- I look at a lot of financial statements, and I’ve begun noticing a trend among the high net worth individuals of our generation. Particularly among small business owners and those in professional partnerships, a lot of people have a
disproportionately high amount of illiquid assets (real estate, closely held businesses, partnership interests) relative to retirement assets (401(k), IRAs, pensionplans) and liquid assets (publically held stocks, bonds, cash). Why does thismatter? Two reasons: people make financial decisions (such as taking out a loan or investing in more illiquid assets) based on their perceptions of their net worth; if they are not really worth as much as they appear on paper, or if their worth is disproportionately skewed to illiquidity, those decisions may be misguided.
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