A family might possess a good investment advisor, a good accountant, and a good attorney yet still encounter issues. These experts focus on different parts of the financial picture, but the family’s choices frequently overlap these boundaries.
For instance, a decision about company shares can impact taxes, liquidity, and concentration simultaneously. Moving abroad can alter the relevance of retirement accounts, insurance, and investment structures established years ago.
The Challenge of Coordination
This issue is especially relevant for families with members, assets, and financial arrangements spread across multiple countries. Retirement accounts may remain in a country where the family no longer resides, and employer equity may be earned in various jurisdictions.
Property, brokerage accounts, and private investments may be held in different locations and currencies. While adding specialists is often necessary, it doesn’t solve the coordination problem.
The Liquidity Example
An investment advisor might create a diversified portfolio without knowing about a large employer-equity position held elsewhere. A tax advisor could recommend a transaction without considering its impact on liquidity for other family goals.
An attorney may structure assets without being aware that a family member plans to relocate internationally. Each recommendation may seem sensible in isolation but can create problems when combined.
Consider a family with substantial net worth but limited available capital for the next five years. Some wealth may be tied up in retirement accounts, employer shares, or property. Private investments may require more capital before yielding returns.
In such cases, focusing solely on the liquid portfolio can lead to misinformed decisions about the family’s financial flexibility. A similar issue arises with investment risk.
The Need for a Holistic View
A portfolio may appear diversified, but the family’s overall position could be highly concentrated. A senior executive might hold employer shares outside the managed portfolio while continuing to receive salary, bonuses, and future equity from the same company.
A business owner may have most of the family’s wealth tied to the same industry as their investment portfolio. For international families, currencies add another layer of complexity. Assets may be held in one currency, while spending is expected in another.
Children’s education and parental retirement plans may involve different countries, and property, pensions, and investments can create various currency exposures.
This doesn’t mean one professional should replace all others. Cross-border families often require specialized tax, legal, and investment expertise in multiple jurisdictions. However, someone needs to integrate these pieces.
It begins with understanding the family’s goals and expectations. Where do they plan to live? When might they stop working? What capital will they need in the next five to ten years?
What provisions do they want to make for children or grandchildren? Which risks are intentional, and which have accumulated over time?
With this understanding, investment decisions can be made in the context of assets held elsewhere. Tax decisions can be evaluated alongside their impact on liquidity. Estate planning can consider both family locations and asset holdings.
Employer equity can be viewed as part of the family’s overall balance sheet rather than just compensation.
The Role of a Central Coordinator
When a family’s plans change, multiple advisors may be affected. A planned move can have tax and legal implications that impact investment decisions before the move occurs.
If an executive wants to retire early, liquidity requirements will change. Reducing a concentrated position may necessitate reevaluating the investment portfolio. A large private investment can alter the family’s overall risk tolerance.
Advisors don’t need to encroach on each other’s expertise; they need to work from a shared understanding. While a family may require multiple advisors, they have one balance sheet and one set of goals.