One of the attributes of successful wealth management is working together as a family towards a common goal, says Eric Enslin, CEO of FNB Private Wealth and RMB Private Bank.
“As a result, both partners should be intimately involved in their wealth journey in order to build a family focused wealth legacy that can be transferred to the next generation,” he says.
Having advised many families about wealth building, Enslin has noted a few common mistakes that high-net worth couples make.
· Not consolidating wealth advisory – working with the same advisor who provides tailored services for the entire family has many advantages. Couples can save on advisory fees, consolidate financial commitments such as investments and bank accounts as well as benefit from wealth management advice that takes both their goals and aspirations into account.
· Neglecting estate planning – a fundamental mistake that high-net worth couples make is taking estate planning for granted, leaving them vulnerable in the unfortunate event that one partner passes away. This poses a serious threat to the family’s wealth if there isn’t an updated will in place that provides certainty on issues related to debt, trust structure, personal and business assets.
· Lack of transparency – it is often said that communication is one of the building blocks of a successful marriage; the same principle applies to wealth management. Couples should openly talk about money management issues and reach mutual understanding on investments, tax strategies, business decisions and challenges, as well as long-term wealth strategies.
· Not sharing responsibilities – entrusting one partner to manage the entire family’s financial affairs is a mistake that can lead to long-term ramifications. Both partners should be actively involved to be in a good position to pass on knowledge to their heirs.
· Poor prenuptial agreement – an agreement should be reached upfront on how assets and income acquired prior to the marriage should be distributed in the event of a divorce. Failure to enter into a comprehensive prenuptial agreement can lead to a lengthy and costly legal battle.