The Risks to Wealth and Well-being are increasing…

so protect yourself and your family by giving yourselves

smart choices

In our 30+ years helping HNW individuals and families design their backup plans, we have never seen so many concurrent risks to wealth and well-being as we do today!  For most years there have normally been one or two headline risks that motivated our clients to ask us to prepare their backup plans…an unfavorable tax policy here, a change of government there. For most of our clients these risks could be managed and mitigated with straightforward solutions – better tax planning, better estate planning, better succession planning and in some cases organizing alternative residence and/or citizenship.

The growing urgency for Backup Plans in 2024

Before we describe the reasons why having a backup plan is even more relevant in 2024, let’s recall that the main reason for having a backup plan in the first place is the protection of one’s wealth and well-being from the risks associated with a wide range of external factors that include: 

  • Government policy risk – such as detrimental changes to tax policy…these days exemplified by  increased rhetoric about taxing-the-rich
  • Socio-political risk – such as increased radicalism, populism, disunity,  government dysfunction, racism and antisemitism, increased gun violence and crime…leading to growing social unrest
  • Economic risk – arising from external factors like government management of the economy, trade wars and economic shock caused by pandemics…and internal factors like the growing resentment over systemic economic inequality
  • Environmental risk – notably the increased risks associated with climate change such as the dramatic increases in both the incidence and severity of wildfires, drought and extreme weather events
  • Geo-political risk – arising from long-simmering tensions that have turned into war in the Middle East , the unprovoked attack by Russia against Ukraine and the expected China takeover of Taiwan made more likely by growing perceptions of American dysfunction and decline
  • Technological risk – represented by its latest poster child, Artificial Intelligence

And of course, this is an election year in the US….which means there is Electoral risk.

What makes all these risks even more worrisome is that this year there are more many more headline risks than normal…and they are far more hazardous! In the eyes of the often-prescient Nouriel Roubini, there are at least ten risks which are at the level where they can cause serious and lasting harm…so he calls them “megathreats.” Moreover, these threats are all happening at the same time…and there are few prospects for domestic or global co-operation to address them. Roubini soberly predicts that “Change is coming, like it or not. The mega threats will reshape our world. If you want to survive, do not be taken by surprise.

For our HNW clients, not being taken by surprise translates into building and maintaining a robust backup plan for themselves and their families that features long-term planning, giving themselves options, professional tax planning and risk management. When building their backup plans, our clients usually demonstrate proactiveness, curiosity, openness and willingness to adapt to change in order to give themselves choices. 

Ian Bremmer’s warning about Three Simultaneous Wars

We will do our best to not sound like Chicken Little, but we are not alone in pointing out there are some very dangerous things happening at the moment. Indeed, Ian Bremmer of the Eurasia Group warns that there are currently three dangerous wars happening at the same time: the Ukrainian War with Russia, the Israel War against Hamas, and the US War against itself.  Let us list just a few of the things that we can reasonably expect in the year to come and then suggest what actions, if any, can be taken by HNW individuals to mitigate their potentially harmful impacts for themselves and their families.

Identifying the 10 Megathreats of 2024

US Election Year Uncertainty

  • Continuing dysfunction in the US Congress and erosion of confidence in the pillars of American democracy – the courts, the media, the government, the bureaucracy
  • The US election campaign is going to be chaotic, divisive…and possibly violent:
    • Major issues will be abortion & women’s health, immigration, gun safety…all made the worse by the enmity between the right and left
    • Disinformation will be at bonfire levels stoked 24/7 by social media disruptors Russia, China, North Korea and Iran
    • The majority of Americans want gun safety regulation
    • Continuing chaos at the southern border
    • Continuing difficulty in getting agreement in Congress for funding for Ukraine, Israel and the southern border
    • While the economy will continue to be the best in the G7, popular perception is that inflation is out of control
  • Depending on election results, the US might stop supporting Ukraine in its fight with Russia and withdraw from NATO…basically abandoning its position as global leader

Brexit Fallout, continuing economic and political turmoil

  • Pundits and polls have Labour forming a majority government in the next general election that must be held before Jan 28, 2025
  • The costs of Brexit will continue to mount up
  • The Non-Dom tax régime is on the chopping block
  • There is significant pressure within the Labour Party to bring in a new wealth tax.
  • “Tax the Rich” will be a dominant theme in the next election

Global Threats

  • Democracy is under threat around the world…with “70 elections in countries that are home to around 4.2bn people—for the first time, more than half of the global population. But while there is more voting than ever, there is not necessarily more democracy: many elections will be neither free nor fair.” (Source: The Economist Year End issue)
    • We can predict with 100% certainty that there will be aggressive social media disruption by Russia, China , Norther Korea and Iran in virtually EVERY one of these elections!
  • The international impact of the US election will further erode the confidence of US partners…who are already making their future plans that take into account the uncertainties in US policymaking and commitments
  • Chaos in Israel & Gaza…that is slowly and steadily expanding into a regional conflict thanks to Iran’s proxies
  • Significant problems within China that could spill over its borders
    • Declining economic growth, youth unemployment, real estate collapse, supply chain issues with West
    • Increased tension with the West across several fronts – trade, public health policy, intellectual property theft
    • Increasing uncertainty about Taiwan’s fate…as Chinese President Xi Jinping made very clear in his televised New Year’s address when he reminded the world of his grand vision where China would “surely be reunified” with Taiwan.
  • Inability or unwillingness of most countries to regulate AI…or to at least reign it in until its potential negative impacts are better understood

The Imperative action of building a robust Backup Plan

This is serious…2024 is not the time to be like a deer caught in the headlights.  Now is the time to act…starting with a Backup Plan that will address your unique situation in terms of wealth, business and  family.

A proper Backup Plan first identifies the financial, security and lifestyle objectives and concerns for you and every member of your family. It then sets out specific strategies to address them all in an integrated manner…often across multiple generations.

Strategies normally cover residence, citizenship, estate and succession planning, potential family law issues…and taxation.  A Backup Plan ensures that should any family members find their current situation threatened, they can avoid any negative impact. They will have the freedom to depart to a pre-planned location and financially sustain themselves comfortably in the future. In short, the entire family will have to freedom to exercise options…or not…and have confidence in the outcomes.     

Key steps towards protection for HNW Individuals

  • Get professional assistance that covers ALL of the possible issues that you will want addressed. This will involve not only immigration and citizenship but also taxation, family law.…even security concerns.  This holistic view will not only help to ensure that all the necessary material changes have been addressed, but also to identify additional issues and options…and new opportunities. In a previous blog, I discussed this in greater detail;
  • Enlist the inputs of key business confidants – to ensure their support and business continuity;
  • Enlist the input and support of family members. Successful Backup Plans are not just approved at the boardroom table…they are also approved at the kitchen table;
  • Recognize that delaying a decision is making a decision…to do nothing.  Of course, we are not suggesting doing something just for the sake of doing something, but in these post-COVID days, lead times to execute a Backup Plan still remain long. Remember that you will need to get documents from one government to submit to a second government for a residence or citizenship. What took two months pre-COVID can now take six or more months…so delaying a decision can often be the riskiest, not the safest, option;
  • If a viable option is available, don’t wait for what you hope will be a better one. In other words, don’t let perfect be the enemy of good. We can cite too many situations where a potential client had a very workable plan ready to execute within a specified timeline, but hesitated in the hope that a better deal would come along. When that didn’t happen…their options became very limited very fast;
  • Plan for the worst…while continuing to hope for the best.  None of us want any of the dire predictions about 2024 to come to pass. But if they do, do you want to be prepared…or searching through your contacts list for someone to help you do under pressure what you can do now in a thoughtful and considered manner. 

The Importance of Non-Conflicted Expertise

In selecting advisors we caution our clients to be very wary of second residences or citizenships sold by commissioned salespeople. Our firm doesn’t take commissions from countries / developers / fund managers who are selling residence or citizenship by investment programs. This long-standing policy removes any question that our advice is conflicted or is in some way motivated by whichever program pays the highest commission. Our advice is based on decades of experience and our guiding principle to recommend what’s in our client’s best interests. A properly designed integrated Backup Plan which is developed and executed by non-conflicted expert advisors not only avoids unnecessary expense or avoidable problems…it gives our clients peace of mind.

So, as Ravi Agrawal, Editor in Chief of Foreign Policy Magazine pondered…conjuring up images from Harry Potter…is 2024 going to be “The Year That Must Not be Named” …or will 2024 be the year that you gave yourself and your family a basket full of positive options and the peace of mind that comes with having a smart Backup Plan in place?

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