A Personal Note
Billionaires throughout the world are very concerned that their wealth management solutions are delivering as “advertised.” They are also seriously concerned, for example, that there are various wealth planning possibilities available that may be very beneficial for them that they are not appropriately considering. Thus, many of them—not all, but many—are very supportive of stress testing. Directly or through their family offices, they are more likely than not to initiate the stress testing process.
In order to help coordinate stress testing for the exceptionally wealthy, I spend most of my time—using a number of strategies and tools—going deep to understand the family’s preferred outcomes. Often, the preferred outcomes are tempered by legal, financial, interpersonal, as well as other limitations. Discussions of wealth management products and services come up but usually have a small supporting role.
To address the mechanics of the wealth management solutions of my clients, I turn to various specialists. Outstanding technical specialists are quite plentiful, making them easy to source and access. Very importantly, the specialists I work with are always compensated extremely well.
Because of stress testing, my clients find that either their wealth management solutions are top-notch and will indeed deliver the results they want or there are problems that can usually be corrected. When stress testing is done systematically, there is no question from any client about the value they are receiving.
I do this for the exceptionally wealthy and I have taught the methodologies to others. What is absolutely essential to realize is that there is no “magic” to stress testing. It does not matter if the client is a billionaire many times over or has a negative net worth. In my experience, professionals can learn how to conduct stress tests with the requisite emphasis on the human element. Also, generally like wealth management, the strategies and tools I use are commodities.
Russ Alan Prince is president of R.A. Prince & Associates.