Wealth Management

Voted #6 on Top 100 Family Business influencer on Wealth, Legacy, Finance and Investments: Jacoline Loewen My Amazon Authors' page Twitter:@ jacolineloewen Linkedin: Jacoline Loewen Profile
Showing posts with label taxes. Show all posts
Showing posts with label taxes. Show all posts

August 17, 2020

The Hazards of Wealth

 If you are an entrepreneur and are smart about your wealth, you will be interested in Jacoline Loewen and her interviews in “Becoming Seriously Wealthy.” Jacoline shares conversations with entrepreneurs and stories of their financial journeys.  In this excerpt from her book, Jacoline explores the hazards of wealth.

Jacoline Loewen is a leader in the high performance wealth management arena. She has invested over 25+ years in entrepreneurship, finance and wealth management, having written several best seller books, including Money Magnet, (John Wiley) publisher).

Two weeks ago, I enjoyed a lunch with a former client at his private residence, looking across his sprawling lawn to the horse paddocks and fields. When I worked for a family office, I convinced this entrepreneur to partner with private equity. After six years, and much hard work, he succeeded in that entrepreneur dream where he sold his business and became wealthy beyond his financial goal set ten years back. 

I was curious how the sudden wealth had impacted his life and asked, “Now that you are a few years along from your sale, what is your big insight? We all think sudden wealth is wonderful but what are the risks? Do you think there are hazards to wealth?”

He laughed, “It's similar to winning the lottery.  It is wonderful and it is a shock to your life, your family, your friends and peer group. The question no one is going to ask you is ‘How are you going to replace this self esteem?’ You've been up Everest and back. Now what are you going to do for thrills and fun?”

My friend then commented, “Do you notice how many entrepreneurs buy an airplane? They have all this hunger for life, for adventure, and now that they have the money, buying a plane and learning to fly seems like a very good idea.”

The CAA reports that the most dangerous pilots statistically likely to have accidents or catastrophic incidents are those pilots with one hundred hours of experience, but less than five hundred. Jack McLeod, Skye Finance, who sold aircraft to entrepreneurs says, “Generally, this group gets bored with pre-flight checks and take short cuts to ‘show off’ to friends and family, feel nothing about flying inclement weather and are not too familiar with flying on instruments alone. Experience and hours are all important.”

My entrepreneur friend had been part of the Strategic Coach program run by Dan Sullivan which uses the Kolbe personality and skill assessment tool.  Apparently, the Kolbe test shows that it is common for entrepreneurs to be quick to start, but to not carry through with attention to rigorous and systematic detail.  He said, “Entrepreneurs learn how to fly initially, but soon skip through the tedious fifty-point check lists prior to flying and overlook the weather conditions. How many tragic tales do you know of entrepreneurs crashing their planes with loved ones on board? Remember the young Kennedy who crashed his plane at night, with his wife onboard?”

Thankfully, most entrepreneurs have been shown to be astute enough to recognize flying is not their skill set and to hire an experienced pilot. The entrepreneurs recognize that while they were talented at their skill set, flying and getting licensed takes time and attention they do not really want to dedicate.

Flying yourself, rather than hiring a pilot, is a terrible way to risk your future. It's misguided, risky and unfortunately, a common first foray into travel by former business owners.

The reality is risks, such as flying planes in poor weather, Black Swan events, pandemics and disasters are all out there. In the finance world, this risk is called beta . A beta of 1.00 is at the market level. If it's 1.5, it's approximately 50% more risky than the market. If it's 0.30 then it's 70% less risk.

When you run with entrepreneurs, risk is rarely mentioned. It's about returns. Winner takes all. Beta does not factor.

As you decide how to look after your wealth, you may want to be the person making all the calls. I have watched many entrepreneurs over the years. Don't fool yourself into believing you can call the risks. I would advice an entrepreneur with new wealth to ask if you want to spend your time checking on your money? Will your family be at risk if you are doing the decision making? What is the worst case scenario for your wealth? Above all, can you do a better job than the professionals with all of their time dedicated to understanding how to grow and keep wealth? Do you have their technology, their experience , their global view of the world, their ability to overcome country bias and the knowledge of beta which is harvested from overseeing your peers’ wealth?

Very much like the skills of the pilot , the skills of managing wealth are increasingly complex. Ensure you have the experts and, the world's best at wealth management .


Interested in risk-testing your portfolio? Please email me at jacoline.loewen@ubs.com

If you would like to read more of the series Becoming Seriously Wealthy, please email me at jacoline.loewen@ubs.com  

Twitter: @jacolineloewen

Praise for Money Magnet, J.B. Loewen

"Every ambitious private business owner should understand the role of investors and how to attract them. Money Magnet is an indispensible guide to the process."
Austen Beutel, Chairman and CEO, Oakwest Corporation Ltd.

December 30, 2014

The benefits of tax-loss and investing

Benefits of tax-loss harvesting are inflated. 

Some so-called robo-advisers may be overstating the benefits of tax-loss harvesting. Some of the claims we’ve seen are unrealistic given our more than a decade of experience managing tax loss harvesting portfolios and results we’ve seen from competitors we respect

The claims made by online advisors arguably represent the triumph of favorably simulated back-tested results over actual experience.