The Complete Family Office Handbook A Guide for Affluent Families and the Advisors Who Serve Them

by Rosplock, Kirby

• ISBN13: 9781119694007
• ISBN10: 1119694000
• Edition: 2nd
• Format: Hardcover
• Copyright: 2020-11-24
• Publisher: Wiley

Summary

Discover new insights on how to setup, manage, and advise wealthy families and their family offices

The Complete Family Office: A Guide for Affluent Families and the Advisors Who Serve Them, 2nd Edition represents the newest update to an essential series. This book prepares the members of wealthy families to collectively manage, sustain, and grow their wealth across multiple generations. It also assists professionals who advise families to better serve their needs.

This book teaches those who advise family offices and wealthy families on:

· How to setup, structure, and advise a family office

· Current compliance, fiduciary and risk management practices for a family office

· Forward-thinking investment management, estate planning, and private trust company considerations

· Fresh insights on philanthropy, legacy, and impact investing

· Best practices to managing family wealth education and preparing next generation owners

· New insights on family governance, strategic planning, and succession

· Methods to create a family constitution, mission, and vision for families and their family offices.

The Complete Family Office Handbook provides the most comprehensive, current research, practical guidance, and approaches from leading family offices from around the globe and illustrates, by way of practical case studies and examples, how families can effectively manage their wealth for the long term.

Author Biography

KIRBY ROSPLOCK, PHD, is the founder of Tamarind Partners, Inc., a world-class family office consultancy and founder and Chief Learning Officer of Tamarind Learning, a comprehensive, virtual learning platform for family offices, advisors, and the families they serve. Visit our websites at TamarindPartners.com and TamarindLearning.com to learn more.

Table of Contents

Preface

Acknowledgments

Chapter 1: Introduction to the Family Office

Kirby Rosplock, PhD

A Macro View of Global Wealth

Billionaire Update

How Much Do I Really Need to Fund a Family Office?

Purpose and Definition of the Family Office

Historical Background of the Family Office

Family Office from the Industrial Age to Current

Key Roles of the Family Office

The Executor and Trusted Advisor

The Guardian and Trusted Watchman

The Librarian and Guru

Family Office Orientation to Family, Strategy, and Operations

Conclusion and Final Thoughts

Notes

Chapter 2:  Family Office Evolution: Inceptions and Archetypes 

Kirby Rosplock, PhD

Inception of a Family Office

Scale: How Much Is Enough?

Impact of the Family Business on the Family Office

Attractions and Challenges with Embedded Family Offices

Separating the Family Office from the Family Business

Sudden Wealth

The Investment Focused Family Office

Family Offices through the Back Door

Family Business Exit and Liquidity Event

Family Office Archetypes

The Founder’s Family Office

The Virtual, Administrative, and Compliance Family Office

The Philanthropic Family Office

The Direct Investment and Investment Office

The Family Business Focused Family Office

The Multi-Generational Focused Family Office

Mathile Case Study

Conclusion and Final Thoughts

Notes

Chapter 3:  Comparing Family Office Solutions: Multi- and Single Family Offices

Kirby Rosplock, PhD

Trends in the Family Office Landscape

Determining Family Wealth Management Needs

Why the Single Family Office Solution?

Why the Multi-family Office Solution?

Questions to Ask During the Evaluation Process

Pathways to Selecting a Multi-Family Office

Godspeed Case Study

Conclusion and Final Thoughts

Notes

Chapter 4: Family Values, Mission, and Vision and the Family Office

Kirby Rosplock, PhD

Introduction to Values

The Process of Exploring Values

Values Statement

Mission Statement

Values, Mission, and the Family Office

The Importance of Vision

Elements for Successful Family Office Visioning

Building Your Family Office Vision

Pitcairn Family Case Study

Five Steps to Creating a Family Vision

Step 1: Clarifying the Process and Expectations

Step 2: Vision Retreat Pre-Planning

Step 3: Staging a Vision Retreat

Step 4: Timing for a Vision Retreat

Step 5: Aligning Vision and the Strategic Plan

Conclusion and Final Thoughts

Notes

Chapter 5: Establishing and Structuring of Family Offices

Ivan A. Sacks, Esq., Partner, Withers Worldwide

William J. Kambas, Esq., Partner, Withers Worldwide

Question 1: What Legal Form Should the Family Office Take?

Choice of Entity

Deciding Between an LLC and a C CorporationQuestion 2: Who Should Pay for Establishing and Operating the Family Office?

Question 3: Who Should Own the Family Office and How?

Legal Ownership

Beneficial Ownership

Models of Ownership

Question 4: Who Should Manage the Family Office and How?

Structuring the Legal Formalities

Structuring the Scope of Services

Family Philanthropy, Legacy, and Social Capital

Managing Regulatory and Estate Planning Concerns

Question 5: How are Family Offices Structured to Optimize Tax Efficiency?

Tax Deductibility of Services Provided by the Family Office

State and Local Tax

Question 6: Can a Family Office Be Structured to Manage Risk?

Risk Management through Architecture

People-Oriented Risk Management

Balance Sheet, Cash Flow, and Economic Risk Management

Question 7: What Is the Process of Establishing and Structuring a Family Office?

Conclusion and Final Thoughts

Notes

Chapter 6: Strategic Planning for the Family

Kirby Rosplock, PhD

Creating a Family Office Strategic Plan

Discovery

The Family Capital Review

The Advisor Network Review

The Estate Plan Review

Mapping and Summarizing Legal Entities

Family Office Stress Tests

Risk and Insurance Management Considerations

Overview of Capital Sufficiency Analysis

Conclusion and Final Thoughts

Notes

Chapter 7: Legal and Compliance Standards and Practices for Family Offices

David S. Guin, Esq., Partner and U.S. Commercial Practice Group Leader, Withers Worldwide

Regulations Affecting Family Offices: Dodd-Frank Act

The Single Family Office Exemption

Clients of the Family Office May Need to Report Beneficial Ownership of Securities of Publicly Reporting Companies

How to Report Beneficial Ownership

Clients of the Family Office May Need to Report Beneficial Ownership as Insiders of Publicly Reporting Companies

Reporting Insider Status on Form 3, Form 4, or Form 5

How Do I Determine Beneficial Ownership in a Multi-Tiered Family Holding Structure?

Are You an Institutional Investment Manager? (The Answer May Surprise You.)

What Is an Institutional Investment Manager?

Reporting on Form 13F

Determining if the $100 Million Threshold Has Been Met

Confidential Treatment

Are You a Large Trader?

The SEC Gets Personal About Insider Trading

Compliance Policies

What Are the Components of a Good Compliance Policy?

Document Retention Policies

What Are the Components of a Good Document Retention Policy?

The Compliance Function: In-House versus Outsourced

Special Issues for Family Offices When Considering Regulatory Requirements

Conclusion and Final Thoughts

Notes

Chapter 8: Investment Management and the Family Office

Kirby Rosplock, PhD

Family Office Investment Management

Concentration

Measuring Success

Lifestyle and Legacy

Time Horizon

Hurdles to Growing Wealth

Family Office Investing: Paradigm Shift

Passive Versus Active Asset Management

A Practical Approach to Asset Allocation

The Investment Process in a Family Office

Investment Review

Investment Governance

Investment Objectives

Investment Committee

Strategic and Tactical Asset Allocation, Manager Selection, and Investment Monitoring

CIO Function: In-house versus Outsourced

Conclusion and Final Thoughts

Notes

Chapter 9: Operations and Information Technology in the Family Office

John Rosplock COO and CFO, Tamarind Partners

Robert Kaufold, President and Chief Risk Officer, Cauldera LLC

Family Needs Drive Family Office Systems

Family Office Operations

Accounting

Reporting

Financial Reporting

Data and Decision Archiving

Family Office Management

Security

Other Technology

Assessing Operational Complexity

Simple to Complex Systems

Complex System Technology

Operations Lens to Insourcing versus Outsourcing

Technology Considerations: Buy or Build

New Technology Due Diligence and Onboarding

Keys to Success

Conclusion and Final Thoughts

Appendix A: Family Office Complexity Assessment

Appendix B: Family Office Technology Segments

Notes

Chapter 10:  Family Office Talent, Compensation, and Recruitment

Kirby Rosplock, PhD

Introduction

Family Office Staffing

Single Family Office Organizational Chart

Gender and Family Office Executives

Recruiting Family Office Talent

Finding a Good Chemistry and Culture Fit

Background Checks

Compensation

Methods for Determining Annual Incentives

Managing Family Office Talent

Role Clarity and Job Description

Reporting Hierarchy and Authority

Performance Management

Communication and Trust

Recruiting Internationally

Case Study: Setting up the Office

Family or Non-Family at the Helm

Family Member Compensation

Conclusion and Final Thoughts

Notes

Chapter 11:  Governance Issues for the Family Office

Barbara Hauser, J.D., Independent Family Advisor, and Kirby Rosplock, PhD

Governance Issues for the Family Office Itself

Benefits of a Good Board

Importance of Independent Directors

Interim Stage of Advisory Board

Accountability to the Family

Participation in Long-Term Strategy

Next-Generation Issues to Address

Succession Planning for the Family Office and Its Executives

Governance Issues for the Family Itself

Analysis of Existing Decision-Making Process

Hallmarks of Good Governance: Transparency, Accountability, and Participation

Benefits of the Family Creating Its Own Governance Process/Structure

How to Create the Family Governance

Family Councils

Family Constitutions

Kettering Family Governance Case Study

Conclusion and Final Thoughts

Notes

Chapter 12: Family Education in the Family Office

Kirby Rosplock, PhD

Stewardship of Wealth

Psychology of Wealth and Child Development

Elsa’s Story

Overcoming Communication Challenges

Case Study: The Waithram Family

Clear Expectations and the Power of Inherited Wealth

Inspiring Entrepreneurship and the Next Generation

Case Study: Jennifer’s Story

The Power, Influence, and Inspiration of Mentors

Creating a Family Education Plan

Conclusion and Final Thoughts

Notes

Chapter 13:  Family Entrepreneurship and the Family Bank

Warner Babcock, AM Private Enterprises, Inc.

Kirby Rosplock, PhD

What Is a Family Bank?

Two Mindsets to Your Family Bank Questions

Five Principles for Family Banks

Democratize

Harmonize

Customize

Flexibilize

Professionalize

Mini-Case Study: Intra-Family Financing of New Family Business

Organizing a Family Bank

Entity Choice

Evolution of Family Banks: From Simple to Complex

Mini-Case Study: A Family Bank Designed to Develop the Next Generation

Good Governance: Family Bank Boards, Committees, and Trustees

Mini-Case Study: Family Bank Without Good Governance

Limitations of Trusts

The Role of the Family Office

The Role of Outside Experts

Tax and Legal Considerations of Family Banks

The Anderson Family Case Study

Conclusion and Final Thoughts

Notes

Chapter 14: Legacy, Philanthropy, and Impact Investing

Kirby Rosplock, PhD

Introduction to Legacy

A Generational Lens to Legacy

Defining Legacy

Financial Legacy

Social Legacy

Philanthropic Legacy

Philanthropy, Impact, and Sustainable Investing

Opportunities and Challenges of Philanthropy, Impact and Sustainable Investing

Family Philanthropy and Foundations

The Root Family Legacy and Evolving Their Philanthropy

The Family Office Supporting Family Philanthropy

Cordes Family Case Study

Conclusion and Final Thoughts

Notes

Chapter 15: Private Trust Companies: Creating the Ideal Trustee

Miles Padgett, Partner, Kozusko Harris Duncan, LLP

Don Kozusko, Partner, Kozusko Harris Duncan, LLP

The Broader View

What is a Private Trust Company?

What are the Differences between a Private Trust Company and a Commercial Trust Company?

Why Do Families Consider Creating a PTC?

What are the Key Considerations to be Addressed Prior to Pursuing a PTC?

Steps to Creating a PTC

Choice of Regulatory Regime

Geographical Convenience

Substantive Trust Laws

Trust Company Laws

Public Policy Environment

Trust and Trust Company Taxes

Achieving Success in a PTC: Setting Priorities

Fostering Beneficiary Development Should be the Primary Objective of the PTC

Principles and Practices for a Successful Private Trust Company

The Parable Family

Conclusion and Final Thoughts

Notes

About the Author

About the Contributors

Index