Seize the Opportunity

Thanks to decades of experience in handling family assets, many well-to-do families recognize that there will always be difficulties from time to time. In such cases, they are able to accept unsatisfactory results from their asset manager with the understanding that entering into a financial crisis usually has a negative impact net worth in its initial stages.

Still, the investment advisor, should be able to explain the poor investment results in a simple and understandable manner.  As long as the investment advisor appears to have the situation under control, the family is basically satisfied, which in turn demands a lot from the asset manager to make sure that things stay under control throughout the duration of the crisis.

Wealthy families are usually well-networked and have access to very up-to-date and high-quality data. They are always hungry for insider information – and even more so during a crisis. The asset manager must be able to provide access to such information – either proactively or via reliable third-party sources. For this he must be well-networked and have his own hunger for breaking news and any information that can benefit his clients.

Being informed and transparent reduces the risk of panic and encourages pragmatic, logical and good decisions. The investment advisor must be a hungry detective and a shrewd information broker. This is essential for successful crisis management- where avoiding panic and keeping your cool are central to making the right decisions.

Never Miss an Opportunity

The crisis is at its peak, or hopeully approaching it, and so far, most people have remained calm and composed, recognizing that the loss of assets is limited and comprehensible.

So now everything is fine and we are all in the clear, right? Definitely NOT – because we are now just starting to find our way out of the crisis.

This stage also keeps the asset consultant on his toes. Wealthy families with their need for new opportunities, now want to be fed with the latest ideas and hot investment tips in light of the new post-crisis economic reality.

Ideally, the value of a stock, which has lost significant value can now be obtained cheaply. A terrific long-term story is also part of it. But the thing most families hate more than anything else – especially during a crisis – is missing out on an opportunity.

History shows that maximizing participation on the way out of a crisis is as important for overcoming the entire crisis cycle as limiting the loss of wealth on the way into the crisis. The asset manager as a family detective and information broker is now in particular demand. If he has the contacts and talent to convey the information, he now needs two things in particular: A strong backbone and solid character. There is nothing more difficult than making investment recommendations during a crisis. The investment risk is high, as is the risk of losing your client’s confidence and business.

In this phase of the crisis, well established families separate the wheat from the chaff when it comes to assessing their investment advisor. The hunger for investment opportunities overshadows everything else. Only intact, well-organized, well-connected and well-advised families can successfully cope with crisis.  The other wealthy families will just have to cook with boiled water and hope they can survive the crisis with minimal collateral damage.

Well-organized families should have a successful financial advisor at their side, with a solid character and innate hunger for information, as well as the talent for conveying that information and empathizing with family values. Financial advisors with their own, well-functioning families have a clear advantage in being successful managers for their clients’ families in a time of crisis.