Investing Talks - John McNertney

Investing Talks

Name: John McNertney

Country of birth: United States of America

Biographical note:

Let's start our conversation by finding out a little more about John McNertney's history and career: childhood, youth, first steps in his professional career, first dreams...

I was born in Palo Alto, California, into a family of seven. We all knew that the Bay Area was changing during the early eighties, but nobody understood how central Silicon Valley could become in the future of technology and business. As my father came from an extremely rural background, he decided to move us to Iowa, in the interior of the country, when I was 12.

And so I spent most of my youth away from home, working on the farm before going to university, also in Iowa. As soon as I graduated, I decided to move back to San Francisco. And so, I began a career in finance... The problem, if I can call it that, with Silicon Valley is that it created so much "New Money", and while I was training as a financial adviser, there were always new clients around every corner. It was a fantastic era and a place to learn the art of successful financial management!

How did John McNertney start working as a financial adviser in Portugal? What were his main motivations?

It was part wish, part luck. I've always been fascinated by life in Europe. I learnt to speak French as a secondary concentration at university, so I was open to living outside the USA. But then fate intervened. My wife received a career opportunity to move to Lisbon in 2019. Initially, I didn't move with her, but when the pandemic started, I came with her and the rest is history! I fell in love with Portugal.

As my main motivations are to guide people seeking to organise the retirement lifestyle of their dreams, I realised that I could do this most effectively for people who share my open global mindset... I now use my technical skills to help provide structure, guidance and investment knowledge to those leading a "Cross Border" lifestyle.

"Make hay while the sun shines!"

What are the main challenges that Americans face when settling in Portugal, whether for tourism or residence?
Generally, I'm more concerned with the second group... Americans settling for residency. In this case, the main challenges are understanding the unique tax and investment challenges they face as new residents of Portugal. More generally, it can be an overwhelming life change, and there are a number of small issues that require organisation and prioritisation. We often underestimate how much of our life is on 'autopilot', so when we move to another country, we have a lot of rebuilding to do.
What are the main services and guidelines that John McNertney provides to its American clients who wish to live or invest in Portugal?

We offer two essential services: Firstly, we develop a comprehensive financial plan. This includes budgeting, debt and investment management, insurance and estate planning. These things have a different level of priority for different people, so this exercise is intense and varies from person to person. 

Once a plan has been developed, we provide the technical expertise to execute that plan. I'm an SEC-registered advisor, so we can actively invest client money in financial assets such as stocks or bonds. These are two separate services: Some just need a plan, and some need us to be hired and monitoring to ensure that the plan is executed according to the strategy.

From your experience, which sectors are of greatest interest to Americans looking for business opportunities in Portugal?
In my experience, the Americans who are attracted to life in Portugal are those who have the flexibility to be location independent. So they're already retired and can go wherever they choose or they have some kind of location-independent job. Can an American nurse simply move to Portugal and start working in a hospital with no language skills or cultural background? Probably not. Can a programmer who supports a global pharmaceutical company and can work remotely work in Portugal? Absolutely. So it's usually this type of person, the person with no distinct ties to a geography, who comes to live here.
What makes Portugal an attractive destination for Americans, whether for tourism or as a place to live or invest?
Americans are attracted to Portugal because of its climate and culture. The climate offers sunshine all year round and, especially for us Californians, that seems perfect! In my experience, the Portuguese are warm and welcoming people. Although they can be a little conservative in some respects, for those of us who feel at home here, we appreciate it. And the proximity to the rest of Europe is a big plus for those of us who have personal reasons to be close to the rest of the European Union as well.
What are the main cultural differences and business practices between Americans and Portuguese that expats should be aware of?

Americans tend to make decisions quickly and feel more comfortable operating in a digital environment. Americans are often surprised to discover that the Portuguese don't send emails first and, when they do correspond, prefer a more formal tone. The Portuguese also don't tend to "fail early, fail fast" in business. In America, it's quite common to launch a partially developed business and expect others to support and promote it. In Portugal, where the tolerance for failure is much lower, this doesn't happen, so I feel that the environment may be a little less favourable for the entrepreneur.

How does John McNertney help his American clients deal with bureaucratic issues such as visas, work permits and residency in Portugal?
The group that comes to Portugal either dedicates a lot of time and patience to learning how to navigate these issues or delegates it to a professional. A new class of professionals has recently emerged to provide guidance on these issues, and they are teaming up with Americans.
What are the main legal and tax areas that Americans should consider when moving to or investing in Portugal?
Americans need to understand how their income and investments will be taxed. Do they bring with them a portfolio of investment assets that they have held for years and may be required to pay capital gains on when they sell them? Do they hold these assets within a US retirement account, where they have certain assumptions about the tax treatment of investments on distribution? These ideas need to be explored, validated and, in some cases, a reorganisation strategy needs to be adopted. As for the legal side of things, it may be necessary to review the inheritance laws that will apply now that they have moved to Portugal.
In your opinion, what are the biggest advantages and disadvantages of living in Portugal compared to the United States?
For me, it's quite simple; I have a young family with three young children. Portugal is a very family-friendly environment, so I think it makes for a healthier lifestyle. On the other hand, Portugal can have a slower pace, and while I'm middle-aged I prefer that, I realise that my children might get impatient and want to move somewhere where there are more abundant and competitive professional opportunities.
Can you share a success story or an interesting story of how you helped an American client overcome a specific challenge when setting up in Portugal?

Last year, I met an American consulting firm that was helping a client who had decided to move to Portugal. This client had saved a lot of money and developed a good strategy for retirement in the US. But when they decided to move to Portugal, the company realised that they didn't have a solid understanding of how to make the transition effectively. And they were right: this client needed my help to redevelop every level of his retirement strategy. 

Most importantly, he and his former advisor worked diligently to identify all of his pain points honestly and efficiently with me. I did the necessary work and introduced him to a number of local resources that he used to deal with his immigration and other lifestyle challenges. In less than a year, he moved full time to live in Portugal and couldn't be happier. It's completely satisfying to be part of these relocation stories!

How do you keep up to date with changes in laws and regulations that affect Americans living in Portugal?
I have established relationships with a wide range of legal and tax professionals and frequently consult them to update my understanding of the laws relevant to my clients. As we are actively connected with the system every day, I have developed a high level of understanding in the practical areas most relevant to me and my clients. I also read the business news daily in the US and Portugal and continue to read the tax code in my spare time. (Seriously! Not fun, but a necessary evil)
What advice would you give to an American who is thinking of moving to Portugal, whether for work, retirement or business?
Be honest with yourself and understand your reasons for doing so. This will help you identify and prioritise what you need to be happy throughout the process. Once you understand the underlying desires, you can create specific goals (for example, "I need to move to a culturally sensitive medium-sized city with lots of English speakers. And I want to become a citizen in the shortest possible time...")
Would you like to leave a message for stakeholders in the property investment industry?
My mum used to say "Make hay while the sun shines!". The property field obviously goes through boom and bust cycles, so try not to get over-exuberant or greedy during the good times. And be prepared to keep enjoying your work even when things slow down. Be a professional and constantly educate yourself to be useful to your clients and maximise your personal effectiveness as a person and a professional!"

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