Wealth management for high net worth individuals

Wealth management for high net worth individuals brings together investments, tax, estate and family planning for people with substantial, often complex wealth. At this level, the focus shifts from building wealth to protecting it, drawing on it efficiently and passing it on. It typically covers:

• managing portfolios held across pensions, ISAs, bonds, trusts and companies
• reducing income tax, capital gains tax and inheritance tax together
• structures such as trusts and family investment companies
• large cash balances and concentrated shareholdings
• preparing the next generation to inherit.

It also means coordinating your accountant, solicitor and private bank, so every decision fits one plan.

A private bank offers banking, lending and investment services, usually through a relationship manager and often using the bank’s own products. An independent wealth manager focuses on planning and investment advice, choosing from across the market. Many of our clients use both: a private bank for lending, such as large or complex mortgages, and Richmonde Laine for independent advice on their overall wealth. If you already use a private bank, we can review how its investment service compares on cost, performance and suitability.

There’s no single legal definition. The wealth management industry commonly uses the term for people with £1 million or more in investable assets, excluding their main home. Most of our clients fall into this group, and many have several million across pensions, portfolios, businesses and property. At that level, the questions change: less about building wealth and more about protecting it, drawing on it efficiently and passing it on. That’s where we focus.

A family investment company (FIC) is a private company set up to hold and invest family wealth. Parents typically lend or gift money to the company and keep control as directors, while children hold shares that capture future growth outside their parents’ estates. Profits are taxed at corporation tax rates, and most dividends the company receives from other companies are exempt. Taking money out can mean a second layer of tax. Because of the setup and running costs, FICs suit long-term investment of larger sums, usually £1 million or more.

Offshore bonds are investment wrappers, usually based in Ireland, Luxembourg or the Isle of Man. Investments grow largely free of UK tax inside the bond. You can withdraw up to 5% of your original investment each year for 20 years with no immediate tax charge. Gains are taxed as income when you cash in. You can time that for a year when your income is lower, or assign parts of the bond to family members who pay less tax. Bonds also work well inside trusts.

Spread it, and look beyond bank accounts. The FSCS protects up to £120,000 per person per banking licence. Large balances should therefore be spread across different banking groups, or held through a cash platform that does this for you. Money market funds and short-dated UK government bonds (gilts) are other options. Gilts are exempt from capital gains tax. Low-coupon gilts, where most of the return comes from the rise to their redemption value, can be particularly tax-efficient for higher and additional-rate taxpayers.

Lifetime giving is one of the most effective ways to reduce inheritance tax and see your family benefit. Options include:

• regular gifts from surplus income, which can be free of inheritance tax straight away
• paying school or university fees
• helping with house deposits
• Junior ISAs (£9,000 a year)
• pension contributions for children or grandchildren (up to £3,600 a year gross)
• larger gifts, which fall outside your estate after seven years.

Trusts add control where you’d rather not give outright. We make sure you only give what you can comfortably afford.

Passing on wealth well is as much about preparation as tax. With your agreement, we can involve adult children in family meetings, explain your plans and their future responsibilities, and help them build their own financial foundations. We also make sure trusts, powers of attorney and letters of wishes reflect how you want your wealth used. Involving the next generation early reduces the risk of disputes, and gives them a trusted point of contact when they need it most.

Concentration is one of the biggest risks we see. It can come from former employer shares, a business sale paid partly in shares or a long-held investment. We plan a gradual reduction that balances risk against tax. That can mean selling across tax years to use both partners’ capital gains allowances, moving shares into ISAs through “bed and ISA”, or gifting shares to charity, which is free of capital gains tax and deductible from income. Some clients can defer gains through EIS. The aim is to reduce risk without letting tax drive the decision.

Yes, significantly. Through self-assessment, higher and additional-rate taxpayers can reclaim up to 25% of the gross value of Gift Aid donations. Gifts of listed shares or property to charity are free of capital gains tax and can be deducted from your taxable income. If you leave at least 10% of your net estate to charity, the inheritance tax rate on the rest falls from 40% to 36%. For regular or larger giving, a donor-advised fund lets you make one donation and choose the charities over time.