5. Who qualifies to be a real fat cat? Odd how purveyors of MFO and other service providers to the wealthy can’t agree on what asset level you need to be able to afford a single family office – just that it’s a lot. Probably just north of the target market of that particular advisor.
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8. Wealth Management A broken business model, but in flux. It is for the better? In the “so strange it must be true” dept… Only 7% of Relationship managers felt strongly they had recd adequate training to complete their job to the highest standard in a 2009 PWC survey of Private Bankers.
9. Unobtainable Goals Finding a realistic mission somewhere in between “maintaining spending power for all future generations “ and “avoiding bankruptcy.” “The most important risk to a family is not loss in the portfolio. The most important risk to a family is not meeting its goals.” Ashvin Chhabra, Fall Forum, October 2008
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12. Unusual Needs?(Highlights) Makes our own office simpler and eases succession from my father Prefers simplicity yet sophisticated enough to counterbalance me Natural Skeptic Had good potential to earn the trust of the entire family not just thru personality but through the rigorous transparency of their reporting Not looking to get rich but rather a passion for the work and a calling to serve our family. (Jay Hughes’ Personne d’ Confidance) All investment and planning processes were thoroughly integrated into an after-tax, after-fee and cost of support framework A firm that fit into and supported our risk management mindset A quarterback to my coach. Makes our various service providers a team.
13. Process so far… Mission & Goals Inventory Needs Identify Likely Candidates Compose RFI or RFP related to need Create and Weight Scorecards In Advance Distribute Requests to Candidates. Interview, Score. Check Multiple References. Re-interview, rescore. Total time: 14 months and counting….
14. An opportunity for collaboration I have created a Wiki to access and edit the tools I used in our search: http://familyoffices.pbworks.com Please, as you visit, post your comments and feel free to add or edit what is there based on your own experiences and wisdom. Currently posted: Our Mission (please post your own), Roles in our Office, Needs Assessment, Cover Letter, RFI, Scorecard, reading list, and a list of potential candidates. Questions? eugene@lipitz.com
15. Further Reading Family Office Exchange. (2008). 50 Best Practices for an Enduring Family Enterprise. Chicago, London: Family Office Exchange. Family Office Exchange and U.S. Trust Family Wealth Group. (2006). Recasting the Central Role of the Family Office as Risk Manager. Chicago, London: Family Office Exchange. Possibly the finest thing ever put out by this fine organization and central to my thinking in identifying our goals. Horan, S. (Summer, 2008). After-Tax Performance Management. The Journal of Wealth Management. To answer those that say after-tax performance isn’t possible (which is not to say it’s easy) Hughes, J. (2007). Family: The Compact Among Generations. Specifically the Chapters on the Personne d’ Confidance. Institute of Private Investors. (2009). Mutually Agreed-To Expectations. from https://www.memberlink.net/mutually-agreed-to-expectations Institute of Private Investors. (2009). Ten Principles. https://www.memberlink.net/sites/default/files/IPI_report_2009_ch_1.pdf Kuechler, K. (2009). Deciding Whether or Not To Hire An Advisor. Institute of Private Investors, Fall Forum. San Francisco. Lucas, S. (2006). Wealth: Grow It, Protect It, Spend It, Share It. A wonderful primer that helped frame the problems and the questions. Rogers, D. (2004). Tax Aware Investment Management. Contains detailed RFI questions related to this subject. Schwed, F. (1955). Where Are the Customers' Yachts? or A Good Hard Look at Wall Street. Zagst, R. e. (Fall, 2008). Asset Liability Management in Financial Planning. The Journal of Wealth Management. You don’t have to understand this, but your consultant certainly should.
Editor's Notes
Not us
People still say” why don’t you just go to Goldman?”
BREAKDOWN BETWEEN REPORT CARD AND MISSION. Thanks to Kristi. Where are the customers yahcts?Have I beaten up on the industry enough yet?
Simon excellent presentation…..the problem with wealth that grows in a linear fashion and a family that grows geometrically. Wealth, Lucas: 17% return required. Jpmorgan
Also, 50 Best Practices. What key roles must or should be performed by 9 family member?
Kristi. Prefer Complexity. Trust issues. Succession. Wide dispersions of sophistication.
Did we need someone who was formerly our currently a trader? Tax aware investing can add 2-2.5%. Quarterbaack 1202 tax treatment small company example.
