The Wealth Enterprise:
TREATING THE FAMILY WEALTH
AS A FAMILY BUSINESS
October
O t b 21, 2013
Smith Family
Family Structure
Mr. & Mrs. Smith
3 Adult Children

$200 Million Net Worth
Operating Company Net Worth
Liquid...
An Interview With The Principals Around The
Business Enterprise ($100 Million):
What’s the mission of the company?
What’s ...
An Interview With The Principal Around The
Wealth Enterprise ($100 Million)
What s
What’s the mission and purpose of your ...
The Wealth Management Paradox
Families that are successful in creating wealth do not always apply
the same best practices ...
Perhaps One Reason Why Is That Managing A Wealth
Why,
Enterprise May Be More Complex Than Managing A
Business Enterprise
B...
Managing Wealth As An Enterprise Entails Three
Primary Activities

Strategy,
Strategy,
Structure &
Governance

Family
Weal...
Strategy, Structure & Governance
St ategy, St uctu e Gove a ce
Conceptualize wealth as a “business”, NAME it, and map out ...
Wealth Management Activities
Wea t
a age e t ct v t es
A complex and inter-locking set of activities
Values
& Mission
Gove...
Ecosystem Of Providers
cosyste O
ov de s
Given the complex set of activities – a
complex network of providers is often
nec...
Managing Wealth As An Enterprise Means
Thinking Strategically About The Ecosystem O
g St ateg ca y bout e cosyste Of
Provi...
Understanding Each Provider’s Role
Provider s
The simple truth: all wealth management
firms sound the same in their market...
Cutting Through The Clutter: The Key
Diff
Differences
Manufacturers
Create & Sell Products
Sell To Investors Directly Or T...
When Mapping Your Ecosystem – Identify
Whi h Role Each Firm I Pl i
Which R l E h Fi
Is Playing
Which firms are “providers”...
Implications To Your Role Of Working With Each
T
Ad i
Type Of Advisor
Working Directly With Manufacturers:
Can be economic...
Implications To Your Role Of Working With Each
T
Ad i
Type Of Advisor
Working With Distributors:
Category with which most ...
Implications To Your Role Of Working With Each
T
Ad i
Type Of Advisor
Working With Advisors:
Category which can help famil...
There Is No “Right” Answer
Right
But thinking strategically about your
ecosystem of providers – just as you
would about th...
Bottom Line: Making Sure Your Enterprise
Management F
M
t Function Is Explicit & I t ti
ti I E li it Intentional
l

Strate...
By Thinking Of Their Wealth As An Enterprise, A
Family Can Achieve Significant Benefits
Think of developing the family’s w...
Continued….

Be explicit about all of the activities required to manage wealth,
how they are connected, and identify the m...
info@wefamilyoffices.com I www.wefamilyoffices.com
Rockefeller Center 1270 Ave of The Americas, Suite 2101 | New York, NY ...
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The Business of the Family: Looking through the Lens of the Wealth Enterprise - Presentation: Michael Zeuner, WE Family Offices, Private Wealth Management Summit 2014

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For more information contact: emailus@marcusevans.com

Michael Zeuner from WE Family Offices and a speaker at the marcus evans Private Wealth Management Summit Fall 2013, held in Las Vegas, NV, delivered his presentation entitled "The Business of the Family: Looking through the Lens of the Wealth Enterprise".

Join the 2014 Private Wealth Management Summit along with leading regional investors in an intimate environment for a highly focused discussion on the latest investment strategies in the market.

For more information contact: emailus@marcusevans.com

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The Business of the Family: Looking through the Lens of the Wealth Enterprise - Presentation: Michael Zeuner, WE Family Offices, Private Wealth Management Summit 2014

  1. 1. The Wealth Enterprise: TREATING THE FAMILY WEALTH AS A FAMILY BUSINESS October O t b 21, 2013
  2. 2. Smith Family Family Structure Mr. & Mrs. Smith 3 Adult Children $200 Million Net Worth Operating Company Net Worth Liquid Wealth $100 Million $100 Million Liquidity/Investment Profile Relationships With 3 Primary Financial Institutions/Private Banks 150 Distinct Investments (Passive, Active & Partnerships) (Passive 12 Distinct Ownership Structures For Estate Planning Purposes 50 Distinct Financial Accounts 19 Tax Entities 100+ K-1s 2
  3. 3. An Interview With The Principals Around The Business Enterprise ($100 Million): What’s the mission of the company? What’s the s a egy for value c ea o a s e strategy o a ue creation? What does your P&L look like? How much do you spend on critical activities and suppliers to your company? Do you have high quality MIS to support your decision decisionmaking? What s What’s your plan for succession in key roles? 3
  4. 4. An Interview With The Principal Around The Wealth Enterprise ($100 Million) What s What’s the mission and purpose of your wealth? What’s are the objectives – short term and long term – for your wealth? Do you have high quality MIS to support your wealth management decision-making? How do you make decisions around your wealth and who’s involved in decision making? decision-making? What’s your plan for succession and education? What is your ecos stem of pro iders what role does each pla and o r ecosystem providers, hat play, how much are you paying, all in, to your financial services providers? 4
  5. 5. The Wealth Management Paradox Families that are successful in creating wealth do not always apply the same best practices they use to manage their business enterprise, when managing their personal wealth enterprise Families often abdicate, rather than delegate, critical wealth management decisions, something they would never do with respect to their operating companies 5
  6. 6. Perhaps One Reason Why Is That Managing A Wealth Why, Enterprise May Be More Complex Than Managing A Business Enterprise Business Enterprise Seeks To Maximize Financial Capital C it l Wealth Enterprise See s To Maximize Financial Cap a ea e p se Seeks o a e a c a Capital PLUS The Family’s Human & Intellectual Capital 6
  7. 7. Managing Wealth As An Enterprise Entails Three Primary Activities Strategy, Strategy, Structure & Governance Family Wealth Enterprise Wealth Management M t Activities Ecosystem y of Providers 7
  8. 8. Strategy, Structure & Governance St ategy, St uctu e Gove a ce Conceptualize wealth as a “business”, NAME it, and map out all the pieces Establish a mission and strategy – short term and long term Define decision-making and governance f D fi d i i ki d framework f th enterprise k for the t i Articulate key roles in the management of the enterprise and who inside and outside the family will play what roles Be explicit about succession for key roles and have development plans for leaders identified to take on key roles in the future 8
  9. 9. Wealth Management Activities Wea t a age e t ct v t es A complex and inter-locking set of activities Values & Mission Governance & Education Investment Advisory I t t Ad i (Asset Allocation; Portfolio Construction; Manager Selection; Performance Measurement) Financial & Estate Planning and Risk Management Financial Administration (Expense Management/General Ledger; Cash Flow; Net Worth; Tax Compliance; Reporting 9
  10. 10. Ecosystem Of Providers cosyste O ov de s Given the complex set of activities – a complex network of providers is often necessary The ecosystem needs to be managed Map the current set of providers Understand fees and manage expenses Coordinate across providers Ensure all are working around E ll ki d the family’s “big picture” and in support of the family’s strategy 10
  11. 11. Managing Wealth As An Enterprise Means Thinking Strategically About The Ecosystem O g St ateg ca y bout e cosyste Of Providers Understand each provider’s role Understand your role Understand the implications 11
  12. 12. Understanding Each Provider’s Role Provider s The simple truth: all wealth management firms sound the same in their marketing material The stark reality: there are fundamental and important differences between wealth managers 12
  13. 13. Cutting Through The Clutter: The Key Diff Differences Manufacturers Create & Sell Products Sell To Investors Directly Or Through Distributors (banks, brokerage firms, RIAs) Paid by investors in funds – management fees Distributors Sell Products To Their Clients Products Sourced From Manufacturers Affiliated Asset Management Units Unaffiliated Asset Management Firms (Open Architecture) Paid by clients and by manufacturers for whom they distribute Advisors Advise Clients On Which Products To Buy Unaffiliated With A Manufacturer Or Distributor (Ideally) Paid Only By The Clients They Represent ( y y y p (Ideally) y) 13
  14. 14. When Mapping Your Ecosystem – Identify Whi h Role Each Firm I Pl i Which R l E h Fi Is Playing Which firms are “providers”: providers : manufacturers and distributors Which firms are “advisors”: paid by you to represent you and buy/source for your What l do Wh t role d you want t play t to l 14
  15. 15. Implications To Your Role Of Working With Each T Ad i Type Of Advisor Working Directly With Manufacturers: Can be economically beneficial by avoiding the added cost of the distribution firms Sourcing and diligence across all asset classes can be a challenge Integrating across all providers to be sure they are not working at cross purposes & in consort with your objectives t i t ith bj ti Need to solve for getting support around overall asset p allocation & portfolio construction Need to solve for aggregated reporting and risk analytics Need to solve for quality control 15
  16. 16. Implications To Your Role Of Working With Each T Ad i Type Of Advisor Working With Distributors: Category with which most families have familiarity and longstanding relationships Conflicts of interest and high costs can be a challenge Need to solve for being sure the “right” products are being bought at the “right” price for the “right” reasons Need to solve for aggregated reporting and risk analytics across providers since most families work with multiple “distributor” firms Need to solve for integration across providers Need to solve for quality control 16
  17. 17. Implications To Your Role Of Working With Each T Ad i Type Of Advisor Working With Advisors: Category which can help families solve for challenges of working directly with manufacturers or distributors Sourcing g Avoiding conflicts of interest Buying/Negotiating Aggregated Reporting Quality Control y Requires families to pay an explicit fee Not all advisors are the same with respect to Allowing you to stay in control Accommodating your unique constraints and preferences Accommodating your desire to work with more traditional wealth managers ( (manufacturers and distributors) ) 17
  18. 18. There Is No “Right” Answer Right But thinking strategically about your ecosystem of providers – just as you would about the providers for your business enterprise – is a critical activity Being clinical about which providers are playing what role and what role you therefore have to play, is essential 18
  19. 19. Bottom Line: Making Sure Your Enterprise Management F M t Function Is Explicit & I t ti ti I E li it Intentional l Strategy, Strategy Structure & Governance Family F il Wealth Enterprise Wealth Management Activities Ecosystem of Providers 19
  20. 20. By Thinking Of Their Wealth As An Enterprise, A Family Can Achieve Significant Benefits Think of developing the family’s wealth as a business or professional endeavor Manage wealth in a purposeful, strategic manner Take a greater role in managing the enterprise and those they hire to support them. Focus on effective decision-making, governance and succession/leadership preparation 20
  21. 21. Continued…. Be explicit about all of the activities required to manage wealth, how they are connected, and identify the most effective providers to accomplish each activity p y Have robust information systems and reporting that allows them to measure progress and support decision-making p g pp g Buy only those products and services that are right for them, at the right p g price. 21
  22. 22. info@wefamilyoffices.com I www.wefamilyoffices.com Rockefeller Center 1270 Ave of The Americas, Suite 2101 | New York, NY 10020 | Tel: +1 212 218 5100 701 Brickell Avenue, Suite 2100 | Miami, FL 33131 | Tel: + 1 305 825 2225

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