One of the biggest challenges in high net worth investing is not a lack of opportunity.
It is the opposite.
Lately, I have been a little quieter on here because I have been busy speaking at conferences in Melbourne, Brisbane and Sydney. My talks have covered not only how I work with clients, but also some of the key challenges faced by high net worth investors.
If I were to highlight one major challenge, it would be the overwhelming abundance of investment choices available.
When you have significant wealth, almost every asset class is open to you. There are thousands of investment products, private deals, real assets and specialist opportunities available both locally and globally.
That sounds like a luxury.
And in many ways, it is.
But it can also become a problem.
Too much choice can lead to decision paralysis or, worse, what I call magpie behaviour: chasing every shiny new opportunity that comes along.
The result is often an unfocused and unwieldy portfolio that looks more like a zoo than a clear and purposeful wealth strategy.
So what is the answer?
In my view, every high net worth investor should have a written investment philosophy.
This is a document that sets out your core investment beliefs, principles and objectives.
It acts as a guiding star.
It helps you know when to say no, when to look deeper and what kinds of opportunities are genuinely aligned with your goals.
That is incredibly valuable when there is so much noise.
One of the things clients often ask me is what an investment philosophy should include or what it should look like.
The truth is, it is deeply personal.
That is also one of the reasons I enjoy this work so much.
For some clients, their philosophy includes avoiding property because they already have enough exposure elsewhere.
Others choose not to invest in venture capital or limit their private equity exposure, preferring instead to focus on angel investing within their own area of expertise where they have real knowledge and influence.
Some clients believe strongly in indexing.
Others do not.
That is perfectly fine.
The point is not to copy someone else’s framework.
The point is to have one.
A well thought out investment philosophy helps ensure your decisions stay:
And in my view, that makes it one of the cornerstones of good wealth management.
To help people understand what this might look like in practice, I have chosen to share my own investment philosophy. To read mine click here.
It sets out the key principles and beliefs I bring to the way I think about managing money.
Yours will likely look different.
And that is exactly as it should be.
If you would like help developing your own investment philosophy and creating a clearer framework for your wealth, you can learn more about how I work with clients 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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