Advising Ultra-Affluent Clients and Family Offices

by Michael M. Pompian (CFA, CFP, Hammond Associates)

• ISBN13: 9780470483503
• ISBN10: 0470483504
• Format: eBook
• Copyright: 2009-04-01
• Publisher: Wiley

Summary

Praise for Advising Ultra-Affluent Clients and Family Offices"Michael Pompian's book Advising Ultra-Affluent Clients and Family Offices is noteworthy for its comprehensiveness. Michael combines 'the big picture' with detailed, prescriptive, and actionable strategies; advisers to wealthy families will receive a detailed understanding of how a quickly evolving landscape impacts their business and its implications for their clients."-John Benevides, President, Family Office Exchange"This book should be on the reading list of anyone who wants to be a full-fledged professional in our industry. Michael Pompian has wisely chosen to focus on practical descriptions and recommendations; in my view this is a great plus, as we need more educational resources in this field. Congratulations. The book is well worth reading."-Jean L.P. Brunel, CFA, Managing Principal, Brunel Associates, LLC"Ultra-affluent clients want information and advice integrated and in real time. So planning, investing, and measuring become a continuous process. This is very hard to do. Michael Pompian articulates a clear and insightful road map which outlines the process, components, and human factors needed to create a sustainable world-class wealth management program-both advisers and wealth owners would be wise to follow Michael's lead."-Stephen Martiros, founder, Summitas (www.summitas.com) Managing Partner, CCC Alliance (www.cccalliance.com)"As wealthy families become more globalized, their needs for wealth preservation and growth have become more complex and sophisticated in times of financial uncertainty. Michael Pompian has crafted an insightful and comprehensive guide for enhancing your own capabilities and awareness on how to advise the most demanding clients. A must-read for all financial advisers!"-Dr. Kurt Moosmann, MBA TEP CFP; cofounder and Managing Partner of Dara Capital Ltd., Zurich, Switzerland"Without incorporating the critical components of effective family governance and the awareness of generational and behavioral issues, families of wealth and their advisers are operating blind in their wealth management pursuits. Michael Pompian's book gives both advisers and family members essential insights for discovering the risk factors they must consider in today's environment and in finding the resources required to provide consummate solutions."-Lisa Gray, graymatter Strategies LLC, author of The New Family Office and Generational Wealth Management"Advising Ultra-Affluent Clients and Family Offices is a valuable 'handbook' that covers all the major areas of wealth management. While Mr. Pompian has written the book primarily for wealth advisers, Advising Ultra-Affluent Clients and Family Offices will provide invaluable insights to ultra-affluent individuals and families, particularly those who are thinking about setting up a family office or becoming clients of a multifamily office."-Paul R. Perez, CFA, Managing Director, Family Advisory Services, Northern Trust"I like the way Michael Pompian presents this material. It covers the waterfront with a clear, concise, and compelling treatment. This book will prove useful for family members and family office executives. I especially admire the multigenerational orientation."-Bradley G. Fisher, CEO, Springcreek Advisors LLC (Multi-Family Office), Corte Madera, California

Table of Contents

Foreword

Preface

Acknowledgments

Introduction to Advising Ultra-Affluent Clients

Who Are the Ultra-Affluent?

Defining the Ultra-Affluent

Quantifying Ultra-Affluence Among Total Global Wealth

Looking to the Future

A World of Opportunities for Advisors

Understanding the Mindset of the Ultra-Affluent Client

Why Advising the Ultra-Affluent Is Different

What Ultra-Affluent Clients Want from an Adviser

Building Relationships by Asking Questions and Listening to the Answers

Consultant Questionnaire

Conclusion

Wealth Attitudes, Aspirations, and Investor Behavior of Ultra-Affluent Clients

Wealth Attitudes of Ultra-Affluent Clients

Family Aspirations

Where Psychology Meets Finance

Investor Biases

Conclusion

Non-Investment Best Practices

The Challenges Associated with Wealth

Guidelines for Sustaining Multigenerational Wealth

Conclusion

Investment Strategies for Ultra-Affluent Clients

Practices of the Best Investment Organizations

Investment Committees

Investment Policy Statements

Appendix: Asset Allocation Policy

Asset Allocation Considerations for Ultra-Affluent Clients

What Is Asset Allocation?

The Importance of Assumptions in the Asset Allocation Selection Process

The Importance of Asset Allocation

Considerations in Asset Allocation for Individual Investors

Domestic and International Equity

Introduction to U.S. and International Equity Securities

The Five-Step Equity Strategy Process

Domestic and International Bonds

Introduction to Bonds

Descriptions of Bond Asset Classes

Private Equity

What Is Private Equity and How Does It Work?

Three Primary Types of Private Equity Investments

Creating a Customized Private Equity Program

Hedge Funds and Ultra-Affluent Clients

What Is a Hedge Fund?

A History of Hedge Funds

The Legal Environment of Hedge Funds

Hedge Fund Strategies

Asset Allocation and Hedge Funds

Creating a Hedge Fund Strategy

Real Asset Investing

The Portfolio Benefits of Real Assets

Real Estate: A Long-Term Inflation Hedge

Natural Resources

Multi-Generational Considerations for Ultra-Affluent Clients

Selecting an Adviser

Trust: The Key Ingredient

How to Select an Advisor

Questions for Prospective Advisers

Conclusion

Selecting a Custodian and Investment Vehicle Structure

Custodial Services

Investment Vehicle Structure

Conclusion

Considerations for Creating a Family Office

What Is a Family Office?

Challenges of Wealth

Practical Reasons to Create a Family Office

Challenges of Running a Family Office

Services Provided by a Family Office

Administrative Considerations for Establishing a Family Office

Considerations for Establishing a Private Trust Company

Conclusion

Special Topics for Ultra-Affluent Clients

Wealth Transfer Planning

Estate Planning Basics

Conclusion

Concentrated Equity Risk Management

What Constitutes a Concentrated Equity Position?

Concentrated Stock Risk Minimization Strategies

Conclusion

Family Governance

Generational Division

Family Governance: An Essential Part of Successful Wealth Transfer

The Incredible Family

Policies

Stages of Development

Conclusion

Risk Management and Asset Protection

Family Office Risk Management

Individual Family Member Risk Management

Conclusion

Ultra-Affluent Client Case Studies

Philanthropy

Philanthropic Strategy Development through Asking Questions

Mission Statement

Implementation of Philanthropic Strategy

Best Practices of Giving Large Gifts to Colleges and Universities

Appendix: "The Next Generation: Redefining the Philanthropic Landscape"

Multi-Generational Asset Allocation Strategies

Different Asset Allocations for Different Generations

Single Allocation for an Entire Family

Customized Asset Allocation by Generation or Family Unit

Asset Allocation Targeting

The Behavioral Finance Approach to Asset Allocation

Conclusion

Notes

About the Author

Index

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