Palestinian money changers 370.
(photo credit: REUTERS/Mohamad Torokman)
Your adviser as financial coordinator I recently met with a financially
comfortable married couple who have investment accounts all over the world, with
different managers looking after each separate account. At first glance, one
would think that they were happy with their investments, but this is not the
During the meeting, they told me that they both grew up very poor
and after working very hard to build up a family business, they sold it and made
aliya with Nefesh b’Nefesh.
This couple is now afraid of the possibility
of war in the Middle East and its consequences on the global economy and all
their hard-earned money. For this reason, they are looking for a relatively
non-aggressive portfolio and exposure to non-US dollar currencies.
reviewing all their different accounts, we found that they were 95 percent
exposed to stocks, a proportion that is far too aggressive for what this couple
is looking for. In addition, they had very little exposure to non-US-dollar
You may think that their use of multiple money managers is
excessive. Well, actually it has become more and more common.
used to be that investors chose to work with one adviser, or do it themselves,
the recent economic crisis has changed that.
According to Cerulli
Associates, a Boston-based research firm: “Among the entire advice-seeking
universe, 27% of households use multiple advisers. Narrow that range to
households with $2 million to $5 million to invest, and the percentage climbs to
35%. Among those with more than $5 million to invest, 58% use multiple advisers.
In the last three years, the pace has accelerated, with the average number of
adviser relationships per household climbing as investors who handled their own
finances turned to advisers for the first time, and those already using advisors
added to their stable.”How could this happen?
When I asked the couple
when they had last spoken to any one of their many managers, they responded that
it was a few years ago. Yet over this time, their needs had drastically changed.
When they had first opened their accounts, they were still living in the United
States, earning high salaries. In this situation, they didn’t need all of their
money immediately, and they wanted it to grow.
However, having moved to
Israel and changed their lifestyle, their investments are no longer appropriate
to their needs. By failing to remain in contact with their portfolio managers,
they have found that their investments no longer serve their new
With more and more investors choosing to use multiple
financial advisers to manage their money, it’s become important for investors to
have one adviser who oversees everything that is going on to make sure that the
investor is investing in an efficient manner.
Financial adviser as CFO
The most effective solution to this problem is to use a local financial adviser.
A financial adviser can be compared with a company’s chief financial officer
(CFO), who is responsible for the entire financial situation of the business.
When a client has various accounts around the world, a financial adviser will
have a broader view of the situation in general. He will not just focus on one
account, like a local investment manager, but will assess everything and see how
the entire financial situation fits his client’s goals and needs.
the main advantages of working with a person who is local is that he will
understand your personal situation and long-term goals best because he is part
of the local culture and speaks your language.Make a plan
meet with an investment adviser, map out your financial goals. Going to the
experts will help you decide how to invest your savings. But you should first
have a firm grasp of your short- and long-term goals and needs.
income will you need to meet fixed expenses apart from any pension, Bituach
Leumi or Social Security income? Do you have children or grandchildren to
educate? Are your elderly parents in need of care? How is your own health? You
need to determine your own budget needs and your ability to tolerate risk first,
and then ask your adviser what kinds of investments would best fulfill these
There is nothing wrong with using multiple managers.
make sure that you have a financial coordinator who will oversee all of your
investments and help you become a successful investor.
contained in this article reflects the opinion of the author and not necessarily
the opinion of Portfolio Resources Group, Inc., or its
[email protected] Aaron Katsman is a licensed
financial professional in Israel and the United States who helps people with US
investment accounts. He is the author of the book Retirement GPS: How to
Navigate Your Way to A Secure Financial Future with Global Investing.