How the super rich bank differently than the rest of us
Research reveals the rich and ultra-rich set themselves apart from most, particularly when it comes to saving, investing and banking. No one does it alone, and many utilize advice from financial professionals.
Here’s a look at some of their most common financial habits.
1. The Rich Use Private Wealth Management
High-net-worth individuals aren’t going to walk into a bank and ask for a regular checking account. They’d miss out on valuable benefits associated with private banking services. Seeking out a private wealth manager or financial advisor might make more sense when there’s a large amount of money involved.
Instead of dealing with a bank teller or calling into a customer service hotline with account questions, rich clients can speak with their own dedicated manager who’s familiar with their accounts.
2. The Rich Stick With Big-Name Banks
High-net-worth individuals often turn to well-known brands to meet their banking needs. According to a recent study, 32% of Americans with a net worth between $5 million and $25 million choose to do business with either Bank of America or Wells Fargo.
Credit unions and community banks are becoming more technologically savvy. But big banks are more likely to offer the latest and most innovative products and services.
3. The Rich Invest Heavily to Grow Their Wealth
Many wealthy investors understand the need to make smart investments in order to hold on to their wealth and boost their net worth. Individuals with a net worth of $100,000 to $25 million, only have 13% of their assets in cash or liquid investments while nearly 60% are equities, meaning they’re investing the bulk of their wealth in the market.
Another survey found the typical American investor keeps 65% of their assets in cash and only 18% in equities. The takeaway? When it comes to banking and investing, the rich and ultra-rich aren’t afraid to gamble with their investments to potentially earn greater returns.
The Best Way to Start Banking Like the Super Rich
Whether you’re already a savvy investor or building up your retirement savings, the most reliable way to start banking like the wealthy is to work with a financial advisor. These financial professionals can offer unbiased advice on how best to grow your portfolio and increase your savings, regardless of your current financial status.
While the value of working with a financial advisor varies by person and advisors are legally prohibited from promising returns, research suggests average additional investment returns can range from 1.5% to 4% each year.
Voya Financial found that 79% of people who use an advisor said they “know how to pursue achieving their retirement goals.” The study also found that 59% of those who use an advisor have calculated how much they need to retire, while 52% established a formal retirement investment plan.
How to Find the Right Financial Advisor for You
Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with top fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is legally bound to act in your best interests. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.
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