crucial for high-net-worth investors

Retirement preparation remains a top concern for HNW investors. Experts suggest that advisors should broaden their advice scope to include estate planning, tax advice, and other services. They highlight the need for clients to assess the impact of interest rate changes on their investments and the possibility of rebalancing their portfolios. Retirement cash flow projections can help align clients' situations with their retirement goals.

The benchmark for a successful retirement was previously set at $1 million. It has now increased, especially for individuals planning to live in high-cost cities.

Tax concerns that impact high-net-worth investors

Tax planning has also become a serious concern. Bryan Kirk, director of estate and financial planning at Fiduciary Trust International, points out the significance of the upcoming presidential election and the potential expiration of tax cuts from the 2017 Tax Cuts and Jobs Act in 2026.

HNW investors face the possibility of an increased tax burden and a reduced estate tax exemption, which is currently at about $13 million for individuals. Kirk advises utilizing the exemption before potential reductions and exploring various tax planning options.

Changes could include increased tax rates and a reduced standard deduction. This could necessitate immediate planning for conversions, such as from a traditional IRA to a Roth IRA. HNW investors should also consider charitable giving as a strategy to mitigate tax burdens.

Reach your investment goals with the help of an experienced financial coach

Riding out turbulent economic times can be stressful. If you're an HNW individual, the current economic challenges necessitate a smart and innovative approach to investing.

At DeWitt PLLC, we can help you protect your assets, secure your legacy, and much more. We offer financial coaching services that are tailored specifically to your investment needs. That includes tax compliance, wealth management, investment structuring, and estate planning.

Contact us online or call our South Miami office to find out how we can help you. We'll gladly help you explore your financial options and provide honest answers to any questions you have.

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