The Little Red Book of Retirement Chapter 1

The financial services industry uses HNW as a classification to designate an individual or family of high net worth. Every region and financial institution classifies high net worth differently, but generally, they are grouped based upon a given dollar amount of their liquid assets. HNW can qualify for separately managed investment accounts instead of regular mutual funds depending on the financial institution and their minimum standards for HNW classification. Most banks will only give special HNW treatment for those who qualify by maintaining a specified amount in liquid assets and/or a certain amount in depository accounts.

All liquid and near-liquid assets (cash, brokerage and bank accounts, retirements, 401 k’s trusts, etc) that can be readily converted into cash are known as invest-able assets. They do not include the value of certain “physical” assets such as real estate, automobiles, art, jewelry, furniture, collectibles, or equity in a business.

The specific definition varies, but by most standards a “High Net Worth Individual” (HNWI) has at least $1 million of liquid, invest able assets. If that individual, either alone or together with a spouse has a net worth of over $1 million they can also be classified as an “accredited investor”.

For many, an “affluent” individual is someone who has less than $1 million, but more than $100,000 of invest-able assets. But once you achieve the 30-million dollar mark you’ll be considered an “Ultra High Net Worth” investor.

Read below for David’s personal insight and the inspiration behind this chapter:

We’re going to continue our series on The Little Red Book Of Retirement, our latest book, my latest book, for high-net-worth clients. I get the question all the time, “What is high-net-worth client?” Really, it’s just an industry term that classifies how much a family, or an individual, has in their portfolios. And every region is a little different. And each firm kind of classifies it differently. But the good thing about high-net-worth clients is they can qualify for what’s called simply managed accounts, as opposed to just mutual funds.

And the reason that’s important is that if you have a simply managed account, it is what it says. It’s simply managed. It’s for you. It’s like your own fund. And the reason that’s important is because 1)  Your taxation is going to be a lot less because we get to decide –  you get to decide –  when we buy and sell certain securities. And also we get the luxury of having to pick our own securities and, typically, the cost are a lot less than traditional mutual funds, significantly.

And so one of the high-net-worth client, relative to net worth, typically, you’re talking about a million dollars or higher. That’s the industry standard of high-net-worth clients. And those assets are typically 401k(s), mutual funds, brokerage accounts, bank assets, CDs, cash. All those types of assets are what are considered in a portfolio. What’s not considered is real estate, automobiles, equity in a house, equity in a business. Those are the things that are not considered part of investible assets, part of what a high-net-worth client has.

So our minimum as a firm is about $500,000. And the reason we have minimums, our average clients really in the one to two million dollars of investable assets or higher. And the reason we work with clients like that, like yourself, is that you need planning. You saved money. You need planning. We need more than an investment plan. We need a retirement income plan.

You can download the entire book of The Little Red Book Of Retirement for high-net-worth clients by clicking here: DOWNLOAD HERE , and also take advantage of our second opinion where I will talk about ways to reduce your taxes, increase your income, and just have an overall better experience in retirement.