As a CEO or senior leader in an organisation, you usually have a lot on your plate. That comes with the territory and in my experience, most people in this type of role thrive on the excitement of being busy, pressured and making impactful decisions.
One of the drawbacks of a full-on, all-consuming role can be that you give 100% (or more!) effort to growing the value of your firm, at the expense of your own wealth. I am fortunate enough to have spoken with and looked after the affairs of CEO’s and senior executives. I’d like to share the benefit of this in the form of 5 key points that every person in this position should think about, as follows:
1) Your family are probably not the same as you
CEO’s are the ‘do-ers’ in life- they have big ideas, don’t tend to pay too much attention to barriers and are an absolute force to be reckoned with. This isn’t just when they are at work, this is a personality trait, so the same approach can often be seen in their investment selection. Here lies the rub though- all of this is great, whilst you are in control. What about when you are not around? I don’t just mean by passing away of old age (which might statistically be a long way away) but what about some kind of incapacitation? Injury? Sudden medical condition?
The recent past has taught us that anything can happen, and we should be prepared. If something happens to you, would your family take on the investments with the same passion and drive? Would they know where to start? What about your shares in the business you work for? Do they sell them? Or do they keep them? Where are all the investments even kept? The point here is not to scaremonger, but rather to make the point that you should communicate with your family what you have, where, why and importantly, who they can speak to if something happens. The latter point is a vital one.
Family members in the midst of grief do not tend to want to pore over spreadsheets and contact countless faceless financial firms- they want to talk to a real person who can spring into action with the family’s best interests at heart. Family members may often (but not always) want to switch to wealth preservation in the aftermath of a major event or a key family member passing. This may be very different to outright adventurous wealth growth that you may have been pursuing.
2) Shares in your business: lose the emotion
This is potentially a big one, and something I come across regularly. Rightly, CEO’s and senior leaders in organisations often build up significant shareholdings in the businesses they are working hard to build.
Part of the challenge of investing is to separate emotion from ‘investment utility’.
By this, I mean separating our emotional attachment to a company we may have worked in for a long time, and to focus on managing risks and seeking diversified returns. Having some of your wealth tied up in the shares of your employer might make complete sense and indeed, is something that I like to see as an investor looking at companies to buy. However, from a personal point of view, be conscious of how much of your wealth is tied up in the one shareholding. It’s highly likely that your income is dependent on the company continuing to trade and to prosper, and if a lot of your capital base is tied to the company too, you might want to think about how to reduce that risk. Remember- there are always unknowns. You might be happy with the corporate strategy and where the business is going, but you don’t know what is around the corner. Just ask the employees of banks in 2006, mining companies in 2008 or travel firms in 2020.
3) Find advisers you trust
One of the frustrations expressed to me by clients is the ‘red tape’ often associated with managing wealth and investments. This can be made even more challenging by using several different providers and not looking for firms who might be able to provide you with a personalised service. The latter point is often bandied around in marketing literature as a selling point but can sometimes be difficult to quantify.
In my experience, personal service comes into its own when you need things actioned quickly or need genuine, personalised advice on-tap. In your position as a senior leader or CEO, you will be familiar with having to make quick decisions in business and will know that you have your team on hand to assist. Your personal wealth life is no different. A small and very effective team can be extremely useful in solving problems quickly, with minimal fuss and above all else, delivering an outcome that works for you.
In my dealing with clients I have found that small, nimble, trusted teams work the best. On many occasions myself and a client’s other advisers have spoken between ourselves to discuss the issue(s), potential solutions, pro’s and con’s and pitched a complete solution, or menu of options, to the client, without the client having to do the running around. That is the power of service!
4) Legacy
I was once told that the most precious asset any of us have is our time.
We can’t buy more of it and we don’t know how much we have.
Quite often there comes a point in our lives when the thought of ‘legacy’ begins to be something we care more and more about. Creating wealth in your lifetime is great, and often you have traded a lot of your unknown reserves of ‘time’ for ‘wealth’. So, when you are out of time, what should happen to the wealth you worked so hard to produce?
The most obvious way to think about wealth after your death may be through the instructions left in your Will. However, far before this point you should think about what you want your legacy to be and how you can bring the rest of the family on this journey with you. Are there causes you feel strongly about? Do you want your wealth to last 1 or 2 generations, or 5 or 10? Are there any issues you would like to support? Are there any values that you would like to instil in your family or friends that they should apply to the management of your wealth, when you are no longer here?
One way you can put your thoughts into your own words is through what I call a ‘Legacy Letter’. The idea of this is not to be a legal document but rather something that is similar to a ‘letter of wishes’. The idea here is to give your family a document that they can refer back to, to guide them through the years of overseeing the wealth that you sacrificed your time for.
I really hope the above points give you some pause for thought and can help you on your own wealth journey.
Stay safe & take care,
Louis
The views expressed in this article are my own.
This information does not constitute advice or a personal recommendation.
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