Your Investments: Your adviser as coordinator

Once you have defined your goals and needs, your adviser can then assess all your different investment accounts, property and any other assets.

Irecently met with a financially comfortable married couple that has investment accounts all over the world, with different managers looking after each one. At first glance, one would think they were happy with their investments, but this is not the case.
During the meeting, they told me they both grew up very poor, and after working very hard to build up a family business, they sold it and came to live in Israel. 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 nonaggressive portfolio and exposure to nondollar currencies.
On reviewing all their different accounts, we found they were 95 percent exposed to stocks, a proportion that is far too aggressive for what this couple was looking for. In addition, they had zero exposure to nondollar investments.
How could this happen? When I asked the couple when they had last spoken to any of their many managers, they said it had been a few years. Yet over this time their needs had drastically changed. When they had first opened their accounts, they were still living in the United States and earning high salaries. In that situation, they didn’t need all of their money immediately, and they wanted it to grow.
However, now that they are living in Israel, with the resultant change in 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 are no longer in tune with their new situation.
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.
One of 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 Before you meet with a financial planner, broker, investment adviser or any other investment professional, 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.
How much income will you need to meet fixed expenses apart from any pension, Bituach Leumi (National Insurance Institute) 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 goals.
Once you have defined your goals and needs, your adviser can then assess all your different investment accounts, property and any other assets to see if you are invested in a way that you can accomplish what you set out to do. He can also determine if you need to make any alterations to get your investments in line with your goals. Aaron Katsman is a licensed financial adviser in Israel and the United States who helps people with US investment accounts.