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The proper management of one’s balance sheet can be challenging for even the most financially astute high net worth investors. A personal balance sheet is a simple tool in which all assets (left side) and liabilities (right side) are listed. However, high net worth individuals tend to focus on the left side of the balance sheet and often pay less attention to their present and future liabilities.

The current interest-rate environment presents a compelling opportunity to review existing liabilities in the context of asset allocation and investment goals. As a financial advisor, I consistently research and provide insight and opine on some of the following items:

• Unsecured loans—credit cards, personal loans
• Mortgages and home equity line of credit loans—residential and commercial real estate
• Securities-based loans and advisory fees—hard and soft costs
• Premium expenses—life, disability, long-term care and homeowners insurance

These items make up the right side of the balance sheet and indirectly affect the left side. My goal as a financial advisor is to help my clients attain additional returns on their balance sheet without taking additional equity risk premium in the markets.

When speaking with clients, one issue that often flies under the radar of even vigilant investors’ attention is inflation. Inflation is a major factor affecting long-term asset value, and high net worth investors face a few key challenges planning for it.

Odds are that you have not heard of CLEWI—the Cost of Living Extremely Well Index, launched by Forbes in 1982. The index is based on the selection of 40 goods and services customarily reserved for very wealthy customers. The index shows that high net worth individuals particularly want to send their children to preparatory schools and a college like Harvard University; go to the opera on a consistent basis; and purchase a designer handbag(s) for themselves or their significant other.

My goal as a financial advisor is to help my clients attain additional returns on their balance sheet without taking additional equity risk premium in the markets.

Historically, the basket of goods tracked by the CLEWI has exceeded inflation by an average of 2.5 percentage points annually. So what does that tell you? Well, it simply highlights the fact that the cost of luxury goods and services is outpacing inflation.

A sound financial plan accounts for, forecasts and models inflation along with, these escalating costs. That is why it is crucial to work with a qualified financial advisor and not just an advisor who manages your money. Even the wealthiest can lose significant asset value over time if their liabilities are not managed properly and they are not following and updating a comprehensive financial plan.

Aligning with the right financial advisor is key to keeping these often-overlooked items in check. He or she will be able to not only look at things on a granular level but also to analyze things holistically on a macro level.

In short: Just because people make a lot of money does not mean that they can afford to overlook the right side of the balance sheet.

Michael S. Schwartz offers advisory services as a representative of Northwestern Mutual Wealth Management Company (WMC), a limited purpose federal savings bank, and a wholly owned subsidiary of The Northwestern Mutual Life Insurance Company, Milwaukee, Wis., (NM). Northwestern Mutual is the fleet name for NM, its subsidiaries and affiliates. Investments held with or managed by WMC are not insured by the FDIC, are not deposits or other obligations of, or guaranteed by WMC or its affiliates and are subject to investment risks, including loss of the principal. Michael Schwartz is an insurance agent of NM (life insurance, annuities and disability income insurance), and Northwestern Long Term Care Insurance Company, a subsidiary of NM, and a registered representative of Northwestern Mutual Investment Services, LLC (NMIS), an NM subsidiary, broker-dealer, investment advisor, member FINRA, SIPC. Pioneer Financial is a marketing name used by a group of Northwestern Mutual representatives (not all of whom are affiliated with WMC) including Schwartz (referred to as the “firm”), and is not a legal entity, partnership, investment advisor, broker dealer or affiliate of NM. The information contained in this article is not a solicitation to purchase or sell investments or securities. The views expressed herein are those of the author and may not necessarily reflect the views of Northwestern Mutual. Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered CFP (with flame logo), which it awards to individuals who successfully complete initial and ongoing certification requirements.

This article was originally published in the June/July 2016 issue of Worth.