“Life is like a box of chocolates, you never know what you get,” said Forrest Gump in the Oscar-winning movie. If you are a wealth planner, however, you might disagree with this statement. “While everybody’s life story is unique, there are certain patterns and events that repeat themselves,” says our Head of Wealth Planning, Roger Stutz. “Forrest Gump clearly was not a wealth planner.”
But Roger is. Early on, his flair for numbers led him into banking. After completing his degrees, he began his career as a relationship manager, ran international projects, spent time in the UK, France and the USA, became a wealth planner and quickly moved into management positions. “What motivates people? How can you develop a vision and guide them to reach their objectives? I love working on these questions with my clients and team members,” he explains. It appears to be the right mindset, as Roger heads Julius Baer’s Wealth Planning division since 2007.
Mapping things out
In his more than thirty years of advising individuals and families on all aspects of financial planning and wealth management, he observed his clients make a certain mistake over and over again: “I believe the reason for this lies in human psychology. It is much easier for our brains to tackle a concrete problem as opposed to anticipating an event that lies far in the future. Nevertheless, it is important to see the big picture at any stage of your life.” The following chart can serve as an example:
“Think about how your life could be reflected in this chart. What is important to you? What do you want to achieve? Identify not only your important life events, but also think about what might happen in the lives of your loved ones. Who do you want to include in your financial plan?”
Setting the course
Once you have identified your major events, take a step back and ask yourself what you can do today to achieve your objectives and support your loved ones. “For example in the case of divorce, a prenuptial agreement signed today may prevent a conflict in the future,” Roger explains. He goes on by listing concrete measures that can be taken for the life events marriage, relocation, and retirement:
Marriage
- Create a wealth overview: “What are your assets and liabilities? How do the cash flows look like? Where are family members located? First gain an overview of the status quo.”
- Check marital law and planning possibilities in your country of residence: “In a second step, understand the marital law and plan your marital regime according to your needs.”
- Protect your spouse: “Nobody wants to think of the sudden death of their loved ones. However, assess whether the financial coverage would be sufficient in a case of emergency.”
Relocation
1 - Plan your asset allocation and ownership structure: “Assess your tax situation in your home country. Then determine which assets should be transferred to your new country of residence.”
2 - Analyse the family situation: “A family split between home country and target country may lead to unexpected tax consequences that have to assessed upfront.”
3 - Analyse the target country holistically: “Succession rules, social security, the healthcare and education system, local culture and language, the real estate market…Check the facts and don’t get blinded by your romantic take on a life abroad.”
Retirement
1 - Plan early and reduce your debt: “Understanding the future benefits/annuities from your social security and retirement funds will help you to determine a possible income gap. Furthermore, you should develop a plan on how to begin your retirement without any debt.”
2 - Cover your expenses through multiple income streams: “An annual inflation rate of 2% over a period of 20 years will eat 50% of your income. Keep this in mind when setting up a structure that aims at paying you a recurring income from social security and pension savings.”
3 - Actively shape this period of your life: “An active, satisfying and happy retirement involves more than having adequate savings. Write down what you want your life to look like during retirement, and start to work towards it.”
“It is not about developing a rigid plan with concrete timelines. Things will definitely change along the way. But the earlier you start, the more flexible you are.”
Three guiding principles
When looking into the future, Roger foresees an increase of complexity in terms of family setups, global mobility and international regulation. Furthermore, he observes that his clients are increasingly educated. “Especially Millennials have studied around the world, ask the right questions and want to make an impact,” he explains. “Digitalisation will further support this trend.”
Before we let Roger go to his next client meeting, we asked him to conclude with his top three wealth planning tips. These are:
1 - Have the overview: “It sounds trivial but do you have an overview of all your assets, liabilities and cash flows? You need to know where you stand today to be able to plan for the future.”
2 - Communicate open and honestly: “Even though it might not be an easy discussion: assemble everybody around a table and address the topics that have been avoided for years. Transparency helps to build trust within a family and is crucial to structure a wealth or succession plan. Once these topics have been properly addressed, you can enjoy peace of mind.”
3 - Prefer contracts over products: “Lots of so-called experts want to sell you financial products or insurances. Be critical, get a second or third opinion, and check whether the objective can also be achieved with a legal contract.”