When it comes to their personal finances, ultrawealthy individuals share many of the same problems as investors with lower balances.
Some of the ultrawealthy—with at least $10 million in investible assets—turn to a peer network to get help and perspective managing and preserving their fortunes. Members of Tiger 21 (which stands for The Investment Group for Enhanced Results in the 21st Century) pay $30,000 a year for admission and do an annual portfolio “defense,” where they each share their personal balance sheet, income statement and financial goals with a small group.
At a townhouse on Manhattan’s Upper East Side, member Perry Lerner recently did his ninth portfolio defense. In the roughly 1½-hour session, Mr. Lerner, the 73-year-old co-founder of Crown Global Insurance Group, explained why he had made certain investments and answered questions about his portfolio, family, charitable giving and estate planning.
Here are four lessons from his presentation and peer responses.
To prepare for his portfolio defense, Mr. Lerner created a spreadsheet of all his accounts, assets and liabilities. Putting everything down on one spreadsheet helped him get a clear, organized picture of what he owns and owes, he says.
It also reminded him of something he thinks when he gets yet another financial statement in the mail. “I have too many accounts,” he says.
During the meeting, he pledged to consolidate his 12 separate brokerage accounts into two. He also plans to consolidate 10 separate bank accounts into two.
Financial advisers say streamlining is a good practice for anyone. It gives you less to track and may cut your fees. And one day, it will give your heirs less to sort through.
If you do close, combine or roll over any of your accounts, beware of early-withdrawal penalties or unintended tax consequences.
Not all accounts can be combined, says Jeffrey Levine, chief retirement strategist at Ed Slott & Co. A nongovernmental “457” plan, for example, may not be rolled over to an individual retirement account, he says.
If you are over 70½ years of age and want to combine retirement accounts, remember that you must take your required minimum distribution (RMD) before rolling over any funds, Mr. Levine says. This is the case even if it’s a direct rollover from your 401(k) or similar plan into an individual retirement account.
At the portfolio defense, Tiger 21 co-founder…