Key takeaways

You’ve spent decades working and accumulating wealth. But is it exposed?

Many ambitious professionals and entrepreneurs, namely high-net-worth (HNW) individuals, assume that accumulating wealth is enough. But wealth without a coordinated strategy is susceptible to risks. Even the most successful investors, entrepreneurs, and executives can unknowingly leave gaps in their financial plans — gaps that can cost millions over time.

Fortunately, incomplete financial planning can be fixed. The first step is turning the spotlight on your blind spots.

What Is Incomplete Financial Planning and Why Is It Risky?

It’s common for successful individuals to operate on financial autopilot. You may have plenty of cash flow, a burgeoning 401(k) balance, and an ample emergency fund. Outside of a mortgage or business loans, you might even be debt-free. 

These are clear signs of success, but achieving these milestones doesn’t mean your wealth is impenetrable. HNW individuals are particularly vulnerable to certain risks — some of which you may not even realize exist.

Incomplete planning usually isn’t obvious, at least not on the surface. It happens when financial decisions are made in silos, without considering their impact on other areas of your life. That could include:

  • Putting money into an investment without considering the long-term tax implications
  • Setting a retirement savings goal without considering how insurance will impact your plans
  • Opening a joint account with a partner without considering estate tax  issues
  • Structuring ownership of an asset without thinking about how to protect against lawsuit risk

Of course, most people have done at least one of the above. However, as you accumulate wealth and make more financial choices over time, blind spots and plan inefficiencies can compound. Eventually, you could find yourself facing unexpected challenges, regardless of your net worth.

The Hidden Gaps That Could Cost You Millions

There’s an inherent yet nebulous challenge to financial planning: you don’t know what you don’t know

Specifically, there are six blind spots that many people overlook as they set wealth goals and make financial choices.

Investment Concentration Risk

Investing in stocks has, historically, been one of the most effective ways to grow wealth — but high returns are far from guaranteed. One study of Russell 3000 companies determined about 4 in 10 stocks suffered a permanent decline of 70% or more from their peak value.1 Shares of companies in certain sectors, including technology, biotech, mining, and metals, experienced even greater declines.

Therein lies the potential issue with allocating large amounts to a small number of companies, especially if they’re in the same industry. Unfortunately, it’s quite easy for even wealthy investors to unintentionally expose themselves to concentration risk by:

  • Owning too much company stock. If your employer faces trouble, both your income and investments are at stake. An infamous example is Enron, where employees lost not only their jobs but also billions in employer stock when the company collapsed in 2001.
  • Forgetting to rebalance your portfolio. As certain investments outperform others, too much of your portfolio could become concentrated in the outperforming assets. If you have 70% of your wealth in stocks and 30% in bonds but the value of your stock investments increases faster, it won’t take long for you to end up with an outsized equity position — unless you reallocate periodically.
  • Not coordinating all your accounts. If you have multiple investment accounts (e.g., 401(k), IRA, and taxable accounts), it can become difficult to keep track of your overall asset allocation without regular monitoring. 
  • Failing to establish an asset allocation framework. Without spreading assets across different types, geographies, or strategies, you may miss opportunities for growth and stability. This can lead to greater volatility, lower risk-adjusted returns, and emotional decision-making during market downturns.

Tax Drag and Inefficiencies

Do you know how different kinds of investments are taxed? Do you have a tax-efficient plan for generating retirement income?

If not, tax drag could reduce your total returns and, consequently, hinder your wealth’s compounding capability.

So, what is tax drag exactly? It’s a reduction in total returns due to taxes on capital gains, dividends, and other forms of investment income. Studies have found that U.S. investors in non-tax managed equity products lost 2.14% of their annual return to taxes on average.2

To reduce tax drag, consider:

  • Investing in a 401(k), IRA, Health Savings Account (HSA), or other tax-advantaged accounts
  • Prioritizing tax-efficient investments, like exchange-traded funds (ETFs), tax-managed funds, or other passively managed investments. 
  • Holding assets for at least a year to take advantage of long-term capital gains tax rates, which are much lower than your ordinary income tax rate (the rate you pay on short-term capital gains).
  • Leveraging asset location to hold funds in tax-efficient accounts. For example, ordinary income producing  investments may be best in an IRA where they can grow tax-free while holding stocks in a taxable brokerage account allows you to benefit from favorable long-term capital gains rates.
  • Employing strategic tax-loss harvesting (i.e., selling certain investments that have declined in value to help offset capital gains).

Liquidity Shortfalls

Having assets is important. Having liquid assets is essential.

An unexpected business downturn, a major capital call, a family emergency — liquidity shortfalls can blindside anyone. If you have millions tied up in private equity, real estate, or other illiquid investments, you could have trouble accessing immediate cash when you need it.

Selling assets takes time, or worse, forces you to sell at a steep discount.

That’s why liquidity planning is just as important as investment growth, especially since the standard emergency fund recommendation (3–6 months of expenses) tends to fall short for most HNW individuals.

In addition to accessible cash and cash equivalent reserves, sophisticated strategies can help bridge short-term needs without unnecessary liquidations. That could include leaning on a secured line of credit or margin loan to help cover a temporary shortfall. Or, for those with private equity portfolios, mapping out cash flows from capital distributions can help proactively project liquidity to ensure it’s available at the right times.

Underinsured Assets and Liability Exposure

Four in five brokers believe there is a problem with HNW clients being underinsured, due in large part to either a lack of awareness of the risks or outdated valuations of assets.3

Mandatory coverage generally translates to minimum protection. When you own significant assets (including investment properties, collectibles, vehicles, etc.), you may need more tailored solutions to prevent gaps in coverage.

Insurance products like umbrella policies, which supplement liability coverage, can offer you broader protection at a more affordable cost. When a claim exceeds your home or auto liability protection, umbrella insurance would protect your personal wealth from risk.

Estate Planning Pitfalls

Estate planning isn’t a subject most people want to spend time thinking about. However, that tends to lead to inadvertent mistakes, such as:

  • Not planning for long-term care, such as in-home aids or nursing home fees. Genworth’s Cost of Care survey estimates that long-term care averages $127,752 per year for a private room in a nursing home, while data shows as many as 7 in 10 adults 65 and over will need long-term care at some point during their lifetime.4 
  • Not creating an incapacity plan, which could put your family in a difficult position if you’re ever incapacitated.
  • Allowing assets to pass through probate, which can increase costs, cause delays, and result in your family’s finances becoming public record. Probate costs range from 3% to 7% of the total value of the estate. And while 98% of Americans believe probate takes less than a year, the average timeline is actually 20 months.5
  • Not planning for estate taxes. Barring legislative action, the lifetime estate tax exemption is expected to drop to about $7 million in 2026, so many more HNW individuals and their families could be subject to estate taxes in the coming years.5

If you assume a will is all you need, you could be leaving your wealth vulnerable and potentially make life more difficult for your loved ones down the road.

Behavioral Bias in Wealth Decisions

Do you know all of your financial biases? Chances are your attitude toward financial management has been shaped by many factors throughout your life, from the way your parents managed money to both positive and negative experiences with financial products you’ve had along the way.

Investors who began buying real estate shortly before the housing market crash that began in 2007, for example, may be wary of purchasing a new home while those who bought internet stocks before the dot-com bust in 2000 may not be eager to invest in the next big tech advances. Unfortunately, these engrained perspectives could lead to missed opportunities if you’re reluctant to take advantage of sound investments based on previous experiences.

Your behavioral biases can affect every aspect of your finances, from how much you save to what you invest in and what financial goals you prioritize. And, unfortunately, biases tend to have negative repercussions. For instance, 66% of investors have made an impulsive or emotionally charged investing decision they ended up regretting.6

Awareness is the first step — recognizing and understanding your biases can help prevent irrational decisions.

Case Study: A Hypothetical Example of Hidden Wealth Risks

Meet John, the 62-year-old executive at a successful software company. After years of hard work, he’d built a decorated career, amassed millions in company stock, and sat on the brink of retirement. 

By all appearances, he was financially secure.

Then, trouble arrived. The market took a turn, exhuming his financial blind spots.

His company’s stock lost nearly half its value overnight — a devastating blow since most of his net worth was tied up in it. The company’s poor performance led to salary cuts and dry bonus pools. With no income diversification, John’s financial future was suddenly in jeopardy.

John thought his retirement savings could keep him afloat, but that exposed another problem: he had never rebalanced his portfolio. His 401(k) was 95% stocks, with no protection against volatility. Selling during a downturn would mean locking in huge losses.

With little liquidity and mounting expenses, John turned to his taxable brokerage account. He sold off his best-performing investments, only to be hit with a massive tax bill.

Then came the final blow. John had never created an estate plan. After four years of financial stress, he suffered a fatal heart attack while going through a messy divorce. Without a will, his estranged spouse inherited a substantial portion of his assets — against his original wishes.

John obviously had an exceedingly brutal run of bad luck, but life’s headwinds don’t discriminate. Having wealth is great — but having the right mix of tax-efficient, accessible investments and an up-to-date estate plan is even better. 

That’s why financial planning should be multifaceted, interconnected, and, perhaps most importantly, proactive.

Protecting Your Wealth from Unforeseen Liabilities

As you think ahead to your future, you’re probably envisioning a retirement with your family, traveling, enjoying the fruits of your labor, and spending time doing the things you love. 

While you should absolutely look forward to an enriching life, you should also prepare for potential hurdles, such as:

  • Lawsuits: No one expects to be sued, but thousands of lawsuits are filed every day. Buying sufficient liability coverage, including umbrella insurance, helps insulate your assets. 
  • Creditor claims: A major illness or other unexpected events could leave you with bills you can’t pay. Integrating trusts into your financial plan can help preserve your wealth for future generations. 
  • Divorce: Grey divorce is on the rise, with close to 40% of divorcing persons now over the age of 50.7 Divorce can be emotionally and financially unpleasant. If you have problems you can’t solve, creating a post-nuptial agreement before things escalate can help you negotiate on issues before it’s too late.
  • Recession: Economic downturns are inevitable but can be particularly disruptive if you just retired. Maintaining an appropriate asset allocation and maintaining some liquid assets reduces the risk. 
  • Incapacity: Creating a durable power of attorney or living trust with a backup trustee allows you to choose a trusted person to protect assets, in case you’re ever incapacitated. Similarly, planning for medical expenses and long-term care ahead of time can help preserve wealth in retirement. 
  • Death: An effective estate plan empowers your family during difficult times, helping follow your wishes, bypass probate, and preserve assets. 

Addressing these issues as part of a holistic financial plan has many benefits. If nothing else, preparing for potential disruptions unlocks peace of mind and allows you to live with clarity and confidence.

 

Why Many HNW Individuals Leave Themselves Exposed

How do even the most successful people overlook these financial vulnerabilities? Three inherent reasons:

  • False confidence: A large net worth can create the illusion of security, leading to overlooked risks.
  • Lack of time & expertise: Managing wealth requires strategic planning, but most HNW individuals are too busy or don’t have specialized knowledge to assess every risk.
  • Optimism bias: Few people expect lawsuits, health crises, or financial setbacks. Of course, living in fear is frankly no way to live, but a glass-totally-full perspective can lead to oversights. 

The best way to fill the gaps, reduce risk, and coordinate the various facets of your financial life into a cohesive plan is to work with experts.

At Simon Quick, we’ll build a road map that adapts to life’s unexpected twists and turns. Moreover, you gain the unfettered support of not one expert, but a team of specialized advisors and support staff.

Schedule a complimentary meeting today to find out more about how we can help shield against uncertainty with a holistic plan and foster newfound confidence to make sound decisions.

About Simon Quick Advisors

At Simon Quick Advisors, we understand the unwieldy challenges that wealth can create — because our founders faced them too. 

In 2004, Leslie Quick was frustrated with financial firms that prioritized sales over service, so he established a multi-family office to provide independent, fiduciary management for his family and others. Similarly, J. Peter Simon, his brother William E. Simon Jr., and their father, former Secretary of the Treasury William E. Simon, opened a family office to protect and grow their family’s legacy.

In 2017, these two firms united to form Simon Quick Advisors, combining their shared values and deep expertise to better serve clients. Today, we continue their mission to deliver wealth management that’s built on trust, not transactions.

One conversation can change your life. Let’s meet, on your terms.

$9.9B
assets under advisement as of 6/30/2025
95
full-time employees as of 6/30/2025
650+
client households as of 6/30/2025
32
equity owners as of 6/30/2025

Sources:

  1. J.P. Morgan, “The Agony and the Ecstasy. The Risks and Rewards of a Concentrated Stock Position.” 
  2. Russell Investments. “How advisors deliver value in challenging times
  3. Ecclesiastical. “Underinsurance is more of an issue for high net worth clients than ever before, new research finds
  4. Genworth, “Cost of Long-Term Care. By State.” 
  5. Trust & Will, “Trust & Will’s New Study Shows Most Americans Deeply Unaware of the Costs, Timeline, and Emotional Toll of the Probate Process.”
  6. Magnify Money, “66% of Investors Regret Impulsive or Emotional Investing Decisions, While 32% Admit Trading While Drunk.” 
  7. Bowling Green State University, “Multiple Gray Divorces: Demographic Trends & Comparisons

 

Disclaimer

This information is for general and educational purposes only. You should not assume that any discussion or information contained herein serves as the receipt of, or as a substitute for, personalized investment advice from Simon Quick Advisors & Co., LLC (“Simon Quick”) nor should this be construed as an offer to sell or the solicitation of an offer to purchase an interest in a security or separate accounts of any type. Asset Allocation and diversifying asset classes may be used in an effort to manage risk and enhance returns. It does not, however, guarantee a profit or protect against loss. Investing in Liquid and Illiquid Alternative Investments may not be suitable for all investors and involves a high degree of risk. Many Alternative Investments are highly illiquid, meaning that you may not be able to sell your investment when you wish. Risk of Alternative Investments can vary based on the underlying strategies used.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Simon Quick), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Simon Quick is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice. If you are a Simon Quick client, please remember to contact Simon Quick, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services.

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This newsletter and the accompanying discussion include forward-looking statements. All statements that are not historical facts are forward-looking statements, including any statements that relate to future market conditions, results, operations, strategies or other future conditions or developments and any statements regarding objectives, opportunities, positioning or prospects. Forward-looking statements are necessarily based upon speculation, expectations, estimates and assumptions that are inherently unreliable and subject to significant business, economic and competitive uncertainties and contingencies. Forward-looking statements are not a promise or guaranty about future events.

Economic, index, and performance information herein has been obtained from various third party sources. While we believe the source to be accurate and reliable, Simon Quick has not independently verified the accuracy of information. In addition, Simon Quick makes no representations or warranties with respect to the accuracy, reliability, or utility of information obtained from third parties.

Historical performance results for investment indices and/or categories have been provided for general comparison purposes only, and generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results. It should not be assumed that your account holdings correspond directly to any comparative indices or benchmark index, as comparative indices or benchmark index may be more or less volatile than your account holdings. You cannot invest directly in an index.

Indices included in this report are for purposes of comparing your returns to the returns on a broad-based index of securities most comparable to the types of securities held in your account(s). Although your account(s) invest in securities that are generally similar in type to the related indices, the particular issuers, industry segments, geographic regions, and weighting of investments in your account do not necessarily track the index. The indices assume reinvestment of dividends and do not reflect deduction of any fees or expenses. 

Please note: Indices are frequently updated and the returns on any given day may differ from those presented in this document. Index data and other information contained herein is supplied from various sources and is believed to be accurate but Simon Quick has not independently verified the accuracy of this information.

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