The background

A 45 year old fund manager with 3 children, Nigel would admit that to some extent he has had his fair share of luck. ‘You make your own luck’ he always says and I’ve been in the right place at the right time to be opportunistic. He’s the marketing manager of a fund manager and was there at the beginning and now finds himself as a major shareholder after having bought out some of the early leavers.

A house in the eastern suburbs worth around $10m with a $1m mortgage, a portfolio of shares and some listed property of around $4m. He also has equity in the fund manager currently worth $18m and delivering a healthy dividend of nearly $2m every year.

The Dilemma

He realises that his wealth has been generated entirely from the business and they’ve been lucky. He also knows that the skills required to grow assets are very different to those required to protect assets. So how does he keep growing the assets quickly whilst ensuring that the lifestyle they’ve got used to will never be any worse.

He said that having worked in the financial services industry, he has grown to distrust the conflicts and has therefore never used financial planners. He is also concerned about his own decision-making and wants to find someone to be his ‘financial conscience’ on all decisions, look for any ‘scorpions under all the rocks’ as well as be the ‘financial guardian angel’ for his family if he is not around.

The Strategies

It was clear that Nigel had more than enough capital to fund his lifestyle for the rest of his life. What he needed to avoid was putting too much of his capital at risk in order to either find some excitement or get too greedy.

He later admitted that what was most valuable through the process were some of the comments made by his adviser. These included:

• “you’re not working for the money…so why are you working?”
• “assuming you can never work again, what portfolio of assets would you like to have to not only look after you and your family, but withstand any personal or financial events?”
• “what impact may your career and money have on your children?”

A number of strategies were implemented.

• Gearing – a reasonable amount of gearing was added to a more structured investment portfolio.
• A set of Investment policies and rules
• Investment portfolio split into ‘insurance fund’ and ‘growth portfolio’ which included investments in more interesting assets like an angel finance fund and property syndications
• A comprehensive estate planning strategy including a set of ‘family rules’ which will provide broad direction to his beneficiaries should he die or become mentally incapacitated.
• Cancelled life insurance as he already had sufficient capital
• Established an adviser relationship for wife in the event of his death.

The Outcome

Nigel continues to work hard and his wealth continues to grow. He knows he has a fall back position no matter what and has a variety of cash flow projections which have alleviated any anxiety he had and has allowed him to take more risk with his investment assets.

He knows he has all aspects of his personal finance under control including someone to bounce ideas off.