5 Ways investing is the same as running a business

Many of my baby boomer clients wonder whether they should keep their wealth in their businesses, or sell and invest the proceeds elsewhere. While they understand the need to diversify, they find investing in other markets less appealing since they don’t have the experience and perceive it to be a greater risk.

Working with business owners, my challenge is just as much about helping them invest money as it is helping them change their perception of themselves. You see, many of my clients view themselves as business owners when they should be thinking of themselves as family wealth managers. This is a surprisingly difficult shift for owners to make.

I first heard about this concept from a multi-generation family business owner who viewed his role as “caretaker of the family wealth” and, given that they had been successful for four generations of the business, there was clearly a message here.

Another difficulty for owners is to realize that their level of risk has changed. There are now a number of different investment products designed to deliver returns against specified risk levels such as hedge funds which help diversify some of the risks associated with owning only equities. The equity stock market has long been the primary diversification option, but fears of volatility, crashes and other forces beyond the control of a business owner have often seen only a small portion of their wealth invested. Today business owners can tap into a far wider range of investment options, as well as good portfolio managers at reasonable prices.

The change in mind set from business owner to family wealth manager is daunting, says David McLean, founder of the ROMC Fund. His advice applies to business owners who are used to weighing risk and the likelihood of returns, and who approach their investing with the same passion as owner-operators. Here are a few ....read the rest at The Globe and Mail.

Jacoline Loewen is the director of business development of UBS Bank (Canada), named Best Private Bank Globally 2014. Ms. Loewen is also the author of Money Magnet: How to Attract Investors to Your Business. You can email her at jacoline.loewen@ubs.com or follow her on Twitter @jacolineloewen.

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