In my experience, most high net worth portfolios do not look how you might 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.
And that is not necessarily a bad thing.
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 investors make.
Pay close attention to fees. They quietly eat away at returns over time.
A 2% annual fee versus 1% may not sound like much, but over 30 years it can reduce your end result by around 20%.
Fee structures can also be complex and opaque, so make sure you understand how they work. They do not just affect returns. They also dictate how managers will behave with your money.
Liquidity does not matter… until it does.
It becomes an issue when everyone is heading for the exit at the same time.
Illiquid investments can absolutely have a role in a portfolio, but they come with trade-offs. Be clear on what you need from your portfolio so you understand how much illiquidity you can genuinely tolerate.
High yields and high returns usually come with higher risk.
That does not mean avoid them entirely. It does mean understand what you are being paid for.
There is often a very fine line between a 10% yield and zero.
Know what you own and why you own it.
Understand your largest positions and make sure the investment case is strong enough to justify their size.
Diversification matters, but too much of it can become counterproductive. You can end up with a collection of tiny positions that, even if they perform well, make almost no meaningful difference to your overall wealth.
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 manage wealth with more intention and rigour.
My role is to act as a sounding board and independent second set of eyes, helping clients build portfolios that reflect their values, priorities and long term goals.
If you would like an experienced, independent review of your portfolio, you can learn more about my independent Outsourced Chied Investment Officer (OCIO) service 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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