In my experience, most high-net-worth portfolios don’t look how you’d expect. Given the substantial asset sizes, there’s often an assumption that they’ll resemble institutional funds, highly diversified, rigorous, and methodically structured.

In my experience, they rarely are.

High-net-worth investing is more personal and nuanced than that, as it should be. Your investments should reflect who you are and what you value. A portfolio should speak to the interests, expertise, and, yes, even the biases of the people behind it. And that makes sense. If a family or individual has a deep background in venture capital or real estate (most commonly), why wouldn’t you lean into those strengths?

That said, this level of personalisation also means that it is critical to get your investment policy and governance right. In my experience, there is a lot to be said for avoiding large losses, not just chasing big wins.

Here are some of the biggest mistakes I see families and high-net-worth (HNW) individuals make:

1. Fees Matter
   Pay careful attention to fees—they eat away at your returns.  Pay careful attention to them. They eat away at your returns. A 2% annual fee versus 1% reduces your final return by up to 20% over 30 years. Fee structures can be complex and opaque, so make sure you understand how they work. They also dictate how managers will behave with your money.
2. Watch Liquidity
   Liquidity doesn’t matter until it does. It becomes an issue when everyone is charging for the exit. While illiquid investments can bring higher returns, they also come with risk. Be clear on what you need from your portfolio so you understand how much illiquidity you can tolerate.
3. There’s No Free Lunch
   High yields and returns come with higher risks. Understand that there is a fine line between a 10% yield and zero.
4. Make sure you own a portfolio, not a Zoo
   Know what you own and why. Understand your largest positions and make sure the investment thesis is strong enough to justify their size. Diversification matters, but too much of it can be counterproductive—you end up with a tonne of small positions that, even when they perform well, are meaningless in the context of your overall wealth.
5. Just because you can, doesn’t mean you should
   You don’t have to own everything. You don’t have to do everything. Not every opportunity is the right one for you. Know when to say no.

Clear governance and regular reviews help you run your investment portfolio with intention and rigour. My role is to be a sounding board—to help clients build portfolios that reflect their values and what they’re looking to achieve. If you’d like to discuss your portfolio, [contact me here].

Kind regards,

Shelley Marsh
Outsourced Chief Investment Officer (OCIO) & Founder
Wealth Differently

General Advice Warning: Wealth Differently holds an Australian Financial Services licence to provide services to wholesale clients only. The information on this website is only for persons who are wholesale clients as per s761G of the Corporations Act. The information includes general advice which does not consider your particular circumstances and you should seek advice from Wealth Differently who can consider if the strategies and products are right for you. You should also understand that past performance is often not a reliable indicator of future performance and should not be solely relied upon to make investment decisions.

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