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

ISBN-13: 9781119694007 / Angielski / Twarda / 2020 / 480 str.

Kirby Rosplock

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Foreword xixPreface xxiAcknowledgments xxvChapter 1 Introduction to the Family Office 1Kirby Rosplock, PhDA Macro View of Global Wealth 2Billionaire Update 7How Much Do I Really Need to Fund a Family Office? 10Purpose and Definition of the Family Office 11Historical Background of the Family Office 12Family Office from the Industrial Age to Current 13Key Roles of the Family Office 16The Executor and Trusted Advisor 16The Guardian and Watchman 17The Librarian and Guru 19Family Office Orientation to Family, Strategy, and Operations 19Conclusion and Final Thoughts 24Notes 24Chapter 2 Family Office Evolution: Inceptions and Archetypes 27Kirby Rosplock, PhDInception of a Family Office 27Scale: How Much Is Enough? 28Impact of the Family Business on the Family Office 30Attractions and Challenges with Embedded Family Offices 30Separating the Family Office from the Family Business 32Sudden Wealth 33The Investment-Focused Family Office 34Family Offices Through the Back Door 35Family Business Exit and Liquidity Event 36Family Office Archetypes 37The Founder's Family Office 37The Virtual, Administrative, and Compliance Family Office 38The Philanthropic Family Office 39The Direct Investment and Investment Offices 39The Family Business-Focused Family Office 40The Multigenerational-Focused Family Office 41Mathile Case Study 42Background: Inception 42Evolution of the Family Office: Strategic Planning Cycles 43A Multigenerational Perspective 44Alignment, Urgency, and Action 45Discovery and Steps 47Involving Outside Experts 48Conclusion and Final Thoughts 49Notes 50Chapter 3 Comparing Family Office Solutions: Multi- and Single-Family Offices 53Kirby Rosplock, PhDTrends in the Family Office Landscape 54Determining Family Wealth Management Needs 58Why the Single-Family Office Solution? 59Why the Multi-Family Office Solution? 65Questions to Ask During the Evaluation Process 68Pathways to Selecting a Multi-Family Office 74Godspeed Case Study 75Introduction 75Background of the Family and Family Office 75A Trigger and Decision for a New Direction 76Journey to Find What Is Next 76Decision-Making Process 77Final Cut 78Key Insights and Outcomes 80Conclusion and Final Thoughts 81Notes 82Chapter 4 Family Values, Mission, and Vision and the Family Office 83Kirby Rosplock, PhDIntroduction to Values 83The Process of Exploring Values 85Values Statement 86Mission Statement 87Values, Mission, and the Family Office 88The Importance of Vision 89Elements for Successful Family Office Visioning 92Building Your Family Office Vision 94Pitcairn Family Case Study 95Five Steps to Creating a Family Vision 98Step 1: Clarifying the Process and Expectations 99Step 2: Vision Retreat Pre-Planning 99Step 3: Staging a Vision Retreat 100Step 4: Timing for a Vision Retreat 100Step 5: Aligning Vision and the Strategic Plan 100Conclusion and Final Thoughts 101Notes 102Chapter 5 Establishing and Structuring of Family Offices 103Ivan A. Sacks, Esq., Partner, Withers Bergman LLPWilliam J. Kambas, Esq., Partner, Withers Bergman LLPQuestion 1: What Legal Form Should the Family Office Take? 105Choice of Entity 107Deciding Between an LLC and a C Corporation 107Case in Point 113Question 2: Who Should Pay for Establishing and Operating the Family Office? 114Question 3: Who Should Own the Family Office and How? 116Legal Ownership 117Beneficial Ownership 117Models of Ownership 117Question 4: Who Should Manage the Family Office and How? 119Structuring the Legal Formalities 120Structuring the Scope of Services 122Family Philanthropy, Legacy, and Social Capital 125Managing Regulatory and Estate Planning Concerns 125Question 5: How Are Family Offices Structured to Optimize Tax Efficiency? 126Tax Deductibility of Services Provided by the Family Office 129State and Local Tax 131Question 6: Can a Family Office Be Structured to Manage Risk? 132Case in Point 132Risk Management Through Architecture 133People-Oriented Risk Management 133Balance Sheet, Cash Flow, and Economic Risk Management 133Question 7: What Is the Process of Establishing and Structuring a Family Office? 134Conclusion and Final Thoughts 136Notes 137Chapter 6 Strategic Planning for the Family Office 139Kirby Rosplock, PhDCreating a Family Office Strategic Plan 140Discovery 141The Family Capital Review 142The Family Background 143The Advisor Network Review 145The Estate Plan Review 145Mapping and Summarizing Legal Entities 146Family Office Stress Tests 147Risk and Insurance Management Considerations 150Family Office Risk Assessment and Insurance Planning 151Family Member Risk and Insurance Planning 154Overview of Capital Sufficiency Analysis 155Simple vs. Sophisticated Approach 156Using Capital Sufficiency in the Family Office 156Case in Point: Doryman Family 157Key Takeaways 164Conclusion and Final Thoughts 165Notes 166Chapter 7 Legal and Compliance Standards and Practices for Family Offices 167David S. Guin, Esq., Partner and US Commercial Practice Group Leader, Withers Bergman LLPRegulations Affecting Family Offices: Dodd-Frank Act 167Case in Point 169The Single-Family Office Exemption 170Case in Point 174Clients of the Family Office May Need to Report Beneficial Ownership of Securities of Publicly Reporting Companies 175How to Report Beneficial Ownership 176Ownership of Securities in the Ordinary Course of Business 176Passive Ownership of Less than 20 Percent of a Class of Securities 176Other Acquisitions 177Clients of the Family Office May Need to Report Beneficial Ownership as Insiders of Publicly Reporting Companies 177Reporting Insider Status on Form 3, Form 4, or Form 5 178How Do I Determine Beneficial Ownership in a Multi-Tiered Family Holding Structure? 179Are You an Institutional Investment Manager? (The Answer May Surprise You.) 180What Is an Institutional Investment Manager? 181Reporting on Form 13F 181Determining If the $100 Million Threshold Has Been Met 183Confidential Treatment 184Are You a Large Trader? 184The SEC Gets Personal About Insider Trading 186Compliance Policies 188What Are the Components of a Good Compliance Policy? 189Document Retention Policies 190What Are the Components of a Good Document Retention Policy? 192The Compliance Function: In-House Versus Outsourced 192Special Issues for Family Offices When Considering Regulatory Requirements 193Conclusion and Final Thoughts 194Notes 194Chapter 8 Investment Management and the Family Office 197Kirby Rosplock, PhDFamily Office Investment Management 198Concentration 199Measuring Success 200Lifestyle and Legacy 201Time Horizon 203Hurdles to Growing Wealth 205Family Office Investing: Paradigm Shift 206Passive Versus Active Asset Management 208A Practical Approach to Asset Allocation 209The Investment Process in a Family Office 210Investment Review 210Investment Governance 211Investment Objectives 214The Investment Policy Statement 214Investment Committee 217Why Would a Family Establish an Investment Committee (IC)? 218How Does a Family Establish an Investment Committee? 218How Does an Investment Committee Usually Operate? 218Strategic and Tactical Asset Allocation, Manager Selection, and Investment Monitoring 221CIO Function: In-House Versus Outsourced 223Conclusion and Final Thoughts 227Notes 228Chapter 9 Family Office Operations and Information Technology 231John Rosplock, COO and CFO, Tamarind Partners, Inc.Robert Kaufold, President and Chief Risk Officer, Cauldera LLCFamily Needs Drive Family Office Systems 232Family Office Operations 233Accounting 233Reporting 233Financial Reporting 235Data and Decision Archiving 236Family Office Management 238Security 239Other Technology 239Assessing Operational Complexity 240Simple to Complex Systems 242Complex System Technology 244Operations Lens to Insourcing Versus Outsourcing 247Technology Considerations: Buy or Build 249New Technology Due Diligence and Onboarding 250Keys to Success 254Conclusion and Final Thoughts 255Notes 256Chapter 10 Family Office Talent, Compensation, and Recruitment 257Kirby Rosplock, PhDIntroduction 258Family Office Staffing 259Single-Family Office Organizational Chart 261Gender and Family Office Executives 267Recruiting Family Office Talent 268Finding a Good Chemistry and Culture Fit 269Background Checks 271Compensation 272Methods for Determining Annual Incentives 274Managing Family Office Talent 276Role Clarity and Job Description 276Reporting Hierarchy and Authority 276Performance Management 277Communication and Trust 278Recruiting Internationally 278Case Study: Setting Up the Office 279Family or Non-Family at the Helm 280Family Member Compensation 281Conclusion and Final Thoughts 282Notes 282Chapter 11 Governance Issues for the Family Office 285Barbara Hauser, JD, Independent Family AdvisorKirby Rosplock, PhDGovernance Issues for the Family Office Itself 286Benefits of a Good Board 286Importance of Independent Directors 288Interim Stage of Advisory Board 289Accountability to the Family 289Participation in Long-Term Strategy 289Next Generation Issues to Address 290Succession Planning for the Family Office and Its Executives 290Governance for the Family Itself 293Analysis of Existing Decision-Making Process 295Hallmarks of Good Governance: Transparency, Accountability, and Participation 296Benefits of the Family Creating Its Own Governance Process and Structure 297How to Create the Family Governance 298Family Councils 299Family Constitutions 300Kettering Family Governance Case Study 302Conclusion and Final Thoughts 308Notes 309Chapter 12 Family Education and the Family Office 311Kirby Rosplock, PhDStewardship of Wealth 313Psychology of Wealth and Child Development 314Elsa's Story 316Overcoming Communication Challenges 317Case Study: Waithram Family 319Clear Expectations and the Power of Inherited Wealth 322Inspiring Entrepreneurship and the Next Generation 325Case Study: Jennifer's Story 326The Power, Influence, and Inspiration of Mentors 327Creating a Family Education Plan 329Conclusion and Final Thoughts 332Notes 333Chapter 13 Family Entrepreneurship and the Family Bank 335Warner King BabcockKirby Rosplock, PhDWhat Is a Family Bank? 335Two Mindsets to Your Family Bank 338Establishing and Funding a Family Bank? 339Five Principles for Family Banks 340Democratize 340Harmonize 340Customize 341Flexibilize 342Professionalize 342Mini-Case Study: Intra-Family Financing of New Family Businesses 343Organizing a Family Bank 344Entity Choice 345Evolution of Family Banks: From Simple to Complex 346Mini-Case Study: A Family Bank Designed to Develop the Next Generation 349Good Governance: Family Bank Boards, Committees, and Trustees 350Mini-Case Study: Family Bank Without Good Governance 351Limitations of Trusts 352The Role of the Family Office 353The Role of Outside Experts 354Tax and Legal Considerations of Family Banks 355The Anderson Family Case Study 355Conclusion and Final Thoughts 358Notes 359Chapter 14 Legacy, Philanthropy, and Impact Investing 361Kirby Rosplock, PhDIntroduction to Legacy 362A Generational Lens to Legacy 362Defining Legacy 364Financial Legacy 365Social Legacy 366Philanthropic Legacy 367Philanthropy, Impact, and Sustainable Investing 368Opportunities and Challenges of Philanthropy, Impact, and Sustainable Investing 371Family Philanthropy and Foundations 373The Root Family Legacy and Evolving Their Philanthropy 374The Family Office Supporting Family Philanthropy 377Cordes Family Case Study 378Conclusion and Final Thoughts 385Notes 386Chapter 15 Private Trust Companies: Creating the Ideal Trustee 389Miles Padgett, Partner, Kozusko Harris DuncanDon Kozusko, Partner, Kozusko Harris DuncanThe Broader View 389What Is a Private Trust Company? 389What Are the Differences Between a Private Trust Company and a Commercial Trust Company? 390Why Do Families Consider Creating a PTC? 392What Are the Key Considerations to Be Addressed Prior to Pursuing a PTC? 392Steps to Creating a PTC 398Choice of Regulatory Regime 398Geographical Convenience 400Substantive Trust Laws 401Trust Company Laws 402Public Policy Environment 404Trust and Trust Company Taxes 405Achieving Success in a PTC: Setting Priorities 405Fostering Beneficiary Development Should Be the Primary Objective of the PTC 406Principles and Practices for a Successful Private Trust Company 408The Parable Family 409Conclusion and Final Thoughts 415Notes 416Appendix A: Family Office Complexity Assessment 419Appendix B: Family Office Technology Segments 423About the Author 425About the Contributors 427Index 431

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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.