Ultra-High-Net-Worth Investors: Preparing for What's Ahead
Consider the future and how to make your wealth work on your behalf
Strategic Planning
Strategic Planning
Family Office
Ultra-High-Net-Worth Investors: Preparing for What's Ahead
Consider the future and how to make your wealth work on your behalf
Strategic Planning
Strategic Planning
Family Office
Strategic Planning
Nearing an Exit: Questions to Ask Yourself and Others
For those beginning to think about the sound management of wealth, possibly around an exit from a large investment, the following outlines some questions we might ask. The questions range from the sublime – family and philanthropic goals – to the more mundane – investment, administrative and tax matters. As you revisit your life goals and begin to embrace this new undertaking, identifying those resources that can help and how to engage with them is likely to become an early priority. Some of these questions are for you, while others may be more suited to the various professional advisors you are looking to assemble.
Strategic Planning
Nearing an Exit: Questions to Ask Yourself and Others
For those beginning to think about the sound management of wealth, possibly around an exit from a large investment, the following outlines some questions we might ask. The questions range from the sublime – family and philanthropic goals – to the more mundane – investment, administrative and tax matters. As you revisit your life goals and begin to embrace this new undertaking, identifying those resources that can help and how to engage with them is likely to become an early priority. Some of these questions are for you, while others may be more suited to the various professional advisors you are looking to assemble.
Questions to Ask Yourself
High-Level Goals
How do I want to use my wealth?
Over what period? Now or later – during my lifetime or for future generations?
What are my ongoing cash needs to support my baseline lifestyle and other regular outlays? Do I expect other major expenditures or investments (size and timing)? Will they be in my home or another currency?
What are my philanthropic aspirations – areas of interest, impact goals? Are these local or global? How do I maximize my impact? How do I size and pace my giving?
What do I want to leave to my children or other family members? How do I communicate that to them to set healthy expectations?
Do I have investment performance targets?
Either as a rate of return (e.g., X% real, inflation-adjusted, after-tax), relative to some benchmark, or alternatively in absolute dollar terms (perhaps to support cash distributions for lifestyle or charity of $Y/yr.)? Is preserving my portfolio value also a goal?
Where might my investment objectives interact with my other goals and interests?
For example, philanthropic or simply personal enjoyment. Can I rank those priorities?
How should I think about “risk?”
How comfortable am I with risk as I pursue those goals? How can I balance risk and potential (but uncertain) returns?
How comfortable am I with illiquidity – the inability to sell something over some time?
What about illiquidity in some portions of my portfolio if part of a well-thought-out forward-looking plan? How much should I be paid for accepting illiquidity? On the other hand, what am I willing to forgo for the flexibility to change my mind and exit positions?
Methods and Execution
How broad are my needs?
Am I seeking holistic solutions that address investment, income tax, estate planning, bookkeeping, and concierge services – or just some aspects of this?
As I assemble a team to solve problems and deliver results, what is the optimal way to fill the various roles required?
What about in-house staff, full- or part-time? Would I be better served by third-party, outside advisors?
How will I engage with my team?
Do I want to be the quarterback that coordinates this work, or should the rest of the collective team do so? For example, do I set policies, let the team develop and execute plans, and regularly report progress? Or will I personally organize and direct a team of functional experts, etc., or approach it in some other way?
How much time am I willing to commit to those endeavors?
Family Considerations
How, and to what degree, do I involve my children or other key family members in decisions relating to my investment activities and/or in philanthropic endeavors?
How do I educate them about wealth and the management and stewardship of wealth?
Is there anything I don’t want my children to know about my wealth or investment activities?
Do I want to give assets to my children sooner rather than later?
Are they ready? And if so, what else should I consider? What is the most tax efficient way to do so?Questions to Ask Your Advisors
Investment Teams
Considering my personal goals, how do I derive the most benefit from my capital?
Investment (vs. personal) cash flows: How should they relate?
For my portfolio, how to match my investments (and commitments) with available cash to always ensure the ability to support my investment and personal needs?
Again, what about the risk of things not going according to plan?
(They rarely do.)
If I want to make entrepreneurial, direct investments, how do I size and ring-fence these activities?
How might I measure the performance?
What about private (not publicly quoted) fund investments?
How can I track commitments and manage these investments as part of a holistic plan? How might I access and evaluate them?
From a larger perspective, how should I get started deploying new capital?
Considering market conditions today and as they unfold, how should I proceed?
If I continue to hold concentrated positions (including my foundational sources of wealth), how might they be considered in shaping and evaluating my overall portfolio?
Are they likely to be material and if so, for how long?
How do I feel about reducing my taxes?
We all pay necessary taxes under the law, but to what extent do I seek to minimize taxes, considering direct costs, inconvenience, and perhaps uncertainty?
Considering all the above, what should a forward-looking, comprehensive investment plan that aligns with and supports my goals look like?
How can all of this be simplified to avoid unnecessary complications?
Legal Team
Can legal structures/entities help further my goals?
What if I were reconsidering my location, residency or citizenship?
Protection from liabilities?
What about conveying property to my children?
If so, what is optimal? How might trusts help?
Should I use legal entities (vs. personal ownership) to make investments?
Can these offer administrative convenience for investing, liability protection, or estate planning benefits?
What approaches might facilitate my philanthropic activities?
Would a foundation help me sustain them? Can such a step be taken later without sacrificing whatever benefits a foundation might offer?
How do I feel about the trade-off between these benefits and costs and increased complexity?
How can I simplify my life and reduce the costs of my financial, investment and legal affairs – while still pursuing my goals/objectives?
Considering the types of investments I am likely to make and legal structures I am likely to employ, where do I hold these investments?
How many (and what type of) custodial relationships do I need and which custodians provide the best value?
Questions to Ask Yourself
High-Level Goals
How do I want to use my wealth?
Over what period? Now or later – during my lifetime or for future generations?
What are my ongoing cash needs to support my baseline lifestyle and other regular outlays? Do I expect other major expenditures or investments (size and timing)? Will they be in my home or another currency?
What are my philanthropic aspirations – areas of interest, impact goals? Are these local or global? How do I maximize my impact? How do I size and pace my giving?
What do I want to leave to my children or other family members? How do I communicate that to them to set healthy expectations?
Do I have investment performance targets?
Either as a rate of return (e.g., X% real, inflation-adjusted, after-tax), relative to some benchmark, or alternatively in absolute dollar terms (perhaps to support cash distributions for lifestyle or charity of $Y/yr.)? Is preserving my portfolio value also a goal?
Where might my investment objectives interact with my other goals and interests?
For example, philanthropic or simply personal enjoyment. Can I rank those priorities?
How should I think about “risk?”
How comfortable am I with risk as I pursue those goals? How can I balance risk and potential (but uncertain) returns?
How comfortable am I with illiquidity – the inability to sell something over some time?
What about illiquidity in some portions of my portfolio if part of a well-thought-out forward-looking plan? How much should I be paid for accepting illiquidity? On the other hand, what am I willing to forgo for the flexibility to change my mind and exit positions?
Methods and Execution
How broad are my needs?
Am I seeking holistic solutions that address investment, income tax, estate planning, bookkeeping, and concierge services – or just some aspects of this?
As I assemble a team to solve problems and deliver results, what is the optimal way to fill the various roles required?
What about in-house staff, full- or part-time? Would I be better served by third-party, outside advisors?
How will I engage with my team?
Do I want to be the quarterback that coordinates this work, or should the rest of the collective team do so? For example, do I set policies, let the team develop and execute plans, and regularly report progress? Or will I personally organize and direct a team of functional experts, etc., or approach it in some other way?
How much time am I willing to commit to those endeavors?
Family Considerations
How, and to what degree, do I involve my children or other key family members in decisions relating to my investment activities and/or in philanthropic endeavors?
How do I educate them about wealth and the management and stewardship of wealth?
Is there anything I don’t want my children to know about my wealth or investment activities?
Do I want to give assets to my children sooner rather than later?
Are they ready? And if so, what else should I consider?
What is the most tax efficient way to do so?
Questions to Ask Your Advisors
Investment Teams
Considering my personal goals, how do I derive the most benefit from my capital?
Investment (vs. personal) cash flows: How should they relate?
For my portfolio, how to match my investments (and commitments) with available cash to always ensure the ability to support my investment and personal needs?
Again, what about the risk of things not going according to plan?
(They rarely do.)
If I want to make entrepreneurial, direct investments, how do I size and ring-fence these activities?
How might I measure the performance?
What about private (not publicly quoted) fund investments?
How can I track commitments and manage these investments as part of a holistic plan? How might I access and evaluate them?
From a larger perspective, how should I get started deploying new capital?
Considering market conditions today and as they unfold, how should I proceed?
If I continue to hold concentrated positions (including my foundational sources of wealth), how might they be considered in shaping and evaluating my overall portfolio?
Are they likely to be material and if so, for how long?
How do I feel about reducing my taxes?
We all pay necessary taxes under the law, but to what extent do I seek to minimize taxes, considering direct costs, inconvenience, and perhaps uncertainty?
Considering all the above, what should a forward-looking, comprehensive investment plan that aligns with and supports my goals look like?
How can all of this be simplified to avoid unnecessary complications?
Legal Team
Can legal structures/entities help further my goals?
What if I were reconsidering my location, residency or citizenship?
Protection from liabilities?
What about conveying property to my children?
If so, what is optimal? How might trusts help?
Should I use legal entities (vs. personal ownership) to make investments?
Can these offer administrative convenience for investing, liability protection, or estate planning benefits?
What approaches might facilitate my philanthropic activities?
Would a foundation help me sustain them? Can such a step be taken later without sacrificing whatever benefits a foundation might offer?
How do I feel about the trade-off between these benefits and costs and increased complexity?
How can I simplify my life and reduce the costs of my financial, investment and legal affairs – while still pursuing my goals/objectives?
Considering the types of investments I am likely to make and legal structures I am likely to employ, where do I hold these investments?
How many (and what type of) custodial relationships do I need and which custodians provide the best value?
Continue reading Ultra-High-Net-Worth Investors: Preparing for What's Ahead
Every person is unique. We pose the above questions to help draw out intent and attitudes about various issues that will rightly vary across individuals. In our experience, however, we do observe some common considerations and needs related to significant wealth and its sound management.
Strategic Planning
While each individual and family has a unique mix of goals and requirements, they frequently share a need for planning and investment expertise and resources, and other support. Forward-looking, wise management is the most commonly needed ingredient.
Continue reading Ultra-High-Net-Worth Investors: Preparing for What's Ahead
Every person is unique. We pose the above questions to help draw out intent and attitudes about various issues that will rightly vary across individuals. In our experience, however, we do observe some common considerations and needs related to significant wealth and its sound management.
Strategic Planning
While each individual and family has a unique mix of goals and requirements, they frequently share a need for planning and investment expertise and resources, and other support. Forward-looking, wise management is the most commonly needed ingredient.
