5 Strategies High-Income Earners Use To Guard Their Wealth — That You Can Use, Too
Written by
Laura Bogart
Edited by
Kristen Mae
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Growing up, you probably had that one wealthy person you greatly admired — that favorite aunt or uncle who had a chic car and stylish clothes, and who definitely gave the best presents. Or the cool neighbor whose house was just a little nicer than yours, whose yard was the envy of everyone else.
As you got older, you started to meet other friends and colleagues who made a lot of money and learned how to use it wisely — because they understood how to protect it.
Knowing how to build a high-income career is important. But financially savvy people also know that it’s equally important to understand how to safeguard their money. They hire financial advisors to give them the best strategies and insights for building on their earnings and creating a more secure financial future.
Fortunately, these tips are relatively easy to follow, even if you’re still working your way up the income ladder.
1. Diversification
Matthew Chancey, CFP, founder of Alpha Tax Title, knows a thing or two about working with high-net-worth individuals. When he thinks about what he’s seen, he goes back to the classic investment saying: concentration — as in picking the right stock or the right investment at the right time — can make you rich, but diversification can keep you rich.
“High-net-worth clients are already above average, and most are more interested in keeping the lifestyle they have instead of becoming much wealthier quickly, so they favor diversifying their assets,” he said.
Diversification means spreading your investments across different asset classes, like stocks, bonds, real estate and cash, so that no single downturn can wipe you out. It’s a simple concept with powerful protective benefits.
2. Risk Management
When Evan Luongo, CFP, founder and lead advisor at NoDa Wealth Management, works with his high net worth clients — many of whom are balancing their careers with parenthood — one of the most important pieces of advice he offers is to create a more resilient financial structure. This can help them stay secure and grounded, even when faced with swings in the market or disruptions to their income.
A key part of this structure is having the right life insurance in place. That includes life insurance, disability insurance, and, in some cases, umbrella liability coverage. Determining the right mix for your situation can be tricky, so it’s essential to get personalized advice from a finance professional or insurance broker.
3. Tax-Efficient Investing
Another priority Luongo stresses with his high net worth clients? Remember, it’s not just about your returns — it’s what you actually get to keep.
“That means thoughtful asset location, leveraging tax-advantaged accounts, and ensuring diversification across asset classes and account types,” he said.
This is advice that Gerry Barrasso CPA, CFP, PFS, founder and president of United Financial Planning Group, also gives his clients. He encourages clients to go for low-cost, tax-efficient ETFs and municipal bonds to reduce tax burdens. He’s also a fan of leveraging charitable giving through donor-advised funds, qualified charitable distributions (QCDs), or charitable remainder trusts. During down markets, Barrasso says clients can also incorporate tax-loss harvesting to offset capital gains in their portfolio.
4. Estate Planning
With proper estate planning, high earners protect their wealth now while also ensuring it lasts into future generations.
For Barrasso, the first step involves hiring a qualified estate planner to help clients start the process. This professional should be in communication with your financial advisor and tax advisor, if you have one.
“Ask your estate planner about strategies to reduce estate taxes and protect your wealth,” he said. “They should have suggestions that fit your situation.”
This could include setting up trusts, updating beneficiary designations, and creating a will or advance directive — all smart moves to make sure your wishes are carried out and your wealth goes where you want it to.
5. Working With Experts
People who’ve risen up in the ranks to earn a high salary have one major skill in common: They know when to bring in experts. Indeed, Barrasso said that one of the smartest money moves high-net-worth individuals make is hiring a team of professionals — including financial planners, tax experts and estate attorneys — who can help them develop a comprehensive, personalized strategy for building and protecting their wealth.
“Don’t do any of this blindly. For your investments, work with a professional that can put together a tax-efficient investment plan based on your situation and goals,” Barrasso said. “I recommend using a fee-only fiduciary, preferably with CPA or Enrolled Agent credentials as well. Experience in tax planning is critical.”
In his experience, hiring the right professionals saves time, reduces stress, and can ultimately lead to better long-term financial outcomes.
Looking to build a legacy? Check out our Life to Legacy guide for expert advice and smart moves you can make today.
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