Capital is there, but the system is not: a case study of a Russian executive after relocating to Europe

There is money, but no real sense of order. Some sits in deposits, some with a broker, some in cash. All of this seemed perfectly reasonable at one point. But the capital grew, and the situation changed. Add relocation, a change in tax residency, and sanctions-related restrictions — and you get a situation where even a financially literate person loses sight of the full picture.

That was precisely the point at which my work began with one of my clients — a senior executive at a large company who, by the time we met, already had substantial capital but did not understand how to make the process of managing it more systematic and consistent.

It all began in May 2021 with personal financial planning.

The objective was to build a capital management system with a 20-year horizon. The goal was formulated as follows: grow the portfolio to approximately $5.5 million by 2041 through market returns and the regular allocation of part of the client’s income into investments.

It was decided to split the available liquid capital (approximately $720 thousand) into two parts: an emergency reserve and the main investment account. The first portion was initially held in Russia, the second with a European broker.

Beyond investment advisory itself, this case combines many moving parts: relocation, a change in tax regime, sanctions-related restrictions, a frozen ruble-denominated portion of the emergency reserve, broker compliance procedures, difficulties with transferring money from Europe to Russia, infrastructure diversification, and a transition toward a more active investment strategy.

What exactly I did as an advisor

Financial planning and goal monitoring. Every six months, I recalculated the growth plan for the core capital, updated the emergency reserve plan, and prepared a report for the client assessing realized returns, the impact of inflation, and the relationship between actual progress and the original plan.

Investment advisory support. I monitored the composition and structure of the investment portfolios in both the main account and the emergency reserve, and when adjustments were necessary, I issued the relevant “individual investment recommendations”. During certain periods, I explained the reasons for negative performance, discussed more active investment strategies with the client, and clearly outlined the higher risks involved.

Operational work with brokers. I supported the client in dealing with brokerage firms: KYC procedures, source-of-funds verification, tax reporting to the Russian tax authorities during the client’s time living in Russia (with support from specialist colleagues, as usual), confirmation of European address, regular passport data updates, powers of attorney, guidance on completing Form W-8BEN, and interaction with broker support teams to resolve incorrect asset display issues in the client’s account.

Infrastructure solutions. I explored ways to transfer funds between Europe and Russia through banks, brokerage firms in CIS countries, and Russian payment systems. We also considered opening additional accounts for the client in the US and Mauritius.

Tax and legal scenarios. Together with colleagues, we helped the client understand the nuances of European taxation, including the potential tax treatment of future employee stock option income. We also assessed the tax implications of a possible move to another country.

Communication and anxiety reduction. I explained the causes of portfolio drawdowns during specific periods, emphasized the importance of maintaining an emergency reserve, discussed infrastructure constraints and the blocking of securities in the prevailing geopolitical environment, outlined the risks of working with brokers and investing in ETFs, and translated bureaucracy into plain human language.

How I was useful as an advisor

• Helped the client see the full 20-year picture: long-term planning, risk profiling, emergency reserves, discipline in allocating incoming capital, and evaluating real returns.
• Helped the client avoid interpreting drawdowns as “failure”: explaining that our work began just before a major crisis, followed by sanctions and sharply rising interest rates.
• Removed a substantial share of operational burden: interaction with brokers and specialist external professionals, tax reporting, KYC, and W-8BEN administration.
• Maintained discipline: periodically reviewing our work together, comparing actual progress to the original plan, and helping make allocation decisions between the main portfolio and the emergency reserve whenever meaningful new capital arrived.
• Proposed alternatives without imposing them: additional accounts in CIS jurisdictions, the US, and Mauritius, helping evaluate the pros and cons of each route.
• In 2025, I proposed a change in investment strategy that produced a noticeable positive effect: the account returned to positive territory and generated a CAGR of approximately 12% annually in US dollars — above the planned target given the client’s risk profile.

Where I could not help the client

• The issue of the frozen ruble-denominated portion of the emergency reserve remains unresolved. Nothing can realistically be done until the current geopolitical conflict is resolved and sanctions restrictions are lifted, which is obviously beyond my control.
• Some ideas around tax optimization remained theoretical due to the “non-standard” nature of the client’s assets.
• It was not possible to open a US brokerage account because of the broker’s requirement that I hold a European license when working with an EU-resident client.
• Existing solutions for transferring funds between Russia and Europe in both directions were often cumbersome. The process was slow and expensive. Cryptocurrency was not considered due to the associated regulatory and other risks.

How the client perceived this

The client, being a calm, rational, and fairly independent individual, demonstrated satisfaction with various aspects of the relationship: expressing appreciation for the reports provided, noting their clarity and transparency, acknowledging growth in personal wealth, rating the pricing model highly, and showing loyalty toward the ideas being proposed. He did not argue, responded substantively, clarified details, and independently raised several important questions.

There were almost no emotionally negative complaints. More a sense of fatigue from bureaucracy, payment restrictions, the European tax system, and infrastructure risks. At times, the client did express concern — for example, about the frozen emergency reserve or holding assets in Europe.

Final reconstruction of the case

This case goes far beyond “buy ETFs and forget about them.” It is about long-term support for a client in an unusual life situation: relocation, a change in tax residency, European brokerage infrastructure, Russian sanctions risk, stock options, allocation of regular and irregular income, payment issues, and compliance complications.

My primary value as an advisor was not so much in investment ideas, but in functioning as a navigator: bringing everything into one coherent plan, running the numbers, explaining what was happening, occasionally asking uncomfortable questions, helping with documentation, proposing different options, and highlighting risks so that the entire structure would not collapse because of a single unpleasant event.

At the same time, some issues objectively remained outside my control. Certain assets remain frozen, the US account was never opened, and several tax optimization proposals were never implemented.

Financially, by the fourth year of the relationship, the picture looked materially better: the portfolio moved out of negative territory, the capital growth plan was ahead of schedule, and the client continues to invest part of his income in a disciplined manner.