Lessons in Financial Planning from the WeWork Debacle Plus: A 9-Step Investment Planning Process that…
“I want to tell you what matters most about my situation,” said a wealthy gentleman we met at a charity dinner. “Protection, protection, protection.” In his seventies, this man had built up a sizable estate in the hundreds of millions of dollars, consisting of real estate, stocks, and a heavy position in municipal bonds. As a child of the Great Depression, he understood the value of every one of those dollars. He wanted his wealth to be shielded from losses so that it would endure for generations to come. After a few meetings, he approached us about taking on the responsibility of managing his real estate and helping with his municipal bonds and stock portfolio.
As we talked more with him, our concern for him was this: Who in his family could appreciate all that went into making his wealth? In whose hands could he place such a fortune for safekeeping once he was gone? His niece worked for a hedge fund manager, but she was very young—and to manage that much money, he was looking for more experience. His son and daughter did not show a real interest in the family finances. Who could take charge of the business, the real estate, and the sizable stock/bond portfolios? And who could take over for him as the guardian of the family wealth to assure the lifestyle he desired for his family for generations to come?
Many ultra-high net worth families share concerns similar to his. Where there is ultra-affluence, there is much responsibility. What will be done to preserve the family fortune? How will the successors be groomed and prepared to handle so much money? Who will have the wherewithal to manage the wealth so that it doesn’t slip away? How will the money be distributed equitably (which does not necessarily mean equally)?
On the financial side, concerns about retaining control of a privately owned family business, managing real estate, or even surviving the next Black Swan event are typical for ultra-high net worth families. The media offers plenty of reasons for concern: questions about China; the unrest in the Middle East; the shenanigans in Washington, DC; Carl Icahn’s prediction in 2015 of a “looming catastrophe”; and the effects on bonds from the federal reserve’s coming actions.
The question is, how will your ultra-high net worth family navigate the new world we live in? What financial and nonfinancial protections will you implement—and what else might tighten up the hatches?