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Seminar Network Family Office Webinar Series
Family Office Webinar Series
Produced by
©2020 Family Office Exchange
Managing Family Risk and Opportunities in Uncertain Times
Sara Hamilton, Founder and CEO, Family Office Exchange
Mindy Earley, Chief Learning Officer, Family Office Exchange
Stand Together Family Office Webinar July 15, 2020
©2018 Family Office Exchange
What Are the Strategic Questions to Address?
How Do We Integrate Our Rising GenerationInto This Future Enterprise?
In Terms of: Owner Education, Roles and Responsibilities, and Future Leadership Skill Development and Training
In Terms of: Best Outcomes, Greatest Flexibility, and Alignment of Interests
What Are the Best Structures and Governance to Implement Our Shared Vision?
5
In Terms of: The Shared Dream, the Financial Enterprise, and the PhilanthropyWhat Does The Shared Vision
of Our Future Look Like?
4
3
In Terms of: Areas of Affinity, Benefits to Cousins, and Business InterestsWhat are the Compelling Reasons to
Stay Together as a Family Enterprise?2
In Terms of: Values, Resources, and Business InterestsWhat Do You Most Want to Pass on
to Your Children and Grandchildren?1
©2020 Family Office Exchange
What the Rising Gens Want
• They would like online learning modulesto supplement programming (78%)
• They want personal development (73%)
• Are highly interested in studying “Negotiating, Skills, Conflict Resolution, and Consensus Building”
• Indicate that connections with FO staff or family members, as well as personal growth,were some of the top goals they held for the upcoming year
• Their participation most frequently looks like family philanthropy, board meeting attendance, and attendance at advisor meetings
• A majority of FOX RG who have attended past RG programming are most interested in learning about investing
©2020 Family Office Exchange
The FOX Rising Gen
1. Are the leaders of their generation and emerging
leaders in their families
2. Value family unity…
3. …but they also want their own identity
4. Want to learn (from previous gens, from each other)
5. Want to contribute to growth
©2020 Family Office Exchange
Five Key Questions to Ask Rising Gens
1. Why is education important for our family in particular? 2. What is a role you would like to play in the family, in
the future?3. What does the rising generation need to know in order
to be an effective owner of a family enterprise? 4. How do we integrate the rising generation into the
family enterprise/system? 5. What will be the work of your generation?
7 ©2018 Family Office Exchange
Building a Strong Enterprise Vision
Guiding Principles
Family Culture
Alignment of Interests
Family Values
Legacy FamilyBusiness
FamilyGatherings& Stories
Real EstateInvestments
Family Foundation
Direct Investing in
New Ventures
Family Vacation
Properties
Joint TravelExperiences
Joint VolunteerProjects
Enterprise Vision
8 ©2018 Family Office Exchange
Pillars to Build a Sustainable Enterprise Family
ENTERPRISE CAPITAL
BUSINESS CAPITAL
PHILANTHROPIC CAPITAL
FINANCIAL CAPITAL
FAMILY CAPITAL
The Sum of All Other Forms of Capital
9 ©2018 Family Office Exchange
ENTERPRISE CAPITAL
BUSINESS CAPITAL
PHILANTHROPIC CAPITAL
FINANCIAL CAPITAL
FAMILY CAPITAL
Pillars to Build a Sustainable Family Enterprise Five Key Family Dimensions
FAMILYALIGNMENT
OF INTERESTS
SHAREDVISION FOR THE FUTURE
STRATEGICGOALS &
RISKS
GOVERNANCE&
LEADERSHIP
LEARNING &LEADERSHIP
DEVELOPMENT
©2017 Family Office Exchange
ENTERPRISE CAPITAL
Lack of a Clear Enterprise Purpose or
Guiding Principles
Lack of Exploration or Understanding of
Possible Future Scenarios
Inadequate Opportunity and Risk Assessment
Unclear Levels of Authority in
Enterprise Structure
Improper Succession Planning or Subjective
Selection Process
FAMILY CAPITAL Misalignment in Family
Values and CultureDivergent Family View on Enterprise Vision
Imprudent Allocation of Family Capital
Distrust in the Governance Process
Lack of Learning Opportunities or
Unprepared Family Leaders
BUSINESS CAPITAL Lack of Family
Support for Business Direction
Lack of Planning for Industry Disruptions
Inadequate Return on Invested Capitalfor Risks Taken
Lack of Clarity about Ownership
and Exits
Not Attracting and Retaining Strong
Leadership
FINANCIAL CAPITAL Unclear Purpose or
Ambiguous Roles for the Family Office
Suboptimal Structures to Support the Vision
Unclear or Inconsistent Wealth Goals and
Investment Strategies
Lack of Depth and Board Experience Related to Finance
and Family Dynamics
Ineffective or Inexperienced Internal
or External Talent
PHILANTHROPICCAPITAL Lack of Support for
Family Values Social Responsibility
Inability to Identify Meaningful
Philanthropic Vision
Unclear or Disjointed Philanthropic Goals
Lack of a Thoughtful Process to Support
Grant-making Process
Insufficient Family Involvement in Philanthropic
Endeavors
Family Enterprise Risk Road Map
DIMENSIONS ALIGNMENT andENGAGEMENT
SHARED FAMILY VISION
ENTERPRISE GOALS and RISKS
STRUCTURE andGOVERNANCE
LEADERSHIP and LEARNING
GLOBAL MACROFACTORS
Extreme Weather Events & Environment
Cyber Security& Technology Gaps
GeoPoliticalUncertainty
Talent Shortages
HealthPandemics
©2020 Family Office Exchange
Example of a Risk Assessment Case Study
DIMENSIONS ALIGNMENT & ENGAGEMENT
SHARED FAMILY VISION
ENTERPRISE GOALS & RISKS
STRUCTURE & GOVERNANCE
LEADERSHIP & LEARNING
ENTERPRISE CAPITAL Lack of a Clear
Enterprise Purpose or Guiding Principles
Lack of Exploration or Understanding of Possible Future
Scenarios
Inadequate Opportunity & Risk
Assessment
Unclear Levels of Authority in Enterprise
Structure
Improper Succession Planning or Subjective
Selection Process
FAMILYCAPITAL Misalignment in
Family Values and Culture
Divergent Family View on Enterprise Vision
Imprudent Allocation of Family Capital
Distrust in the Governance Process
Lack of Learning Opportunities or
Unprepared Family Leaders
BUSINESS CAPITAL Lack of Family
Support for Business Direction
Lack of P Planning for Industry Disruptions
Inadequate Return on Invested Capital for
Risks Taken
Lack of Clarity about Ownership & Exits
Not Attracting and Retaining Strong
Leadership
FINANCIAL CAPITAL Unclear Purpose or
Ambiguous Roles for the Family Office
Suboptimal Structures to Support the Vision
Unclear or Inconsistent Wealth Goals & Investment
Strategies
Lack of Depth & Board Experience Related to
Finance & Family Dynamics
Ineffective or Inexperienced Internal
or External Talent
PHILANTHROPIC CAPITAL Lack of Support for
Family Values Social Responsibility
Inability to Identify Meaningful
Philanthropic Vision
Unclear or Disjointed Philanthropic Goals
Lack of a Thoughtful Process to Support
Grant-Making Process
Insufficient Family Involvement in Philanthropic
Endeavors
Source: FOX Global Family Enterprise Institute (2019)
RED – Highest Risk Yellow – Moderate Risk Green – Risk Being Managed
©2020 Family Office Exchange
Prioritize the Risks in Waldo’s WorldMapping and Prioritizing Family Risks
LOW LEVEL OF IMPACT HIGH
LOW
HIG
HLE
VEL
OF
INFL
UEN
CE
Maintain the Family Values/Philosophy
Set a Philanthropic Vision
Develop Leadership Succession
Engage Younger Generations
Respond to Regulatory Reform
It is the combination of the Risk Factorsthat must be understood and addressed by the family
©2020 Family Office Exchange
Planning for a “World Without Waldo”Waldo Enterprises Current State Issues in “World Without the
Founder ”Decision-makers in World Without Founder
Ownership Family Trust Trustee succession Trustees of Generation Skipping Trust make decisions
Governance Trustees of Private Trust Company Selection of Trustees Owners Board of owners will select the Trustees
Enterprise Board None No structure for allocating capital across asset opportunities
Formation of formal Board including outside advisors
Advisory Committee No Formal Committees Assessment of skills needed for different committees
Enterprise Board will determine the number of Committees needed
Leadership Provided by Founder Lack of clarity about who can make decisions
Decision-making distributed by function across the enterprise
Key Roles Idea generation comes from Founder Lack of innovation and regeneration A Strategy Committee will be formalized to provide this function
Risk Tolerance Founder has a high tolerance for long-term risk while the 2nd Gen isn’t so sure
Risk tolerance for 2nd generation will need to be assessed and incorporated/recalibrated
Family Leaders Council makes decisions
Policy Maximize after-tax return, focus on primary growth and secondary income
Policy stays the same Family Leaders Council sets this policy
Investment Strategy Direct ownership of actively managedstocks, bonds and funds – but no currently written investment policy or designated decision-makers
Lack of an Investment Committee Necessary to form a qualified Investment Committee
©2020 Family Office Exchange
FOX Presenters
Sara HamiltonFounder & CEO
Sara Hamilton is the Founder and CEO of Family Office Exchange (FOX),a thought leader for 30 years regarding thebusiness of managing the family enterprise and the family’s wealth across generations. The strength of the FOXnetwork is derived from the collective knowledge and experience of over 500 globally-minded family enterprises andtheir advisors based in 20 countries. FOX has a staff of 47 professionals and Sara is based in the Chicago homeoffice.
A recognized visionary in the private wealth community, Sara provides strategic direction for FOX and leads thedevelopment of programs and services supporting wealthy individuals, family office executives, and wealth advisoryfirms globally. For three years running, she was named as one of the "Top 50 Women in Wealth Management" byWealth Manager. Sara is the co-author of Family Legacy and Leadership: Preserving True Family Wealth inChallenging Times and serves on the executive education faculty of the University of Chicago Booth School ofBusiness for the "Private Wealth Management" course offered twice a year in Chicago.
Mindy Kalinowski EarleyChief Learning Officer
Mindy Kalinowski Earley is Chief Learning Officer for Family Office Exchange. In her role, she works to foster integrated learning programs for enterprise families and is responsible for developing the family learning community. She co-chairsthe FOX Rising Gen program, co-chairs the Family Learning and Experience Council and serves as an outsourcedChief Learning Office to FOX members. Mindy is inspired by helping people learn, grow and discover the way thatthey will make personal and productive contributions, using their strengths and talents.
Mindy has held various roles in small and large family offices and has been responsible for creating and stewarding professional learning networks in support of human and intellectual capital. She has designed learning experiences that increase the knowledge base and enhance the life path of individuals while providing personalized support and coaching to help them meet their goals.
FOX Offices are in Chicago, New York, Denver, Richmond and Madridwww.familyoffice.com
Thank You!The information contained in these slides is presented by professionals for your information only & is not to be considered as legal advice. Applying specific information to your situation requires careful consideration of facts & circumstances. Consult your BKD advisor or legal counsel before acting on any matters covered.
