Family office exchange managing change

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Family office exchange managing change

  1. 1. ©2002, Family Office Exchange LLC All Rights Reserved Managing Change in the 21st Century The Evolving State of the Industry Family Office Exchange
  2. 2. ©2002, Family Office Exchange LLC All Rights Reserved Bill Paying & Record Keeping Custody &Custody & SettlementSettlement Financial Consolidation Inventory of Collectibles Custody & Settlement Performance Measurement Foundation Compliance Partnership Accounting Cashflow & Liquidity Management Risk Management & Insurance Trust & Partnership Structures Asset Alloc. & Manager Selection Gifting & Grantmaking Tax Planning & Compliance FamilyFamily RiskRisk AssessmentAssessment Family Governance Family Member Involvement Family Member Education Family Assets & Liabilities Lifestyle Goals Wealth Transfer Goals Investment Goals & Policy Philanthropy Goals Risk Assessment Complexities of Wealth ManagementComplexities of Wealth Management
  3. 3. ©2002, Family Office Exchange LLC All Rights Reserved Profile of the 1980s § Business owners face succession issues § Leveraged buyouts create wave of nine-figure liquidity § Owners face complex financial alternatives The Evolving State of the Industry Profile of the 1990s § Private wealth separates from institutional market § Family offices offer customized solutions and proactive management § Private trust companies serve family dynasties Profile of the 2000s § Costs of dedicated family offices increase with their success § All professional disciplines converge toward MFO platform § Harnessing financial information is critical component
  4. 4. ©2002, Family Office Exchange LLC All Rights Reserved The Evolving State of the Industry Family Philanthropy Tax & Estate Planning Investment Diversification Family Continuity Risk Management Interdisciplinary Strategic Advice Trust & Financial Management
  5. 5. ©2002, Family Office Exchange LLC All Rights Reserved Multi-family OfficesTrust CompaniesPredominant Service Providers Interdisciplinary Wealth Management Money ManagementThe Scope of the Business 6th Generation3rd GenerationThe Definition of Old Wealth $1 Billion$100 MillionDefinition of Wealth Early 21st Century Late 20th Century What Has Changed?
  6. 6. ©2002, Family Office Exchange LLC All Rights Reserved + Objective Strategic Advice Integrated Wealth Advisory Firms–MFOs § Integrated Planning § Investment Planning § Lifestyle Management § Risk Management § Strategic Philanthropy § Family Continuity Wealth Advisory Firms § Tax & Estate Planning § Trusteeship § Investment Advisory § Financial Planning Investment Advisory Firms (RIAs) § Strategy & Policy Development § Asset Diversification § Manager Selection & Oversight § Performance Measurement & Analysis The Evolving State of the Industry Financial Planning Firms § Budgets & Cash Balances § Investment Diversification § Insurance Coordination § Event-driven Planning
  7. 7. ©2002, Family Office Exchange LLC All Rights Reserved Governing Boards, Advisory Boards & Private Trust Companies Power of Golden RuleFamily Governance Layers of Trusts, Partnerships, LLCs Trust & Partnerships Ownership Structures Early 21st Century Late 20th Century What Has Changed?
  8. 8. ©2002, Family Office Exchange LLC All Rights Reserved Indexing Core & Targeting Alternatives Added Value from Active Management Over-diversificationStock Concentration 16 Asset Classes6 Asset Classes Fund of FundsCustom Portfolios Early 21st Century Late 20th Century Investment Trends What Has Changed?
  9. 9. ©2002, Family Office Exchange LLC All Rights Reserved Average Asset Allocation Average Performance Expectation Still 10-12% Core Equity 49% Real Estate 13% Private equity 14% Hedge Funds 5% Cash 5% Fixed Income 14%
  10. 10. ©2002, Family Office Exchange LLC All Rights Reserved Managing RiskMeasuring Risk Open ArchitectureMulti-asset Class Managers Finding Emerging Managers Finding Consistent Performers Early 21st Century Late 20th Century Investment Trends (cont.) What Has Changed?
  11. 11. ©2002, Family Office Exchange LLC All Rights Reserved Greater TransparencyLack of Disclosure Management of Information Lack of Financial Information How Loss Can OccurWhat Could Be Lost How to Own/LeverageHow to Invest When to Get OutWhen to Get In Early 21st Century Late 20th Century Measures of Risk What Has Changed?
  12. 12. ©2002, Family Office Exchange LLC All Rights Reserved Philanthropic ImpactPersonalized Giving Family Continuity External Advisory Boards Business Continuity Family Governing Boards Wealth EnhancementInvestment Performance Trading Money for Time Trading Time for Money Early 21st Century Late 20th Century Measures of Success What Has Changed?
  13. 13. ©2002, Family Office Exchange LLC All Rights Reserved What Hasn’t Changed? Taking Action in the Face of Uncertainty Finding Objective, Interdisciplinary Advice Managing the Execution of Complex Legal Strategies Developing Shared Control Among Families Irrevocably Tied Together Competing Against Institutional Clients for Access to Best Products Wealth Management Challenges
  14. 14. ©2002, Family Office Exchange LLC All Rights Reserved What Hasn’t Changed? “It’s about so much more than managing money” Business Finance Philanthropy Family Continuity
  15. 15. ©2002, Family Office Exchange LLC All Rights Reserved Fostering the Entrepreneurial Spirit Managing Financial Transitions Developing All Types of Family Assets Deciding How Much is Enough for Inheritors Understanding Money, Power and Love Offering Leadership Training & Financial Education Developing Philanthropic Values Family Continuity Challenges What Hasn’t Changed?

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