Risk-Management and Growth Strategies for High-Net-Worth Entrepreneurs

Economic volatility, inflation, and geopolitical tensions can erode wealth if not actively managed. High-net-worth entrepreneurs need strategies that preserve capital while capturing growth opportunities.

This article explores how diversification, tactical asset allocation, alternative investments, and risk-mitigation toolscan help you build a resilient portfolio. We highlight best practices from industry leaders and show how Paulson & Partners can tailor these strategies to your unique circumstances.

1. Understand Your Risk Profile

Effective risk management starts with clarity on:

• Personal goals

• Time horizon

• Tolerance for volatility

Entrepreneurs often have concentrated exposure to their own businesses, making diversification outside the core enterprise essential. A clear assessment of liquidity needs and investment objectives informs the right mix of growth and defensive assets.

2. Diversify Across Asset Classes

The traditional 60/40 portfolio (60% equities, 40% bonds) may no longer offer sufficient protection. High-net-worth investors should diversify across:

• Real estate (income + inflation hedge)

• Equities and bonds (core growth and defense)

• Alternative assets such as private equity, hedge funds, and commodities

Diversification reduces the impact of single-market shocks and improves risk-adjusted returns.

Include Alternatives and Digital Assets

Alternative investments—private credit, infrastructure, commodities, and digital assets—can further enhance diversification.

• Digital assets such as cryptocurrencies and tokenised funds are increasingly mainstream, offering potentially uncorrelated returns.

• Allocating even a modest portion to alternatives can improve resilience, but professional guidance is crucial due to complexity and illiquidity.

3. Adopt Tactical Asset Allocation and Regular Reviews

Markets evolve—static allocations don’t. Regular reviews and tactical adjustments keep portfolios aligned with economic conditions. Examples include:

• Shifting from growth to value stocks during high inflation

• Holding more cash when valuations appear stretched

• Rebalancing to maintain target risk levels

Tactical asset allocation ensures your portfolio adapts while avoiding overexposure to any one asset.

4. Use Insurance and Hedging to Protect Assets

Risk management extends beyond investments. Protect luxury and personal assets with comprehensive insurance:

• Yachts, aircraft, fine art, jewelry

• Liability coverage and umbrella policies

• Cyber-insurance for digital risks

For concentrated stock positions or illiquid holdings, hedging tools such as protective puts, options collars, or exchange funds can reduce downside risk while preserving upside.

5. Align Growth Strategies with Estate Planning and Philanthropy

Risk management and growth must integrate with long-term estate planning. Tools include:

• Trust structures and family limited partnerships to protect and transfer wealth

• Charitable vehicles (donor-advised funds, charitable remainder trusts) to align philanthropy with tax benefits

• Regular estate plan updates to reflect changes in tax law and family needs

This alignment ensures that strategies not only protect wealth but also secure its purpose for future generations.

Summary

Managing risk while pursuing growth requires a holistic approach:

• Diversify across real estate, equities, bonds, and alternatives

• Adopt tactical allocation and regular reviews

• Protect assets with insurance and hedging

• Integrate with estate planning and philanthropy

Together, these strategies safeguard wealth and support long-term growth.

Paulson & Partners provides bespoke risk management and growth strategies for entrepreneurs and family offices. Our team will assess your risk profile, analyse your assets, and design a diversified, forward-looking portfolio. We also advise on insurance, hedging, and estate planning to protect your wealth from unforeseen events.

Contact us today to build a resilient investment strategy that supports your long-term goals.