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Don’t get emotional, advisers say. Be realistic, even with wealth that most people would consider to be fantastic.Cristian Baitg/Getty Images/iStockphoto

According to literary legend, F. Scott Fitzgerald once said that "the very rich … are different from you and me," and Ernest Hemingway responded, "Yes, they have more money."

To financial advisers, both authors were right.

On one hand, wealthy investors in Canada and elsewhere are just like other investors, except, as Mr. Hemingway might say, they have more to put into the pot. There are high-net-worth people of all ages, with varying risk tolerance, and a wide range of dreams and goals.

On the other hand, with more at stake, it's important for the high-net-worth investor to behave differently than someone taking a flier on a stock with a few hundred dollars.

Don't get emotional, advisers say. Be realistic, even with wealth that most people would consider to be fantastic. Huge fortunes can be lost by bad, overemotional decisions, so advisers like to help high- and ultra-high-net-worth investors remain level-headed and cool.

High-net-worth investors don't all fall into one category, says Ken Huggins, senior wealth adviser at Meridian Credit Union in Pickering, Ont.

"I would say a lot of high-net-worth investors don't even consider themselves to be in that category," he says.

"Many of them are conservative with what they've got. They're that much more cautious because they've got more to lose." In some cases, he adds, when high-end investors look at their worth they still fear that they don't have enough to be comfortable in retirement.

Most of us would probably think otherwise. Typically, an investor is considered to be high net worth if he or she has $1-million in investible assets – in other words, money beyond the value of his or her house, business or other holdings.

There's an additional category of ultrahigh-net-worth people – uber-rich individuals with $20-million investible or more.

According to the annual World Wealth Report last year by RBC Wealth Management and Capgemeni, the number of high-net-worth individuals in Canada rose 6.5 per cent to a record 298,000 people in 2012. There were some 4,500 people with $30-million or more to invest, up 11 per cent that year.

"I don't think you can cookie-cutter these people," says Lori Livingstone, portfolio manager with BMO Nesbitt Burns' wealth management division in Toronto.

"There are people who would be considered high net worth who are disciplined and save and focus on retirement, and there are people who are really undisciplined," she says, based on her years of specializing in working with high-end investors.

Both Mr. Huggins and Ms. Livingstone say that a good adviser to the high-net-worth investor needs to be part financial expert, part psychologist.

"You always have to focus on the specific client. Different people have totally different lifestyle needs," Mr. Huggins says.

Some wealthy clients want to use their money to retire, travel and enjoy themselves. "Others say, 'I just want to remain in my house and look after my grandchildren,' " he explains.

One approach to investment for high-net-worth people is to set aside a portion of wealth to invest in lower-risk securities such as bonds and a portion for the stock market, which is inherently higher risk.

Ms. Livingstone says there used to be a formula for doing this – take the number 100 and subtract your age and put this percentage into equities. For example, a 60-year-old with $1-million to invest would put 40 per cent into higher-risk, higher-return investments.

The problem is that this kind of formula is not foolproof, as people are living longer and the economy appears to be less certain than ever. "We're in an extraordinarily low-interest environment and fixed income [investments] are not getting anything close to the returns you need," Ms. Livingstone says.

Some high-net-worth investors appear to be looking at riskier bets these days.

Last September, the online publication Wealth Professional reported on a survey by the Alternative Investment Management Association of Canada, which found that Canada's high-end investors are turning to consultants to find alternative investments such as hedge funds and private equity.

For his part, Mr. Huggins says he suggests to wealthier clients looking for higher-return investments to consider either global or Canadian small-cap funds. "But you don't just arbitrarily throw something at these," he says. "A get-rich-quick scheme can also be a get-broke-quick scheme."

He refers to the advice of the legendary investor Sir John Templeton: You don't have to be right all the time; you just have to be right 51 per cent of the time.

"I find that the high-net-worth clients are more receptive to having people help them get where they want to be. They tend to be more receptive to professional advice."

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