BigSur typically communicates with one main point person in each family. “It doesn’t matter where they live—it relates to their understanding of finance and their skill set relative to their siblings,” says Pakciarz. “It could be that one sister has an MBA from NYU Stern and understands our world.” Each family decides who will serve in this role. BigSur generates monthly performance reports and conducts client calls once a month or once a quarter, depending on family preferences. (Pakciarz serves on the Board of Overseers of the NYU Stern School of Business.)
At BigSur, “much of what we do is generating income and preserving existing wealth,” he says. BigSur also does a lot of investing for clients in alternatives, including real estate, private equity, private debt and venture capital, among other asset classes. The team also looks closely at the potential tax consequences for its domestic and offshore clients.
Pakciarz, who thinks the U.S. stock market is a little overextended in the short term, could sell and trim down positions for offshore investors without triggering a tax event for long-term or short-term capital gains, he says. But to minimize the tax impact for U.S. investors, he might instead buy protected puts or short an index that’s highly correlated to their long equity exposure, while also working with clients’ tax advisors to determine further tax consequences and tax considerations.
“The strategy for two brothers with the same return objectives, risk profile and portfolio holdings can be very different if one lives in the U.S. and the other lives in Brazil,” he says.
Mexican Moves
Lizzie Dipp Metzger, the founder and president of Crown Wealth Strategies in El Paso, Texas, describes working with multinational clients as “a natural situation.” Her financial advisory and wealth management firm is just over the border from Mexico. (Her own mother is from Mexico while all her cousins are U.S citizens.) People started referring Metzger to other Mexicans who have homes in the U.S. or children living here. Approximately 10% of her 250 clients live on both sides of the border.
Referrals are important for reaching Mexican clients because she isn’t permitted to market outside the U.S. and because it’s harder to establish trust with them, she says. “There’s a very big distrust against advisors, females and insurance,” she says. “All three of those things are set up against you when it comes to working with clients from Mexico.” Life insurance policies from Mexico often fail to pay out, she says.
Most of Metzger’s Mexican clients speak English fluently, but she often conducts meetings in Spanish because many are more comfortable communicating that way. All documents are created in English.
Metzger stresses planning now to avoid big tax liabilities in the future. Should investors who have moved from other countries decide to become U.S. citizens, it could create an estate tax problem, she says. If they don’t become U.S. citizens, transferring assets to heirs who live in the U.S. also can be problematic.
Years ago, Metzger’s mother inherited a farm in Mexico from Metzger’s grandfather. “We’re not talking about a $10 million inheritance,” she says, but transferring the money to the U.S. (about $70,000) was still very difficult. “Maybe that’s one of the reasons why I really wanted to help transnational clients,” she says.