What Are Some Common Challenges High-Net-Worth Individuals Face?

While some may consider a large financial surplus as the solution to most problems, the complexity that accompanies significant wealth can present new challenges in its own right. Fortunately, with thoughtful planning and collaboration with the right professionals, these challenges can be overcome. In this article, we explore some of the key areas of concern high-net-worth individuals and families face.

Privacy & Cybersecurity

A common threat to high-net-worth individuals arises from the sheer amount of highly sensitive and confidential information involved in their affairs, whether in their business, their personal life or their finances. Due to the significant wealth and reputations involved, even seemingly mundane information could be used to cause serious harm. Hacking of personal electronic devices could allow access to financial, medical and legal details that may enable the hacker to commit identity theft directly. It may further serve to grant them access elsewhere, such as two-step verification emails, potentially providing access to banking, investment or other transactional accounts. Just as the growth of personal wealth often calls for adjustments to lifestyle and for greater sophistication among professional advisors, cybersecurity too must evolve to ensure that the integrity of information and of key systems remain intact.

Protecting The Family Enterprise And Legacy

Many successful business owners are particularly concerned about preserving the family business and legacy. Shares held by family members may be susceptible to unintentional transfers should a shareholder undergo a marital breakdown in which their personal share holdings become subject to division, potentially granting a former spouse an ownership stake in the business. Looking into legacy, there will also likely come a point where a business owner must make succession plans if the family business is to carry on and be passed down to the next generation. 

All financial and tax planning aside, the incoming generation must not only have a desire to continue operating the business, but the incumbents must be comfortable in the next generation’s abilities to successfully manage the enterprise and share in key philosophies. If the business is to be sold outside the family, the business owner must ensure that proactive and thorough planning is done not only to minimize the value lost to tax, but also to strategically map out how this wealth will be allocated to benefit the next generation and set them up for their own success.

Changing Tax Landscape

Most wealthy individuals and families, with their advisors, have devised and put in place strategies to minimize the erosion of wealth by taxes. In the case of business ownership for example, income splitting can reduce the overall tax bill, with income being paid out to various family members. 

Another tax planning opportunity presented by family members is in the context of a business being sold, where each share-holding individual is able to use their personal Lifetime Capital Gains Exemption against the gain on disposition of shares in a qualifying small business corporation, potentially saving hundreds of thousands of dollars in taxes. 

Over time as policy evolves, certain strategies become more challenging to apply as new criteria for eligibility are put forward to restrict the use of these approaches. For instance, in the case of splitting income, the CRA put a set of TOSI (tax on split income) rules in place on January 1st, 2018 to limit the benefit of income splitting through private corporations, including mandating that a sufficient and meaningful contribution to the business must be made by the adult family members with whom income is to be shared.

As you navigate the complexities of managing significant wealth, it is important to stay up to date on all relevant developments that may impact your business, your planning, and your wealth in general. It may be wise to consult with professional advisors as you assess risks and plan around them, and to ensure that the advisors themselves are up to date and aware of the risks most relevant to you.


Bloom Investment Counsel, Inc. is a well-established Toronto-based independent, privately-owned boutique investment management firm providing customized, actively managed, Canadian and U.S. dividend-paying portfolios for wealthy individuals, family offices, foundations, corporations, institutions and trusts.

Founded in 1985, Bloom has experience in managing in excess of $2.5B in assets over the years. We believe that generating independent cash flow is central to the success of our clients’ portfolios because it provides capital for the present day, if needed, while continuing to preserve and build wealth for the future.

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This content is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this content should consult with his or her financial partner or advisor.

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