Deep insights on the best way to attain investment privacy


Today's message comes from eClub advisor Steve Rosberg who provides a Corporate management service from Latin America. He has been my Ecuadorian banker (I am on a trip in Ecuador right now) for years. Good investing! Gary


Dear Gary,

As the debate rages on as to whether privacy can continue to exist, or it is being eroded to nothing, and what all this implies for us, I would like to suggest we all stop for a moment, look around, take stock and refocus.

Let us accept that absolute privacy is not possible. Let us accept that violations of the tax laws are not generally politically correct and that even when they can be justifiable, their costs may far outweigh the anticipated benefits.

Where does this leave us? It forces us to get smart or give up. Getting smart means two things:

  1. Instead of tax avoidance, do tax planning. Meet with your tax lawyer, or other specialist advisor, and plan your way into minimization. This will vary person by person, country by country. Generally speaking, there is much that can be done to improve your situation.
  2. When thinking about your privacy, set your goals. Absolute secrecy doesn't cut it. So, whom do you wish kept isolated from information on your wealth? In a limited privacy environment, this becomes the crucial question. You are not hiding from the tax man, you are defending yourself from external aggression in an increasingly litigious society. You are reducing your profile as a target.

Thus, you state your limited objectives and design accordingly. Start by not being a conspicuous consumer. Follow up by being neat and do not leave big footprints all over the place. This means that you should use encryption if you think your mail could be read, and choose jurisdictions that do not raise flags (as an example you yourself have mentioned, bank in Denmark as opposed to Grand Cayman). If your mail comes from a commercial company or an individual, instead of labeled from a bank, your profile is even lower. Think as for example the French do, who when visiting their private bankers in Switzerland: they go there by train instead of by plane. Why? It is anonymous.

Most importantly, choose reliable counterparts who will intelligently follow the guidelines you and your legal advisors have charted out.

You will achieve this level of service and adequate privacy only by developing a real, personal relationship with your trustees, financial advisors, and bankers. These should be people whom you like, trust, and who are in line with your objectives. The kind you would like to share dinner with.

These persons need not work for a bank or a brokerage house, but can relate to them and you independently. Their time, work and attention will be very valuable to you, for they are at your service without conflicts of interest. In no way is it comparable with point and click advice you can get from a web trading site, or from a large financial institution only worried about pushing assets down your throat. They will be able to stand up to you and tell you not to do something foolish (we all get those impulses!). That is their business!

This is how I focus my services for my closest customers. Once their structure has been designed together with their advisors, I help them set up in the jurisdictions of choice. If they have chosen to run by "remote control", they get mail from me and we meet periodically to discuss – face to face – what we wish to do for the future. Is it expensive? It costs a lot of money, but I think it is very much cheaper than the alternative.

All these ideas are self-serving to a point. But they are of even more service to those persons intelligent enough to use them. The advisors I have met from your team think along these lines. It is time for the people to take stock of this and put it to use for their benefit.

Best wishes,

Steve


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