Completing the puzzle - Wealth Management beyond investment returns
Our initial conversations with prospective clients typically centre around two common themes – people want reassurance that their investment portfolio is tax-efficient given their complex tax reporting obligations, and they want their investments to generate returns so that their financial goals can be satisfied over the long-term.
These are very important issues requiring specialist advice and creating solutions for US taxpayers and ‘non-doms’ has been in our DNA since our first day of business in 2009. Since then our investment offering has grown from strength to strength and the portfolios we recommend offer clients access to diversified portfolios focused on seeking to maximise the returns that may be achieved from each unit of risk they take, whist seeking to minimise exposure to specific company or sector risk
While investment returns and tax-efficiency are very important, as our client relationships grow and develop, we often see a shift in expectations as our clients feel that working with a trusted advisor provides access to a multitude of other benefits. Here are some of the other valuable ways that we work with clients:
A constant focus on goal-oriented, cross-border financial planning
Efficient investing is just the beginning and it is important to wed investment strategies with adaptable financial planning. We will always start relationships by understanding our clients’ goals and ambitions so that we can optimise their account structure, cash flow planning and investment strategies to give them the best chance of achieving success. We make use of financial projections software to build a base plan for the future, and when life changes unexpectedly, we take pride in being a first point of contact to help our clients test their financial plans for a new-look future. Sometimes their son or daughter has been accepted to study abroad in the US and the first invoice has arrived (ouch!), or they have found a dream home in Barbados for retirement. In any event we are always happy to revisit the numbers and recommend any necessary portfolio adjustments so that the wider plan retains the best chance of future financial success.
We are trusted members of the wider advisory team
High-net worth families often require bespoke legal and tax advice to make sure their affairs are in order, and we are happy to recommend advisors that we believe are a good fit from the wide network of trusted professionals in our space. Often UK based institutions are reticent to work with foreign nationals, particularly Americans, for fear of falling foul of the ever-changing regulatory rules. We happily recommend individuals and firms to our clients who are used to working with Americans to avoid any nasty surprises, and whether its buying a new home, setting up a Trust for future generations, or working out the tax impacts of selling an asset while living abroad, whilst we do not provide legal and tax advise ourselves we enjoy being part of the conversation and working closely as a trusted ally alongside our clients other advisors to make sure there is an alignment of understanding.
Truly understanding risk and the right level to recommend for our clients’ portfolios
Risk in a financial plan tends to break down into multiple facets. Of paramount importance is the level of risk an individual is comfortable taking, which is considered alongside how much risk they can afford to take in each of their portfolios, as well as the level of returns that they require to achieve their goals. The affordability for risk-taking can be broken down further still:
- Time-horizon – how long can a client commit to taking a certain level of risk and remain invested in the markets without needing to draw income from the portfolio, or to withdraw a significant portion of the assets?
- Capacity for loss – if the value of the portfolio fell by a certain amount, how would it impact a client’s goals and their ability to continue to afford the standard of living that they enjoy?
Our role is to ask the questions to find out the level of risk with which the client is comfortable, and to explain how best to apply this appetite for risk to each of their investment pots. We also recognise the importance of maintaining the correct level of emergency cash in personal bank accounts, even if this means investing less with MASECO. We are able to consider investment risks on both a portfolio and holistic level and make sure that clients are rebalancing their accounts when necessary to maintain an appropriate level of risk.
To apply some context, March of 2020 saw the sharpest downturn in the history of the S&P 500, and as you might imagine we spent a lot of time making use of video and phone calls with clients who wanted to make sure their hard-earned assets were safe. As advisors we learned a lot from the experience, and it is testament to the MASECO Investment Philosophy and our focus on financial planning that enabled our clients’ investment portfolios to weather the storm. In many instances our advice centred around sticking to the plan – we had built robust financial plans from the offset without chasing investment returns alone, we had ensured our clients’ had strong advisory teams around them, and we had recommended levels of risk that we deemed appropriate on a holistic and account level. For these reasons the majority of our clients had the confidence to remain invested through the worst of the coronavirus downturn and therefore reap the rewards as global markets regained their strength later and marched to record highs in December.
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Use of information:
- Nothing in this document constitutes investment, tax or any other type of advice and should not be construed as such.
- The investments and strategy noted in this document may not be suitable for all investors and making available the information in this document is not a representation by MASECO that any investment strategy is suitable for any particular client.
- This document is provided for information purposes only and is not intended to be relied upon as a forecast, research or investment advice.
- All investments involve risk and may lose value. The value of your investment can go down depending upon market conditions and you may not get back the original amount invested.
- Your capital is always at risk.
- Although the information is based on data which MASECO considers reliable, MASECO gives no assurance or guarantee that the information is accurate, current or complete and it should not be relied upon as such.
- Information about potential tax benefits is based on our understanding of current tax law and practice and may be subject to change. The levels and bases of, and reliefs from, taxation is subject to change. The tax treatment depends on the individual circumstances of each client and may be subject to change in the future. Past performance is not a reliable indicator of future results.
- Past performance is not a reliable indicator of future results.
MASECO LLP (trading as MASECO Private Wealth and MASECO Institutional) is a limited liability partnership registered in England and Wales (Companies House No. OC337650) and has its registered office at Burleigh House, 357 Strand, London WC2R 0HS. Telephone calls may be recorded for your protection.
MASECO LLP is authorised and regulated by the Financial Conduct Authority for the conduct of investment business in the UK and is an SEC Registered Investment Advisor in the US.
The partners are Mr J E Matthews and Mr J R D Sellon; Mr D R B Dorman, Mr H Q A Findlater, Mr T Flonaes, Mr N B Tissot, Ms A L Solana.