6 reason why independent financial planning can be your legacy’s biggest risk

We believe in the value of collaboration. 

Some of the best creations come from working together, sharing ideas, and understanding different opinions – all things that a knowledgeable financial advisor can offer.  

An outside, professional perspective can be invaluable for building a robust portfolio that withstands market peaks and troughs. Even more specifically, it can alleviate certain risks associated with independent financial planning.  

Here are 6 common risks associated with independent financial planning.  

1. Losing sight of perspective 

It is natural for HNWIs to use their wealth to better their lifestyle and when you have the means to attain the best, it can be tempting to lose sight of perspective. But, for many of the wealthiest individuals, maintaining perspective and spending below their means has secured their success.   

Having a trusted financial advisor that gives unbiased advice goes a long way towards maintaining your wealth, reassuring you during market uncertainty to remain focused on your long-term goals. 

2. A smaller legacy  

It is likely that you feel comfortable with your wealth now and, for that reason, do not feel the need to seek out professional support. However, the most valuable financial support sees the importance of financial stability in the long-term – not just in your lifetime but also for generations to come.  

After working hard to accumulate your wealth over time, it is natural to want it passed on to the right people. But ensuring that happens takes early legacy planning and, without the appropriate professional support, you can be at risk of not leaving behind the legacy you want.  

3. The danger of becoming too risk-seeking 

A study by Barclays Wealth showed that wealthier millionaires were more likely to agree with statements such as, ‘to do well in financial markets you have to buy and sell often’ and ‘I wish I could take a more disciplined approach to my finances’.  

As your wealth grows, you will develop the means to afford taking losses however there is an artful balancing act to risk-taking. Knowing the line between advantageous and disadvantageous risk is difficult but necessary. Having reliable advice to help you navigate through these complexities can eliminate your risks from the start.  

4. The risk of a portfolio not being diversified enough 

Diversifying a portfolio takes time and thorough research. Without a doubt, having a collective approach that values different perspectives is beneficial here. With more minds come more ideas and approaches; something that is invaluable in diversification. A diversified portfolio is a more robust portfolio, but the way to building that would benefit from dependable financial advice.  

5. Tax inefficiency 

Being tax-efficient is all-the-more important as a HNWI. As tax rates often increase in accordance with wealth, the wealthiest individuals need to pay attention to relevant tax rules and how it will impact growth. 

But navigating through tax regulations is complex, time-consuming, and filled with uncertainty over whether you’ve found the most tax-efficient solution. Professional financial advice can offer reassurance and support, while decreasing the risk of any tax liabilities.    

6. Unpredictable loss 

However good you might be at managing your assets, unpredictable life events will inevitably occur. Whether it be health-related, job-related, or family-related, upsets are always bound to happen and without a supportive financial advisor, you might find yourself trying to strike a balance with your financial and personal well-being, when your focus should remain on yourself or your loved ones. 

Having a dependable wealth managemer can alleviate your financial burden through these times, allowing you to focus on putting yours and your family’s wellbeing first.  

Wanting to independently focus on your wealth is understandable. It is a deeply personal matter, and it is natural to feel protective over that. However, with bespoke financial planning and asset management, you will have more time to focus on all the things you love doing – something far better than dwelling over your finances.