Shield heritage in times of uncertainty: Keys to a solid strategy

The partner Norz Patrimonia EAF draws a road map to protect capital in unstable contexts and warns that without long -term discipline, structure and vision, preserving heritage is increasingly difficult

Shielding heritage in times of economic, political or social uncertainty is a growing need for people and families seeking stability and preservation of their capital in the long term.

Patrimonial management consists in considering the global patrimonial situation of an investor (individual or a family group) and making investment decisions aimed at maximizing their assets and protecting it in the future.

Patrimonial management has a global vision of investment and can cover various aspects such as patrimonial, fiscal, legal structure, investor education and ethics, inheritance planning to the next generation, insurance …

Each heritage demands its specific planning. The vast majority of successful heritage efforts are associated with the use of professional practices. Often, I use the expression that successful companies is the result of combining a good business idea, with a management of resources and future vision. A successful patrimonial management is always associated with a “business” management of it.

In patrimonial management it is necessary to define the investment policy. The investment policy is defined as the set of rules that form the action plan aimed at satisfying the objectives of the investor, in a certain temporal horizon and respecting its degree of risk aversion.

The application of the investment policy allows:

• Provide discipline to the investment process.
• Reduce the possibility of inappropriate decisions.

Investment policy implies defining:

• THE INVESTOR PROFITABILITY OBJECTIVE
• Investor’s risk tolerance
• The temporary horizon of the investor
• Inverter restrictions (liquidity needs, taxes, regulations, personal situation of the investor).

In addition to the above considerations, the profitability of a heritage has to overcome inflation and tax cost.

Keys for a solid patrimonial protection strategy:

First, intelligent diversification, with the aim of minimizing the concentrated risk. This diversification must occur both in terms of classes of assets and sectors (monetary, fixed income, variable income, real estate, alternative assets, …). Diversification includes investing in different countries to find opportunities and simultaneously reduce local political or economic risk

Secondly, it is key that all assets that are part of the assets are of quality and have an attractive revaluation potential. This is a key point to protect capital and allow the revaluation of the various investments. Warren Buffet considers this one of the key points of his success as a heritage investor for sixty years.

Third, I would highlight the optimal structure of a legal, legal and fiscal type. For each heritage case, the most appropriate and efficient heritage organization must be analyzed. This will make it easier for us to consider processes such as inheritance planning, donations, or be more efficient in moments of disinversions and future investments.

Fourth, the unavoidable need to have a percentage of liquidity and strategic reserve. This liquidity reserve aims to respond quickly to emergencies or opportunities. The liquidity fund must cover between 6 to 12 months of fixed expenses and can be reversed in monetary products, short maturities. Surveys published annually to large family officers of the world, show us that they always have 10% to 14% of the total patrimonial in monetary and liquidity positions (accounts, letters, short -term bonds, monetary funds …)

Fifth, information and continuous financial education. The objective in this case is the decision -making decision in the face of changes in financial markets, economy and global risks.

In sixth place, consider the use and hiring of insurance (life, health, property, civil liability …) where it is necessary and convenient in patrimonial management (company, real estate, financial …).

Finally, it is necessary to adopt the role of the family protocol to define the papers, rules of action, responsibilities and shared vision of the heritage management. Successful patrimonial management usually associated with families with clear guidelines on how to act in different situations. It is very important to adopt a family protocol to avoid blocking.

In conclusion, shielding heritage is not only to protect what you have, but plan with vision, adaptability and prudence. A solid strategy combines financial instruments, legal structures, constant education and common sense.

For successful patrimonial management and shield it in time of uncertainty, they are necessary: