Mark Hauser, a seasoned private equity investor and entrepreneur, highlights various wealth management strategies and breaks down the basics for novice investors.
The often-used term “wealth management” may conjure up visions of well-heeled investors analyzing their portfolios with top-tier financial advisors. These meetings may take place in the advisor’s well-appointed office, although stakeholders could also meet in their client’s luxurious home. Either way, well-off investors and their families are often skilled at the finer points of wealth management.
Fortunately, wealth accumulation and wealth management aren’t restricted to already-wealthy individuals. Private equity expert Mark Hauser states that people in diverse income brackets can often access wealth-building tools and resources. Through careful long-term investments, and advice from a qualified financial advisor, they can make progress on their own wealth management goals.
By any definition, wealth building is a long game that often takes decades. Investment consultants who promise fast returns and high yields are essentially preying on aspiring investors who haven’t performed their own due diligence. Private equity principal Mark Hauser strongly recommends that investors avoid these “get rich quick” scams.
Fortunately, time-tested wealth accumulation strategies can help anyone grow their long-term net worth. When individuals are financially able to invest, proven wealth management guidelines can provide a foundation for success.
Achieving any worthwhile goal involves careful planning and sustained commitment. When obstacles arise, developing a targeted resolution strategy helps an individual to avoid distractions and rash actions. By remaining focused on the goal, they are well-positioned to accomplish it.
Private equity expert Mark Hauser states that this approach also applies to an individual’s wealth management journey. In overly volatile financial markets, an investor who retains an unwavering vision of their goal is more likely to achieve it. To enable a successful outcome, Mark Hauser discusses seven foundational wealth management principles.
Before an individual can address their financial goals, they should ideally focus on their feelings about (and past dealings with) money. These messages and experiences can influence an individual’s future financial choices. Specifically, they could choose a lifestyle that revolves around the acquisition of money. Conversely, they might opt for a frugal lifestyle in which money carries very little importance.
Once an individual becomes aware of obsolete (or even detrimental) messages about money, they can banish them in thought and practice. Concurrently, the person can elevate the money-related messages that reflect their current beliefs and mindset. Now, says Mark Hauser, the individual can strive to make financial decisions that reflect these core values.
Next, the individual should determine what they plan to achieve by acquiring their wealth. Maybe they want to enjoy a rewarding retirement filled with travel and good relationships. Perhaps they want to start an intriguing new business. Maybe they want to ensure their spouse is financially secure if the individual passes away first.
Regardless of the individual’s motive, internalizing their primary goal will enable them to make decisions that support this objective. Concurrently, they’ll be better able to steer clear of strategies that don’t align with their financial goal.
Each individual should create a personal net worth statement (or personal balance sheet). This financial statement lists the individual’s assets and liabilities at a specific point in time. By subtracting the liabilities from the assets, they can determine their personal net worth.
Equipped with this information, the individual can identify changes in their financial situation. Mark Hauser recommends that they conduct monthly reviews of bank and credit card statements. A budgeting program may also be useful in tracking cash flow and expenses relative to financial goals.
Every year, an individual should reflect on major life changes during the most recent 12-month period. Examples include a change to marital status, a job loss, or a significant change in home value. These issues may require an individual to modify their financial affairs accordingly.
Private equity expert Mark Hauser says keeping good electronic records helps ensure financial information is easily available. Important financial documents include tax returns and supporting information, insurance contracts, and estate planning documentation. Financial institutions typically make relevant documents available online.
In today’s highly digital world, individuals find it increasingly simple to gain access to personal and financial information online. Unfortunately, identity thieves and other cybercriminals could also obtain these details. Equipped with just one or two bits of information, a fraudster can open accounts in an individual’s name. The criminal could also gain access to an individual’s financial institution accounts.
To avoid these potentially disastrous outcomes, Mark Hauser recommends that individuals use a distinctive password for every online site. A digital password manager can streamline this process. Multi-factor authentication is another tactic designed to ensure that only legitimate users can access an account.
Finally, by contacting the three primary credit agencies, an individual can freeze their credit. Therefore, a fraudster cannot open any new accounts in the person’s name.
Before developing an investment strategy, an individual should ensure they have a workable understanding of how investments work. First, private equity expert Mark Hauser recommends that potential investors acquaint themselves with common investment vehicles. Examples include stocks, bonds, mutual funds, ETFs (or exchange-traded funds), and real estate.
An investment’s risk typically corresponds to its potential reward. Therefore, higher-risk investments carry potentially high rewards. In a similar vein, when an investor holds a risky asset for a longer term, they may see less variability in average annual investment returns.
With these and other factors in mind, Mark Hauser says an individual should create a targeted investment strategy designed to achieve their financial goals. Adhering to this overarching strategy, even with certain deviations, is the best course of action.
A well-crafted estate plan enables an individual to maintain control of their assets while protecting beneficiaries and minimizing estate taxes. Although an estate plan is best known for defining the movement of property upon an individual’s death, the plan may also contain other provisions.
An accountant, attorney, financial advisor, banker, and life insurance agent (among others) are typically involved in designing an estate plan. Each advisor is personally familiar with the individual’s goals and wishes for their beneficiaries.
An individual who embarks on a wealth management journey never really reaches the finish line. Over their lifetime, they (and their advisors) continually adjust the plan for changing goals, family circumstances, and external influences.
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