Call us at: 800.669.6780

Why Ultra-Affluent Families Lose So Much Money: $5 Million to $500 Million of Investable Assets


Why Ultra-Affluent Families Lose So Much Money: $5 Million to $500 Million of Investable Assets

Imagine retiring October 2007 and entrusting your $30 million with a money manager from Wall Street or a Big Bank financial advisor. Based on the firms’ pre-determined cookie cutter investing, this manager placed your retirement dollars in what amounted to a 60/40 model! That is 60% Equities and 40% Bonds.

Now imagine the market collapse and eventually bottoming out March of 2009. You would have lost about $10 million excluding the withdrawals you would have made to sustain your life style. In October 2007 your mindset was that you will never spend all $30 million you worked so hard to save, and now 5 months later you are thinking, I only have $20 Million left and will my money expire before I do?

This collapse was very similar to what recently happened with Covid-19. Hi, Chris Snyder here, Co-founder of Pillar Wealth Management and I am here with a message for families with liquid portfolios of at least $5 Million and up to $500 Million.

We were also managing our client’s retirement when the dotcom crash hit in 2000. However one of the big differences between that market crash and the Corona virus crash,was the bond market. In 2000, bonds were paying nearly 7%. Today, bond interest rates are at all-time lows.

Why does this matter? Because in 2000, if you had a 60/40 asset allocation – you weathered the storm better since those high bond yields helped somewhat compensate for the battering taken by stocks.

Today, in the midst of the coronavirus crash, that bond yield cushion isn’t there. Typically to help the economy the Federal Reserve can lower interest rates, that was easy when they were at 7%, today there is not much room left. The 60/40 Wall Street Myth of Stability can be devastating to your retirement.

All too often we talk to prospects who come to us shocked that they have lost so much money. They were convinced that their advisors had been managing their money well. Especially after the stock market returned 31% in 2019. But the truth is usually unveiled during vicious crashes, like that of Covid-19.

When we look at their portfolios it blows our minds how frequently they are 60/40 or the majority of time, even more aggressive. This was due to two things, either the advisor was negligent and failed to rebalance, or the advisor was greedy when times are good. They allowed the 60/40 allocation to become 70/30 or even 80/20! No wonder they lost so much money.


Many of the biggest pensions and investment firms use a 60% stock/40% bond asset allocation, in part because it is considered more stable than ones more heavily weighted in stocks, but also more lucrative than ones leaning more toward bonds.

However, what does historical data actually show about the performance a 60/40 split? Lets look at a good long period, March 2000 until March 2020 –During this 20-year period – a 60/40 split earned 5.27% annually while the S&P500 made 4.79%. And that’s before taxes and fees. It actually beat the market.

No wonder Wall Street uses this as a cookie cutter formula to sell high and ultra-high net worth investors on this model. However,if we un-peel the onion further, it is also true that from Oct 2007 (the start of the last economic economic crisis) through March 2009 (when we saw a bottom), a 60/40 portfolio lost about 33%. EVENTUALLy it took this 60/40 model 603 days to recover back to even.

For high net worth and ultra-high net worth families – especially those within five years of retirement or already retired – you might not have time to make up your losses. Chances are, you also don’t have such an appetite for losses! If you agree these 60/40, 70/30 or 80/20 asset allocation strategies have failed you, and you’re ready to take action, I suggest a short chat with my partner and Co-founder, Hutch Ashoo is in order. As a fiduciary, independent financial advisor, we advise ultra-high net worth investors how to protect their wealth and maximize gains, offering the best of both worlds. You can reach Hutch Ashoo on his cell (408) 675-1777, call him or text him anytime, he hardly ever sleeps . Thanks for watching and Hutch and I look forward to talking with you soon. Again, Hutch’s number is 408-675-1777, call or text him now.