High-net-worth individuals face a swirl of inflation, interest rates, changes in regulations and economic cycles as they make financial decisions. This is where a financial advisor can step in with wealth planning to help make sense of these complex factors and how they affect long- and short-term goals.

The impact of inflation and taxes on wealth planning

Inflation can have a significant effect on high-net-worth individuals’ wealth plans. For example, rising inflation can prompt the Federal Reserve to increase interest rates, which means loans and lines of credit become more expensive. This can have a ripple effect; as businesses borrow less, economic growth can slow down, which influences everything from the costs of goods and services to stock prices. On the other hand, if interest rates go down, a wealthy investor may choose to refinance some debt or use the opportunity to start a new investment.

New or changed tax rules can also impact a range of decisions, from selling valuable assets or starting a new business to retirement planning and estate planning. If you own a business, tax changes may influence how you think about hiring, expanding or selling.

These are only a couple of trends that can affect high-net-worth individuals and their financial decisions, and they are why many choose to work with a financial advisor or wealth-planning service such as ÃÛ¶¹ÊÓƵ Wealth Way. A financial advisor brings extensive experience in all types of markets and economies. An advisor can provide historical context and help individuals stay aware of their biases. A wealth-planning service can also help with diversification, strategically spreading your investments among multiple asset classes, including stocks, bonds, cash and real estate.
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Understanding global economic factors and their impact on wealth planning

Global military conflicts, political turmoil and economic activities can drive banking policy changes, disrupt supply chains and affect the prices of commodities, including oil and gas. These factors collectively influence financial planning strategies. While everyone aims to grow their wealth, this potential growth comes with inherent risks. Financial advisors specializing in wealth planning can help you balance your financial goals with your risk tolerance.

Diversification can help here, too. While having a mix of asset types can help, financial advisors can also provide guidance for diversifying investments around the world. An experienced advisor can help identify economic trends outside the U.S., what opportunities they create for you and how an investment may or may not make sense based on your current portfolio.

Tax and estate planning in a changing economic landscape

Economic changes can also factor into tax and estate planning. If tax laws change, for example, you may need to adjust how you give gifts or transfer wealth to family members. Because the economy is always shifting, it’s important for high-net-worth individuals to update their financial plans and strategies regularly. Some common approaches include:

  • Putting money into tax-deferred accounts such as retirement plans or annuities, which delay taxes until later.
  • Giving gifts to family members each year to lower their taxable estate.
  • Setting up trusts such as a dynasty trust or an irrevocable life insurance trust, helps protect assets and reduce taxes when passing money to future generations.
  • Selling investments that have lost value to offset taxes on profits from other investments, also known as tax-loss harvesting.

Charitable giving is another great way for high-net-worth individuals to reduce taxes while supporting causes they care about. One option is to donate stocks or other investments, which helps investors avoid capital gains taxes. Setting up a donor-advised fund or a charitable trust allows people to make donations over time while getting tax deductions right away. A private family foundation is another option that gives families control over how their donations are used while lowering estate taxes. By including philanthropy in your financial plans, you can help others and make smart financial decisions.

Staying flexible amid constant change

Change is inevitable. Staying adaptable as economic trends come and go can help you take advantage of new opportunities, and a seasoned financial advisor can assist you in making the right decisions for your unique goals.

At a glance

  • Economic trends impact wealth planning, as changes influence financial decisions and investment strategies.
  • Global factors, such as geopolitical events and market shifts, can shape financial strategies and risk management.
  • Tax and estate planning require flexibility, such as using tools like trusts, tax-loss harvesting and charitable giving.

See how a ÃÛ¶¹ÊÓƵ Advisor can help guide you through all of life’s stages.

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Disclosure

ÃÛ¶¹ÊÓƵ Wealth Way is an approach incorporating Liquidity. Longevity. Legacy. strategies that ÃÛ¶¹ÊÓƵ Financial Services Inc. and our Financial Advisors can use to assist clients in exploring and pursuing their wealth management needs and goals over different time frames. This approach is not a promise or guarantee that wealth, or any financial results, can or will be achieved. All investments involve the risk of loss, including the risk of loss of the entire investment. Time frames may vary. Strategies are subject to individual client goals, objectives and suitability.

The information contained in this newsletter is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors, as the appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. Investing involves risks, and there is always the potential of losing money when you invest. The views expressed herein are those of the author and may not necessarily reflect the views of ÃÛ¶¹ÊÓƵ Financial Services Inc.

Neither ÃÛ¶¹ÊÓƵ Financial Services Inc. nor its employees (including its Financial Advisors) provide tax or legal advice. You should consult with your legal counsel and/or your accountant or tax professional regarding the legal or tax implications of a particular suggestion, strategy or investment, including any estate planning strategies, before you invest or implement.

Insurance products are made available by ÃÛ¶¹ÊÓƵ Financial Services Insurance Agency Inc. and by other insurance licensed subsidiaries of ÃÛ¶¹ÊÓƵ Financial Services Inc. through third-party insurance companies unaffiliated with ÃÛ¶¹ÊÓƵ Financial Services Inc.