DEFINING MOMENTS | AN ENTREPRENEUR’S CAPACITY FOR RISK
BY IAIN TAIT
Popular wisdom frequently portrays entrepreneurs as extreme risk-takers whose success is the product of bold decisions and exceptional confidence levels. But while this may be true of business decisions, we often find it can be the complete opposite when it comes to managing your personal wealth.
In fact, outside of their business, entrepreneurs can be reluctant to take any risk at all. This is especially the case if you have had a liquidity event from selling all or part of your business.
In our experience, there are many reasons why this may be the case. You built your business by relying on your own hard work and judgement, and by having the resilience to let go of your mistakes and focus only on what motivates you.
As an entrepreneur, you may also prefer to stand out from the crowd rather than follow the beat of someone else’s drum. To achieve this, you need to innovate, and this means putting something on the line, whether it is your capital or your reputation. While the risks of losing either are always mitigated in one way or another, you’ve grown accustomed to it.
By contrast, your approach to your personal wealth may be the complete opposite. For wealth managers like us, the challenge lies in helping you to overcome the contradiction between your desire to take on big risks with your business and your fear of loss with your personal wealth.
At London & Capital, we believe it is important to get to know you and your approach to risk before making any investment recommendations. Managing an investment portfolio is not the same as running a business, therefore the risks associated with it will be different.
Only when we understand your financial goals, as well as the challenges you face, will we recommend a portfolio that has been designed to achieve your objectives.