Are you a high net worth individual who just married the love of your life? Never overlook the importance of mutual understanding, trust and open and honest communication to grow and preserve your wealth.
Eric Enslin, CEO of FNB Private Wealth and RMB Private Bank, says, “One of the attributes of successful wealth management is working together as a family towards a common goal. As a result, both partners should be intimately involved in their wealth journey in order to build a family focused wealth legacy that can be transferred to the next generation.”
Common mistakes that high net worth couples make:
- Not consolidating wealth advisory
Working with the same advisor can save you on advisory fees, consolidate your financial commitments such as investments and bank accounts, and help you benefit from wealth management advice that takes both of your goals and aspirations into account.
- Neglecting estate planning
A fundamental mistake that high net worth couples make is taking estate planning for granted, which can leave you vulnerable in the unfortunate event that one of you passes away. Ensure that there is an updated will in place that provides certainty on issues related to debt, trust structure, personal and business assets.
- Lack of transparency
Communication is as important to wealth management as it is a successful marriage. Both you should openly talk about money management issues and reach mutual understanding on investments, tax strategies, business decisions and challenges, as well as long-term wealth strategies.
- Not sharing responsibilities
Entrusting one partner to manage the entire family’s financial affairs is a mistake that can lead to long-term ramifications. Both partners should be actively involved so that they are both in a good position to pass on knowledge to their heirs.
- Poor prenuptial agreement
An agreement should be reached upfront on how assets and income acquired prior to the marriage should be distributed in the event of a divorce or legal separation. Failure to enter into a comprehensive prenuptial agreement can lead to a lengthy and costly legal battle.
Enslin says, “Growing and preserving wealth requires both partners to actively work together to hone and develop family values in order to build a lasting legacy. Moreover, getting the right wealth management advice that takes into account the whole family’s needs is equally important.”
Source: FNB. Image: iStock