As we discuss high net worth, it might start to sound scary. To an extent, it is. Most people think that if you have money, then you will not have problems. You can simply solve your problems with cash. While money can solve a lot of problems, it creates new problems of its own. This is not to discourage you from building wealth. This is to inform you of the nature and effect that you might expect when you get there. As you build wealth, moving from debt freedom, to affluence, to financial independence, to high net worth and beyond, you are trading one set of problems for another, better set of problems, each step of the way.
For example, when you are saddled with debt, you might have problems making your mortgage payment, or finding money for food. These are incredibly stressful problems. Once you work your way out of debt, and you are building wealth, you will have problems such as friends not understanding why you are not eating out, or driving around in a beat up car because you are so focused on hitting that magic number in your net worth. Further down the line, you may have problems with friends and family hitting you up for money and scammers at your door. Eventually you trade those issues in for the challenges of estate planning, tax planning, and setting up trusts and/or charitable foundations. Deciding which world problems to tackle is a much better problem than wondering how you will eat tomorrow.
In the realm of large scale wealth, tackling your new set of problems now requires a team of experts. Your first team will likely include an accountant to advise you on tax matters, a wealth manager to watch the markets and keep your investments profitable, and wills and estates attorney to help you ensure your wealth ends up in the right hands after your death through mechanisms like wills, trusts and other legal instruments.
The first time that you put together this team will seem like drinking out of a fire hose. Just finding a GOOD accountant, a good wealth manager and a good wills and estates attorney are hard enough. There is massive vulnerability in choosing poorly here. Pick the wrong ones and your money will disappear faster than Houdini. Pick the RIGHT ones and your net worth will grow, protected and assured.
At first, you will be a deer in the headlights, just tying to understand everything they are telling you, and making all the decisions they will ask you to make. Once all the initial set up is in place, these professionals can do their job largely without your involvement. And then it hits you… you have a TEAM. That is scary, actually. And a bit exciting. You are on a new level now and must rise to meet it.
Money has an interesting effect on character… it magnifies it. If you were an asshole when you were broke, you will be a massive asshole when you are wealthy. If you were kind, you will be a saint. Interestingly, YOUR wealth will have the same effect on OTHER people. If your kids were entitled and manipulative before, they really will be now. If your ex-spouse was… well, whatever they were that made them your ex…. that too will be magnified and they will all come. People you never even met will be accusing you of things that never happened.
At some point, whether you are showing off flamboyantly or not, word will get out that you have money, and people will come after it. All kinds of people… people you never even met, and your closest family. And you will add another one or two people to your team: lawyers. You will endure a phase where you are not only fighting off attacks from every angle, you are (if you’re smart) using these lawyers to clean up any vulnerabilities you might have hanging out there from past mistakes, and forging solid, protective walls around you and your wealth to ensure no new vulnerabilities arise.
If you have not yet faced these kinds of attacks, lawyer up NOW to assess your vulnerabilities and prepare strategies to mitigate them while you still have time. Don’t avoid this critical step.
If you enjoy travel, especially as an UHNWI, but even as a HNWI, you might also have a kidnapping problem. This is a problem even for those who have a recognizable name, regardless of wealth, because a recognizable name makes your would be kidnappers assume you are wealthy, even if you are not. It pays to read up on strategies to avoid this. For some, depending on where you are traveling, your might choose to hire a security team. If you do, vet them carefully to make sure they are not easily paid off to assist the very kidnappers that you are avoiding. At a minimum, use a fake name for all hotel registrations, dinner reservations, and car services. You might choose one name per trip and use that name at each of the hotels, restaurants and car services that you use. OR you might change your name for each service. OR you might change your name every day. In extreme circumstances, you might even take the approach of booking several hotels and rotating between them. Or you might just pick a safer place to travel.
The point is to assess your security needs and act accordingly. A consultation with a security professional might be in order.
It is usually after such legal attacks, and a kidnapping threat or two, that the wealthy decide that quiet wealth is better than fame. They go underground for a while. They show off less. They might even move to another, more rural area. Who can blame them? When fame cannot be avoided, smart HNWIs are found keeping as low a profile as possible. Now you know why.
