Does having hundreds of millions mean chaos in managing your wealth?
To be honest, managing my wealth is a mess…
This was the candid self-reflection of a family patriarch before his family joined our multi-family office in 2021. The portfolio itself wasn't bad; the absence of certain asset classes is not a fundamental error, especially for someone who had only been able to devote limited attention to investing while running the family’s core business.
However, the individual investments were scattered around the world, held across numerous brokers and banks, with minimal documentation and fragmented contact information. There was no comprehensive overview of purchase prices, the performance of individual investments, or their respective weightings over the previous fifteen years.
Any potential inheritance proceedings would have been extremely complicated. Many investments would have been difficult for the heirs to identify and access. Legal costs would have been high, as would the resulting stress.
Managing my wealth takes up too much of my time
In our new partner's defense, he is far from an exception. When someone spends years running a large company or a demanding business at full capacity, they simply don't have time to manage a complex investment portfolio in every detail.
And that is exactly the situation of the family patriarch described above: a highly successful entrepreneur in his field. But there are only 24 hours in a day, and there is more to life than just work and obligations.
Many understand the importance of diversifying wealth beyond their core business, but the tasks associated with managing it are often sidelined or postponed. The urgency of organizing investments and ensuring they can be passed smoothly to the next generation often becomes apparent only when a major life event occurs.
A similar scenario occurs when someone lacks either the interest or the investment expertise needed to manage the family’s investment assets. It is encouraging to see that many heads of families recognize these limitations and have no hesitation in seeking the right external partner.
Here, too, one possible solution for a family with significant wealth is to work with a multi-family office, an institution that can:
- consolidate everything in one place,
- provide a clear and comprehensive overview,
- improve portfolio efficiency and performance,
- reduce overall costs,
- support continuity across generations, and more.
Not knowing the exact figures behind each investment can reduce overall portfolio performance
Another potential drawback of a poorly organized family wealth portfolio is lower returns. Most wealthy families primarily aim to protect their wealth against inflation over the long term. Therefore, it is very important, both financially and strategically, to understand the numbers behind every investment.
Its performance needs to be monitored both individually and as part of the portfolio as a whole. Modern portfolios contain much more than just stocks and a handful of funds.
Monitoring all instruments and their financial and legal parameters is a significant challenge. While Excel is a powerful tool, specialized software or an online portal can provide a much clearer and more practical solution, not only for the current investor but also for future generations.
At the same time, a comprehensive and detailed overview enables the portfolio manager to rebalance the portfolio more effectively and decide which assets to retain, reduce, or add. This can contribute to stronger long-term portfolio performance, one of the key objectives of wealth management.
An example of how an entire family portfolio can be clearly organized, with all the relevant information in one place:
