Stop Copying the Ultra-Wealthy (Their Strategies Don’t Work for You)
I can’t tell you how often I hear some version of this:
“Isn’t this what wealthy people do with their money?”
Usually, it comes up in the context of something that sounds a little more sophisticated than the basics: borrowing against investments, using whole life insurance as a strategy, or investing in private deals that feel exclusive and hard to access.
And I get it. It’s easy to assume that if something is commonly used by ultra-wealthy individuals, it must be a smart move for everyone else.
But the truth is, the ultra-wealthy are playing a completely different game. And if you try to apply their strategies to your own financial life without understanding that, you can end up taking on risks that don’t make sense for you.
Ultra-Wealthy Trap #1: Borrowing against your portfolio
One of the most common examples I see is the idea of borrowing against your investment portfolio. This is often pitched as a way to avoid selling investments for a large expense like a home purchase.
Why the Ultra-Wealthy Choose to Borrow
Sometimes this gets framed as a tax strategy, and for ultra-wealthy individuals, that can absolutely be part of the equation. If they’ve held highly appreciated investments for decades, selling could trigger significant capital gains taxes. Borrowing instead allows them to access liquidity without realizing those gains.
But that’s not the only reason this strategy gets attention. It’s also often marketed as a way to “have your money do two things at once.” You can keep your portfolio fully invested and growing, while borrowing against it to fund a purchase. In other words, you don’t interrupt compounding, and you introduce a layer of leverage on top.
In theory, that sounds efficient.
And for someone with tens of millions of dollars, it can work. They have the scale, diversification, and excess liquidity to manage risks. If the market drops and their portfolio value declines, they can easily cover a margin call with cash or by selling a small portion of their holdings without materially impacting their financial picture.
Why Borrowing May Not Work Well for HENRYs
For most people, though, this is a very different situation.
When you borrow against your portfolio, you’re introducing leverage, meaning you’re increasing your exposure to market volatility. If the market declines, not only is your portfolio down, but you may also be required to add cash or sell investments at depressed prices to meet a margin call.
That’s where this strategy can quickly go from “efficient” to risky.
What’s often presented as a way to optimize returns can, in practice, amplify losses and reduce flexibility at exactly the wrong time.
A Different Mindset, Approach for Large Expenses
So if you’re not among the ultra-wealthy, how should you handle a potentially large expense?
I generally recommend that if you’re saving for something like a home down payment, you prioritize liquidity. Keep those funds in cash or cash-like investments as you get closer to needing them. And if the money is invested, be prepared to sell and move it to cash when the timing matters.
Because in real life, having the money available when you need it is far more important than trying to maximize every last dollar of return.
Ultra-Wealthy Trap #2: Whole Life Insurance
Another example that comes up frequently is whole life insurance. It’s often marketed as this powerful, multi-purpose financial tool, something the wealthy use to build tax-advantaged wealth.
And I understand the appeal. It’s often positioned as a way to “do it all”: provide life insurance, grow your money, and offer tax advantages, while playing on the idea that term insurance “goes away” at the end of the policy.
One of the Main Reasons the Ultra-Wealthy Use Whole Life Insurance
But in reality, whole life insurance is primarily an estate planning tool.
For ultra-high-net-worth families, it’s often used inside structures like irrevocable trusts to provide liquidity for estate taxes. That’s a very specific use case, tied to a very specific problem. That’s a problem that most people simply don’t have. If you were to pass away in 2026, the estate tax exemption is $15,000,000. So you would need to have more than that in assets for this to even begin to pose a problem.
So for the vast majority of households, there is no federal estate tax concern. And if you reach a point where you’ve accumulated enough wealth to support yourself in retirement, you typically have enough to support your family after you’re gone as well, meaning the need for permanent life insurance often diminishes over time.
Big Drawback of Whole Life Insurance: The Cost
Whole life insurance is significantly more expensive than term, with a portion of premiums going toward commissions and fees. As a result, many people end up in a complex, costly product when a simpler approach — term insurance plus investing the difference — would have been more effective.
That doesn’t make a whole life policy inherently bad. In the right context, it can be a useful tool. But that context is typically estate planning at very high levels of wealth, not general wealth-building for most people.
Ultra-Wealthy Trap #3: Private Markets, Investments
Then there are private investments: private equity, hedge funds, and private real estate deals. These are often positioned as what “sophisticated investors” use, and there’s a certain appeal to that. They feel exclusive. Different. Elevated.
Why, How the Ultra-Wealth Deploy Private Investments
Again, context matters. For ultra-wealthy investors, these types of investments typically represent a small slice of a very large, diversified portfolio. They don’t need the liquidity. They can tolerate the risk. And they often have access to top-tier opportunities that aren’t widely available.
Drawbacks of Private Investments for HENRYs
For HENRYs and other high earners who are still building wealth, the picture looks very different. The minimum investment sizes alone can force you to allocate a much larger portion of your portfolio than is appropriate. The lack of liquidity becomes a real constraint. And the fees, often layered and complex, can significantly eat into returns. At that point, what’s being marketed as “sophisticated” is often just expensive and restrictive.
I also see a lot of interest in more complex tax strategies, such as opportunity zone investments or layered real estate structures. These can absolutely be useful in the right situations, but they tend to get oversimplified on social media. The reality is that these strategies require scale, coordination, and careful implementation. What works at $50 million doesn’t necessarily make sense at $2 million.
And this is really the common thread across all of these ideas: they’re not inherently bad. They’re just often taken out of context.
What HENRYs Should Copy from the Ultra-Wealthy Playbook
But here’s the part that matters most.
There are things the ultra-wealthy do that are absolutely worth paying attention to, but they’re not the flashy strategies. They’re the fundamentals behind how they operate.
The Ultra-Wealthy Don’t Try to Do Everything Themselves
They have a wealth management team.
Not because they need complexity, but because they understand the cost of blind spots. Their financial advisor, tax advisor, and estate attorney are all working together to make sure decisions are coordinated, and nothing falls through the cracks.
And that’s something I see high earners underestimate all the time.
Most people who are managing things on their own aren’t doing anything obviously wrong. But they’re often missing opportunities, overlooking tax implications, or making small mistakes that compound over time. Especially with things like backdoor Roth conversions, equity compensation, or how different accounts interact with each other.
A good advisor isn’t there to make things complicated. They’re there to simplify the big picture, connect the dots, and help you make better decisions across your entire financial life.
Because the biggest risk for high earners isn’t lack of information, it’s blind spots.
Ultra-Wealthy People Protect The Most Scarce Resource
The other thing the ultra-wealthy do exceptionally well is protect their time.
They are incredibly intentional about how they spend it. They outsource. They delegate. They focus on what matters most.
But many high earners do the opposite.
They’ll spend hours trying to optimize small financial decisions, while also taking on everything at home — cooking, cleaning, managing schedules — often feeling stretched thin in the process.
Meanwhile, their time is incredibly valuable.
I recently read an article from The Atlantic about how more upper-middle-income households are hiring help. They’re not doing this as a luxury, but as a way to manage time and reduce stress. And that’s exactly the shift more people need to make.
Your ability to earn is one of your most valuable assets, especially during your peak earning years. Protecting your time, avoiding burnout, and creating space for your life outside of work is an incredibly strategic move, not just something to indulge in.
The ultra-wealthy don’t try to do everything themselves, and you shouldn’t either, because the goal isn’t to copy their complexity. It’s to adopt the behaviors that actually move the needle and ignore the rest that don’t.
In the end, wealth is built through consistency, clarity, and making good decisions over and over again.
And most of the time, that looks a lot simpler than people expect.
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About the author
Carla Adams is a CERTIFIED FINANCIAL PLANNER® practitioner who specializes in helping women build strong financial plans around their equity compensation, including Restricted Stock Units (RSUs) and company stock options. With over 15 years of experience in financial services, Carla has in-depth knowledge and expertise geared toward helping clients with complex financial situations. She enjoys boiling down complicated scenarios through practical examples and down-to-earth conversations.