Organising & Understanding Family Wealth – Your Questions Answered

In this quick Q&A session the Head of Sales for Enness Global, Toby Johncox, talks to Jordan Williams of Artorius about some of the advice he gives High Net Worth individuals (HNW) in terms of understanding and managing their wealth.

How does someone begin to organise their financial affairs?

The key thing is actually to ascertain and understand what it is you’ve got within your estate. So first of all, understanding what assets you have, where they’re held, and who’s actually in charge of those assets. When we’re working with families who come to us and ask exactly that same question, the first thing that we do is understand what their asset position looks like today, and what their objectives are for the future. And we then build a consolidated report whereby all the information relating to their estate can be captured. And by having that understanding of what you’ve got today, one can then analyse and assess concentration of risk, look at whether the mandates that you’ve got within your investment portfolios are appropriate to your circumstances, whether they’re actually going to achieve your stated objectives. So, first and foremost, it’s about understanding what you’ve got and what you want to achieve.

There is no one size fits all solution for this. Every family is different, every family is going to have a different objective as to what they want to achieve with their wealth. And so certainly, when families come to us, it’s our role to probe, in a nice way, to understand what it is they’re trying to achieve with their wealth, and understanding whether the measures they’ve got in place, are appropriate. Absolutely key to that is working with their existing advisors. And what we find is that with our involvement we work in collaboration and bring the team of advisors together. Because, so often, someone might have their tax advisor, their accountant, lawyer, and trusted mortgage brokers, but very rarely do they talk to each other. And so they have separate conversations with each of these advisors. But the key about how to start and organise their affairs, it’s about bringing all their advisors together to help devise a plan for the future.

What should I be investing in and where should I invest?

There is no one size fits all and everyone is different. What might be right and suitable for one client is not going to be right and suitable for another. So it’s about understanding what it is the client is trying to achieve, what they’re worth, what their investment horizon and what their risk profile is, what their return objectives are. Once we’ve ascertained that, then we can actually go about devising what the right investment strategy is.

What is the best way to monitor your wealth?

There are certainly the benefits that families have derived from having consolidated reporting across their affairs. Typically wealthy families will get portfolio evaluations and statements from their banks and other traditional wealth managers. But they’re in isolation, they’re just in relation to that particular relationship. But by having a consolidated report, that brings in all their different investment portfolios, and not just investment assets, but their property holdings and their holdings in yachts, and jets, and art and fine wine, and their depositions and other liabilities. Bringing all of that together into a consolidated report is a great way of actually understanding what the client’s overall wealth is on a month-to-month or quarter-to-quarter basis:

• understanding their movements
• understanding how different investments are performing
• how investments are performing according to specific benchmarks that have been created
• understanding the fees that the clients are paying

Having that oversight over your wealth leads to better decision making. And makes other key family members more informed about their wealth position.

There’s the monitoring side, which is having everything in one place in an easy-to-read format. But equally, taking the time to monitor. Ultra high net worth global citizens don’t have the time to go through bank statements, look through portfolios even if their different advisors are sharing those monthly with them. So it’s critical to have someone that can look after everything in one place.

It’s about optimising the positions that you have. And by identifying what savings can be made, identifying an investment strategy that might work better for you. So are you in the right investment strategy for what you’re trying to achieve. And by moving into something that’s more appropriate, hopefully, will enhance returns. So, again, you can’t do that if you’re not looking at things as a whole. If you’re doing it piecemeal it’s not going to be as effective.

What is the situation regarding London property?

It’s a really interesting time to buy real estate, but it’s still about buying the right property, the right real estate. The London residential market still has huge appeal to many. London still is, obviously, a global city, which has many attractions, and we’re still seeing people moving to the UK to send their kids to school here, wanting to start up businesses here. And I think the London property market has shown over many, many years to be resilient.

There have been undoubted challenges to the market, and numerous tax changes that have taken place; uncertainty over Brexit, uncertainty over changing government risk, but it has shown to be resilient. But it all goes back to buying quality. And if you’re buying the right property in the right location, and you can understand what the correct price is, there are still opportunities out there. I think things are changing in terms of what people want, undoubtedly people are going to want more outside space or access to local parks and other amenities. But I definitely think there are opportunities out there. And there are places in London which are still incredibly popular whereas some of the areas which had significant new build, they’re shown to be less popular now.

There are still very good value mortgage rates available to international clients, the dollar versus the pound still remains a good exchange so that makes it a really interesting time for people to buy real estate. But it’s buying quality that’s going to see good appreciation in the longer term.