RAMESES III

Whither Perpetuity?A Family Office Redefines its Mission and Searches For the Right Advisor to Make it Happen

“Not hiring me will be the greatest mistake your family has ever made.”

-An unsuccessful candidate to become our key trusted advisor.

Works Cited

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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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.

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

Family Office as Risk Manager--Not Doing Its Job

Lack of a shared vision for the future

Lack of an effective decision making process

Lack of transparent family communications

Improper ownership structure

Inappropriate diversification of assets

Lack of focus on key family risks …and failure to create mitigation strategies for those risks.

(Family Office Exchange and U.S. Trust Family Wealth Group, 2006, p. x)

What key roles must or should be performed by a family member?

Self-AwarenessWho are you that wanted only a [consultant] to join you in

your nonsense?Walt Whitman

A hunchback is always happy when he see another hunchback. David S. Brown, my grandfather

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.

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….

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

Further ReadingFamily 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.