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© 2008 Northern Trust Corporation northerntrust.com
Doug Regan, EVP President The Wealth Management Group
Nancy Felton-Elkins, SVPDirector of Fiduciary ServicesThe Wealth Management Group
Serving The Complex Needs of Ultra-Affluent Families and Family Offices
The Northern Trust Experience
The Northern Trust Experience
What Will We Do Today?
What is The Wealth Management Group?
How are we serving the Ultra High-Net-Worth client?
What may be changing?
The Northern Trust Experience
The Wealth Management Group
Founded in 1982
285 highly trained professionals on staff Our relationship managers have 18 years average industry experience
Wealth Management staff in Chicago, New York, Los Angeles and London
$194 billion in assets under administration
$30 billion in assets under management
64% of Wealth Management Group clients utilize a single family office which represent 85% of AUA
We serve 22% of the Forbes 400 families
Average client relationship size is $475 million
Over 35 client relationships with $1 billion or more in Assets under Administration
410 family relationships, with clients located in 48 states and 15 countries
Services offered: Global Asset Servicing and Reporting
Investment Management
Investment Consulting
Performance Measurement and Risk Assessment
Fiduciary
Private Banking
The Northern Trust Experience
Education
Family Financial Forum For Families and their Family Office Executives
Pre-conference for Family Office Executives
Inspiring Human Capital Exclusively for Family Members
Learning and networking
Defining values and passing them on to future generations
Global Wealth Alliance Education for our largest clients’ Family Office Executives
Client Advisory Board For the heads of Family Offices to network with each other and
to aid in improving the overall quality of services we provide to our mutual clients ― the Family
Financial Executives Group Networking Group for Family Office Financial Executives
The Northern Trust Experience
Wealth Passport
Data ConversionDownloads
Assets Held by Northern Trust Custody Trust Deposit Investment Management Brokerage Foundation Lending Mutual Funds
Hedge Funds Private Equity Investment Partnerships Family Partnerships Mutual Funds Real Estate & Property Operating Business Other (Art, Collectibles, Vehicles, etc.)
Assets Held Outside Northern Trust Custody Trust Deposit Investment Management Brokerage Foundation Lending Mutual Funds
Risk and Compliance Monitoring Transaction Initiation Performance Assessment Net Worth Summary General Ledger Asset Allocation Summary File Cabinet
Asset & Liability Reporting Partnership Reporting Standardized Financial
Statements Calendar Alerts Foundation Management
Wealth Passport
General Ledger Portfolio Management Performance Measurement
Third-Party Software
Client-Initiated or Automated Data Integration
Data
Data ConversionDownloads
Assets Held by Northern Trust Custody Trust Deposit Investment Management Brokerage Foundation Lending Mutual Funds
Hedge Funds Private Equity Investment Partnerships Family Partnerships Mutual Funds Real Estate & Property Operating Business Other (Art, Collectibles, Vehicles, etc.)
Assets Held Outside Northern Trust Custody Trust Deposit Investment Management Brokerage Foundation Lending Mutual Funds
Risk and Compliance Monitoring Transaction Initiation Performance Assessment Net Worth Summary General Ledger Asset Allocation Summary File Cabinet
Asset & Liability Reporting Partnership Reporting Standardized Financial
Statements Calendar Alerts Foundation Management
Wealth Passport
General Ledger Portfolio Management Performance Measurement
Third-Party Software
Client-Initiated or Automated Data Integration
Data
With a quarter-century of experience working with Family Offices,
Northern Trust understands their complex structures and can deliver comprehensive, customized solutions.
Wealth Passport’s secure environment empowers wealth owners and family offices to conduct business more efficiently, make strategic decisions and focus less time on administrative functions.
The Northern Trust Experience
Acquirors vs. Inheritors
Acquired Transition in socio-economic class
Identity is established partially or wholly prior to acquiring the wealth
Acquiror’s Quandary
Incorporating wealth into personal identity How much do I assimilate?
Inherited Maintenance of socio-economic class
Identity is tied up with wealth
Inheritor’s Quandary
Growing an identity out of a wealth environment
The Northern Trust Experience
What is Making My Phone Ring?
What shall I tell my children about our wealth? How can I educate them about wealth? How can I stop them from feeling entitled to it?
Is the client an acquiror or an inheritor?
Acquiror: Concern that the next generation will have too much money
Inheritor: Concern that the next generation will not have enough money-needs to work; entitlement
The Northern Trust Experience
What is Making My Phone Ring?
Why would I NOT want Dynasty Trusts?
Family Offices becoming investment companies or multifamily offices
Family Offices becoming Private Trust Companies
Aggressive tax strategies
Investment performance requests for complex portfolios to review managers and consultants
Partnerships or LLC’s to pool assets in smaller trusts
The Northern Trust Experience
What is Making My Phone Ring?
Can I put my plane, yacht, ranch, art, etc. in a trust? Estates with staffs
The ocean is coming over my seawall.
Art
Can I put the museum in a trust?
Jewelry
Timber
Natural gas wells
Yachts with crews
This is the monthly for only ONE boat in Monaco?
Airplanes
Is this the gas bill?
The Northern Trust Experience
What is Making My Phone Ring?
How many trees did you kill to produce this report?
Challenges of Information Wealth Passport encourages
customization and aggregation
Some folks want it simple
Electronic reporting, CD’s, or paper?
Fear of computers
Partnership accounting
“I’ve been elected. What should I do?” Blind trusts
The Northern Trust Experience
Where In the World Do I Go?
What states don’t have state “death” taxes?
Should I avoid moving to a Community Property state?
What does de-coupling mean? Will I pay more death taxes in the state I call home?
What states don’t have state taxes?
Where can I have a Dynasty Trust with no Rule Against Perpetuities?
Should I have an Asset Protection Trust in Delaware? In Guernsey?
I know some states have better laws for Special Needs Trusts. Which ones?
If Northern Trust in Chicago is co-trustee with my attorney in California, will my Irrevocable Trust be taxed in California if I am not a California resident?
Where is it best to establish a Private Trust Company (PTC)?
We have a PTC but want Northern Trust for:
Asset Servicing/Information Delivery / Global Assets
Co-Trustee with powers limited to making discretionary distributions
Consultant on investments, discretionary decisions, being a trustee
Can I reform this trust in Illinois? Ohio? California? Delaware?
Can I repatriate my Bahamian trust and what will it cost in taxes?
The Northern Trust Experience
The Yale Syndrome
Asset Allocation Challenges with Alternative Asset Classes
The Northern Trust Experience
The Yale Syndrome
Percentage recommendations of consultants and investment committees range from 25-80%
Passive versus Active Investments
Knowing the Trust and family objectives, goals for advisors, and risk tolerance: family meetings
Need for pooling assets, LLC’s, layered entities, schematics
Flight to safety in turbulent markets
The Northern Trust Experience
The Yale Syndrome
Lack of sophistication, need for education
The Northern Trust Experience
What In the World Are You Doing?
Facilitating family meetings
Working with multiple attorneys from several firms
Reforming, remodeling or decanting trusts
Clients willing to pay for strong attorneys and accountants
Engagement letters
Pooling assets
Filing tax returns for the underlying interests
Seeking discounts for pooled asset gifting
The Northern Trust Experience
What In the World Are You Doing?
Retainers or pay as you go and expenses
Bias to big law firms with global capabilities
Global capabilities for international legal, trust and estate planning
You wear many hats
The Northern Trust Experience
What May Be Changing?
EVERYTHING!
Investment security
The tax law
Strategies to unbundle fees
New President and Congress in 2009
Global Issues
AML for every country
Next generation Issues
Succession planning
Philanthropy
© 2008 Northern Trust Corporation northerntrust.com
Thank You
Serving The Complex Needs of Ultra-Affluent Families and Family Offices