The definition of “family” has evolved considerably over the past 30 years. Gone are the days of the cookie-cutter family unit spread around the subdivision in carbon-copy houses with carbon-copy lives.
Today, every family is unique with unique goals, unique needs, and unique objectives. And wealth and entrepreneurial businesses create layers of complexity. Abundance creates complexity. And generations create even more complexity.
So, if every family is different and every financial plan is different, why are most investment strategies so similar?
When it comes to wealthy families, this isn’t Walmart. There is no off-the-rack, one-size-fits-all solution. You deserve customization. You deserve a tailor and a designer with an impeccable eye for both people and the markets. A great tailor can make a wardrobe seem custom by taking up a hem, adjusting a cuff, or making a few nips and tucks to the inseam.
The same applies to your portfolio. A standard asset-allocation mix may work for the average investor, but you and your family are anything but average. One size does not fit all.
My mission is to find a style, a fit and a design in your investment portfolio that works uniquely for you. As investment strategists, we want to build a portfolio that can withstand any potential outcome.
But I’ve learned from my career working with large institutional investors that really bad outcomes can occur if a portfolio is not customized properly with the investor, their family, and their objectives in mind.
It all begins with risk tolerance. From the outside looking in, a portfolio can appear perfectly suited for a client. But, if a family can’t handle the possibility of a bad outcome, we need to consider that in a portfolio.
And remember what we started with: Every family is unique, and wealth and abundance create more complexity.
We must consider every nuance, or a portfolio isn’t worth the paper it’s printed on.
For example, let’s think about a fictional wealthy family. Being a child of the 1980s, let’s use the Ewing’s from the television show “Dallas.” The Ewing’s accumulated their wealth from oil drilling.
To create true diversification for the Ewing’s, we would have to weigh their existing exposure to oil and gas so that they aren’t overweighted in the sector as we craft a diversified portfolio for them. For the Ewing’s, we might also want to examine their real assets, like their expansive Southfork ranch, and assess how that fits within their overall estate. (But a discussion on real assets should probably wait.)
At the end of the day when it comes to building a portfolio, wealthy families shouldn’t be trying to keep up with the Jones’ or the Ewing’s. Every family is unique. Doesn’t your portfolio deserve to be unique too?