The wealth paradox: why having more can also mean worrying more
The paradox
Having money opens doors but it also gives you something to lose. Those two feelings sit side by side for a lot of people, and in the current geo-political environment they sit closer together than they have done for a while.
We hear it in conversations with clients every week. People aren’t panicking but they are a bit less settled than they were a year ago, and they’re not always sure why.
If you have been feeling off about money lately, you are not alone. A lot of people in similar positions are feeling the same way.
Three worries keep coming up
When we ask clients what’s on their minds, three things come up time and again. Inflation, even as it eases, can erode the real value of your wealth over time. Tax, after a run of Budgets that have kept wealthier households guessing. And the wider backdrop, meaning interest rates, elections and events abroad that nobody can control.
Two of those are familiar. Inflation and interest rates move around, they affect returns, and a sensibly built portfolio is designed to cope with both. Uncomfortable at times, but manageable.
Tax is the one that’s different. You cannot diversify your way out of a tax rise. You can only plan around it, and planning takes time.
That is why tax keeps coming up. The direction of travel feels uncertain, and the unknowns are driving more of the anxiety than the knowns. The parts of your financial life most exposed to tax, meaning pensions, estate planning, business assets and investments held outside wrappers, are where good planning has the biggest effect. They are also the parts that most often get neglected.
The property question, and the younger generation
Property is worth separate consideration, because it comes up in almost every conversation with younger high net worth clients. The value of the property no longer feels guaranteed to rise in value. Higher mortgage rates have pushed up borrowing costs, whether that’s a new purchase, a second home, a buy-to let or a remortgage. And the market in general is more unpredictable than it was a decade ago. Furthermore, additional taxes and withdrawal of tax breaks have hit buy-to-let investors hard in recent years.
If you’ve invested most of your wealth in bricks and mortar, you are carrying more in one type of asset than you may feel comfortable with. Spreading the load across pensions, investments and other structures may not seem exciting, but it can stop exposure to a single asset class deciding how well you sleep.
What helps to calm the anxiety?
Worry tends to ease when there is a plan in place, and when someone is reviewing that plan with you regularly. People who have regular conversations about their money tend to feel more at ease with it, whether or not the external picture improves.
A useful plan covers the obvious and the less obvious. What you own, where it sits, and what it is doing. The allowances and reliefs that are sitting there unused. Inheritance tax, pensions, ISAs, trusts, personal tax planning and business relief products. And the people who will inherit your wealth after you.
Why independent advice matters
When an adviser is tied to a product provider, your options are narrower than they need to be. Independent advice means the plan is built around your personal circumstances, using a full range of available solutions, not just a limited list of products to which some advisers are tied. It also means your adviser can adjust when conditions change. That matters more when the outside world is noisy and unpredictable.
Why reviews matter
Your life moves. The rules move. Markets move. A plan written three years ago and left alone won’t keep pace with any of that. An annual review, with extra conversations when something changes, is how a plan stays relevant and meaningful. A marriage, a grandchild, a business sale, a house move, a health scare, a change in the tax code. Each is a reason to sit down and look again.
How we can help
We’ve been planning wealth management and investment strategies for over 30 years. We provide independent advice, have a track record of outperformance against sector benchmarks, and build plans around people rather than products. When the news gets loud, we offer a calm voice.