Financial Plans of the Ultra-Wealthy


“Champagne wishes and caviar dreams” is something that Robin Leach would say at the conclusion of “Lifestyles of the Rich and Famous”.  This television show aired for 10 years starting in the mid-1980s.  It showcased the luxurious lives of the ultra-wealthy.  It would feature homes, collections, vacations, and lifestyles of those ultra-wealthy investors.  This show was wildly popular during that time because everyone wanted to know how those investors lived.  This curiosity would have been best directed at knowing what types of financial planning those investors utilized and what they included in their plan.

Investors that have a net worth over $5 million dollars have different topics that they include in their financial plans according to recent research from Spectrem Group.  These ultra-wealthy investors are far more likely to include a number of components in their financial plans than their less wealthy counterparts.  Over three quarters of these investors include a statement of net worth in their financial plan, while less than half of investors with a net worth below $1 million have that included in their financial plan.  Those investors that have a net worth between $1 million and $5 million are in between with two-thirds including a statement of net worth in their financial plan.

Another component that is included by more investors at the highest wealth levels is estate planning recommendations and structure.  Just under two-thirds of these ultra-wealthy investors include estate planning recommendations and structures in their financial planning.  This is in stark contrast to the 42 percent of investors with $1-$5 million in net worth that utilize estate planning in their financial plans.  Only 21 percent of those investors with a net worth below $1 million include estate planning recommendations and structures in their financial plan.

Cash flow analysis and a household financial statement are also far more likely to be a part of the financial plans of ultra-wealthy investors.  The inclusion of these components indicate that those investors at the highest wealth levels may treat their financial plan similarly to running a business, as those are tools often used in the business world.  Tax planning is another component of financial planning that is more likely to be included in the ultra-wealthy’s financial plans.

This difference can be used as an educational tool for investors at lower levels of wealth.  Including estate planning, cash flow, financial statements in financial planning can provide a much clearer picture of an investor’s overall financial life.  This clarity can lead to increased savings or potential changes in investment allocation after evaluating the household financial statement and cash flow.  Mirroring the financial planning actions of the ultra-wealthy can be a positive move towards creating more wealth among those who have not yet achieved those wealth levels.

A word of caution however: while it can be helpful to include components in a financial plan that is most often utilized by wealthier investors, it is wise to keep investments, retirement planning, and spending more specific to each individual’s unique situation.  We can all have champagne wishes and caviar dreams, but we can’t all have it in real life.