Investing for high-net-worth clients can be a challenging endeavor due to the high amount of money that is usually involved in complex alternative investments. This makes it even more concerning when a major financial institution like Credit Suisse, starts facing woes and potential failure. For Tom Ruggie, a certified financial planner and wealth manager, the banking crisis was a wake-up call as his business was involved with the institution in a debt obligation that could have put his clients’ money in jeopardy if Credit Suisse had collapsed.
Despite the risk, many high-net-worth clients remain invested in alternatives, ranging from private equity to direct investments in start-ups. According to a survey from Deloitte, over one-third of those with assets worth more than US$250,000 have some form of alternative investment and more than 81% hold alternatives for their ultra-high net worth clients with more than US$30 million.
Accordingly, Tom Ruggie suggests that his clients have a varied portfolio, containing both traditional equity investments such as mutual and exchange-traded funds, fixed income, as well as private investments. He aims to have a mix that is tailored for each client depending on their individual needs and financial capacity. Generally, he warns not to put more than 10% of a net worth into non-traditional alternatives, while his own portfolio holds around 40%.
For those who are willing to take on the risks, private equity, hedge funds, and direct investments in start-ups offer incredible potential, while also advising against non-fungible tokens (NFTs) and cryptocurrency due to their speculative nature. For high-net-worth clients looking to get involved in private investments, Tom recommends starting at US$25,000 and to research the offering, while private equity and hedge funds usually require US$250,000 and US$5 million net worth, respectively, to be considered eligible.
Destiny Wealth Partners, a family office business and financial planning firm run by Tom Ruggie, is the perfect example of this. He believes that high-net-worth clients who have the financial capacity to take on risk and have large sums of money tied up in complex investments can benefit from these strategies. Even during difficult economic times, when others may be running for cover, investors can benefit from the potential gains and bonuses to be reaped from alternatives if done properly.
Tom Ruggie is a certified financial planner, wealth manager and author based in central Florida. He has over 26 years of experience in the finance industry and has written several books related to investing, money and personal finance. Destiny Wealth Partners and the financial planning firm he runs are company that provides the services necessary for high-net-worth clients to assess their needs and make smart decisions with their money. The company specializes in alternative investments and prides itself in its expertise to guide clients through difficult financial times while looking for opportunities in the long-term.