As a high net worth individual (HNWI), you likely know what your portfolio is worth. But do you have a clearly defined sense of what your wealth is for?
Financial success can build confidence, create freedom, and foster contentment, but there are limitations to focusing solely on stock market performance, benchmarks, and tax efficiency.
Wealth can bring complex choices, and it is most effective when aligned to a strong sense of purpose. It’s here that the concept of “human return on wealth” comes in.
Key takeaways
- The value of your wealth can be measured by what it enables as well as what it returns.
- Advice can help you resolve emotional trade-offs as well as financial ones.
- A focus on purpose could improve your investment, gifting, retirement, and succession decisions.
- Thoughtful planning can turn your wealth from a source of pressure into a source of confidence.
Keep reading to find out more.
It might be valuable to frame your wealth around your personal goals and values
Wealth can bring opportunities, but it can create tension and anxiety too. Money dilemmas might include decisions around:
- Spending or consolidating
- Supporting children or encouraging independence
- Valuing privacy or recognising the need for transparency.
Managing these tensions is key to achieving your long-term goals.
When used in the right way, wealth can be empowering, providing a sense of control and the space to give to family, create memories, and leave a lasting legacy.
At HFMC Wealth, we believe that your investments should be measured by what they enable, not just what they return. Begin by asking yourself some simple questions:
- What would I like my wealth to make possible over the next year or decade?
- Am I preserving wealth with purpose or simply from habit?
- What represents a good human return on my wealth?
You might want to spend more time with family, travel the world, or give back to those who have helped you along the way.
By reframing your wealth around personal goals and a clear purpose, rather than merely thinking financially, you could enjoy the human returns on this investment.
Advice can help you consider the human return on your wealth
Financial planning is about more than just numbers. It’s a tool for confident and evidence-led decision-making linked to your personal goals.
Human return on wealth will mean something different to everyone but will likely include peace of mind and security alongside the chance to provide family support, meaningful experiences, and a lasting legacy.
Here are just three ways professional financial advice could help you refocus on human returns.
1. Cashflow modelling and life’s “what if?” questions
As an HNWI, you’ll have plenty of financial options on the table, but the paradox of choice means this won’t necessarily be a good thing. Too many choices can lead to overwhelm and decision-paralysis, feelings that are only heightened when large sums are involved and the ramifications of a poor choice could be significant.
Cashflow modelling allows you to ask life’s important “what if?” questions and visualise the real-world impact of your choices. These projections provide a clear picture of potential outcomes, empowering you to make the best decision.
These questions might include:
- What if I stepped back from work to spend more time with my family?
- What if I retire now rather than wait another 10 years?
- What if I redirected funds to help my children onto the property ladder?
Ask yourself what you want your wealth to achieve and then speak to us. We can use cashflow modelling to help you see what the human return on your wealth could really look like.
2. Estate planning and the need for communication
Discussions around money, mortality, and legacy can be difficult. Many families need help resolving wealth’s emotional trade-offs as well as the financial ones. This help usually starts with clear communication.
A simple conversation and the right financial plan can help families make decisions that feel technically sound and personally right.
Where estate planning is concerned, sitting down with an adviser is an important first step, allowing you to think about what legacy and inheritance mean for you, financially and emotionally. This discussion might even represent the moment HNWIs start thinking seriously about legacy for the first time.
Once you have a clear purpose for your accumulated wealth, it’s time to communicate those wishes to all concerned parties.
Having faith in your plan allows you to conduct these discussions with confidence, clearly laying out your wishes and the thought behind each decision, allaying fears and heading off any potential conflict further down the line.
3. Regular life-stage reviews and invaluable peace of mind
Understanding what human return on wealth means for you and putting a plan in place to help you achieve your goals is just the start.
Life throws up obstacles and complexities at every turn, and that’s why professional advice is never a “one and done”. Regular reviews help to ensure your plan remains aligned to your goals as circumstances change, whether those shifts relate to government legislation or your family dynamic.
This ongoing support ensures you have peace of mind at every stage along your journey.
Get in touch
A focus on wealth’s human return can provide peace of mind, giving you optionality and the chance to provide family support, financial independence, and a lasting legacy.
If you have any questions about finding the emotional purpose of your wealth, get in touch with HFMC Wealth today. Contact us online or call 020 7400 4700 today to help plan your loved ones’ financial future.
Please note
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
The value of your investments (and any income from them) can go down as well as up, and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
