An invaluable educational tool, The New Family Office: Innovative Strategies for Consulting to the Affluent provides investment and wealth management consultants with the skills and knowledge to exploit the new environment in private wealth management.
An invaluable educational tool, The New Family Office: Innovative Strategies for Consulting to the Affluent provides investment and wealth management consultants with the skills and knowledge to exploit the new environment in private wealth management.
Lisa Gray tracks the changing demands from the marketplace, explaining how you can take advantage of the upheavals in the financial services industry to move from a role of investment management advisor to that of wealth optimization consultant - fully developing the family office model and providing optimal solutions to the changing needs of your clients.
What needs to be put in place to attain and maintain business success?
Discover the new options for accomplishing family office business objectives.
What are the factors that make family office models so attractive?
How do you optimise the wealth of your clients, in order to maximize your personal financial returns?
What is the required technology, the costs and education to move to a new wealth optimization model?
With a complete examination of the histories of the family office and financial services industry, The New Family Office: Innovative Strategies for Consulting to the Affluent explains the state of the industry, the choices and opportunities open to today's high level advisors, and, step-by-step, the process to establish advisors as the consultants to today's demanding clients.
"...The book brings together all the possibilities - in terms of servicing mechanisms - advisors and consultants have available to them. In successfully bringing together all of these elements, the author has created an invaluable resource book." Frank L. Campanale, former President and CEO, Salomon Smith Barney Consulting Group
"Any consultant interested in dealing effectively with private clients would benefit from reading this book. While the book deals specifically with the complexities of family offices and how to manage them profitably, it offers numerous insights that can be used immediately by consultants in refining and improving their service, communications, client education presentations, and marketing efforts. The ultrarich might have specific needs and motivations, but in the final analysis, they, too, are people who value an expert adviser who can solve their problems." Book review in IMCA Monitor by Brooks C. Sackett, CIMA, CFP, President, Chief Capital Management Inc (see Reviews page for the full review)
"This book does an excellent job of tracing the history of the family office, identifying the unique attributes of the service models in use, and providing helpful suggestions that a practitioner can adapt for daily use. In an environment where individual investors are becoming more sophisticated and selective, this book can provide a distinct competitive edge." J. Richard Joyner, President, Private Wealth Management, Tolleson Wealth Management
Table of Contents
The New Family Office Innovative Strategies for Consulting to the Affluent
Contents
Author biography Foreword Acknowledgements
Introduction Problems for the financial services industry Problems for the family office industry The solution The future of the financial services industry The purpose and structure of this book
Part I: The historical basis for the family office’s appeal
Introduction to Part I
Chapter 1:Evolution of the family office model Introduction Origins of the family office Early securities investment and the construct of family assets Industrial icons create a need for larger family offices ‘Waves of wealth’ and multiple generations complicate family wealth Other emerging wealth concerns Expansion of the family office Services and structure of the family office Key objectives of the family office The family office of today Conclusions
Chapter 2: Separately managed accounts: the ‘Holy Grail’ of the financial services industry Introduction Legislative changes foster the development of SMAs Lockwood’s pension fund business model The introduction of separate accounts for individuals Educating the brokerage community Early operations of the broker/consultants Conclusions
Chapter 3: Family office models: melding old objectives with new structures Introduction An overview of family office models Variations on original model themes New family office models Family offices around the world Measuring value Challenges and issues families face A round-up of family office models
Chapter 4: Facing the emerging realities Introduction Landscape of the financial services industry The financial services industry view of consulting The family office view of consulting What the wealthy are seeking Who are the wealthy?
Part II The basics
Introduction to Part II
Chapter 5: Creating efficiencies through collaborative networks Introduction Team dynamics and the waves of change Team collaboration with outside advisors Enhanced efficiency and profitability How to create efficiency and reduce costs A new version of the team model What technology can and cannot do
Chapter 6: Harnessing the power of information management Introduction The next ‘big frontier’ New technology mandates The ‘virtual’ family office Functional overlap between the industries The state of technology in the financial services industry The state of technology in the family office industry Summarizing the technology platforms Technology case studies Preparing for future success
Chapter 7: The feasibility of the new family office models: costs and how to manage them Introduction Considerations in setting up a new family office practice Costs of becoming an independent wealth optimization consultant Monitoring costs and creating a business
Chapter 8: Family dynamics and governance Introduction How family dynamics shape family office structure Indigenous generational dynamics The family governance ingredient Concerns regarding governance The growing role of philanthropy The wealth optimization consultant’s role in governance The growing influence of women and minorities Conclusions
Part III: Competitive advantages of expanding your practice
Introduction to Part III
Chapter 9: Education: the differentiating factor when applying wealth optimization skills in the new model Introduction Why ongoing education is essential Educational resources Incorporating family dynamics The role of the wealth optimization consultant Involvement in the family council Specific education needs Conclusions
Chapter 10: Attracting the wealthy and their advisors Introduction Key characteristics of wealth and the wealthy The needs of the wealthy Further characteristics of the wealthy Cycles of affluent personalities Conclusions
Chapter 11: Expanding advisory practices into wealth optimization businesses: deciding how to compete Introduction The competitive framework Compensatory concerns The transformation process Conclusions
Chapter 12: Effective marketing and client education Introduction What marketing is designed to do The difference between advertising, marketing, and sales The source of marketing success The marketing plan Marketing materials Conclusions
Chapter 13: The new family office: the optimization of family office services Introduction The advisory perspective A new business model Optimization is the key The focus of the wealth optimization consultant Models of the future
Appendix: Outsource resources for wealth optimization businesses Philanthropy Educational organizations Web-based client service platforms Performance measurement and attribution Connectivity Virtual connectivity Technology service providers for financial institutions Industry trade magazines Institutional Investor journals Other journals
Review
"...The book brings together all the possibilities - in terms of servicing mechanisms - advisors and consultants have available to them. In successfully bringing together all of these elements, the author has created an invaluable resource book." Frank L. Campanale, former President and CEO, Salomon Smith Barney Consulting Group
"This book does an excellent job of tracing the history of the family office, identifying the unique attributes of the service models in use, and providing helpful suggestions that a practitioner can adapt for daily use. In an environment where individual investors are becoming more sophisticated ad selective, this book can provide a distinct competitive edge." J. Richard Joyner, President, Private Wealth Management, Tolleson Wealth Management
"Lisa Gray has done an excellent job of presenting a comprehensive history of the wealth management field and the challenges that both institutions and family offices face in the years to come in her book "The New Family Office." This is an invaluable resource for all family office executives and practitioners in the field who should be striving to create the type of wealth optimization models she introduces in her writing." Lee Hausner, Ph.D., Partner, DoudHausnerVistar
"With more and more entrants in the high-net-worth-client sweepstakes, Lisa Gray's round-up could not be more timely. "The New Family Office" provides a clear analysis of the genesis of family offices—then and now—and of the difference in approach and scope of services offered by true family office and their myriad derivative hybrids. It is a useful survey of the current wealth management scene." Stanley H. Pantowich, Partner, CEO, TAG Associates
Book review from the IMCA (Investment Management Consultants Association) Monitor:
New Book Offers Detailed Introduction to Family Offices By Brooks C. Sackett, CIMA, CFP The New Family Office: Innovative Strategies for Consulting to the Affluent by Lisa Gray, CIMC (Euromoney/Institutional Investor Plc., 2004); 200 pp; ISBN 84374 064 8; U.S. $145
When we hear the term “family office,” some of us conjure up the image of a long-time trusted consultant diligently serving the investment management needs of the multigenerational members of a single family. Others think of consultants serving as business and financial managers of the family’s affairs through the coordination of tax and estate planning, portfolio management, and risk analysis along with a variety of personal services such as bill paying and household payroll tax administration. Still others see the consultant as a key figure in the metamorphosis of the “family as client” to the “family as client in the business of serving other families.” Each of these forms of the family office is accurate, and this underscores the key question facing interested consultants. What kind of family office can and do you want to serve?
For consultants to the affluent and those who strive to be, Lisa Gray’s book provides and excellent detailed introduction to the family office in its numerous and discrete forms. She covers the specific ways consultants can work with these clients and the nature of effective marketing and continuing service to this market. After reading this lucid and well-organized book, any consultant will be in a strong position to think through his or her options regarding the family office arena. While Ms. Gray has written an excellent work regarding the family office, she has also stressed the keys to professional success in serving all affluent and private clients: professional education, client education, technological implementation, and cost-effective practice management.
The book is organized into three parts. The first deals with the history of the family office. Its development is interlaced with those of both the financial services industry and the family office industry. This organization offers consultants insights into the value that family office clients perceive in their advisers against the backdrop of the traditional, product-driven financial services industry and its checkered efforts to capture that market. For the affluent, value lies in processes, not products.
The second part deals with the new concept of wealth optimization and its various forms. Throughout the book, Ms. Gray stresses that the ideal goal of service and the ideal level of service provided to family office clients from consultants should be focused on the optimization of all forms of family wealth. Each family possesses its wealth in various manifestations, and each manifestation—the financial capital, the human capital, the social capital, and the intellectual capital—should be optimized through the family’s work with advisers. To accomplish this, the full array of services expected by family office clients is outlined along with the critical importance of effective collaborative relationships among all those providing services. Human capital is optimized through the effective organization and management of all family members, advisers, office staff, trustees, and directors. Social capital is optimized through the influence the family’s standing can exert in local, national, and international circles. This can take the form of redemptive and nonredemptive philanthropy as well as standing for public office. Intellectual capital was the driving force that created the family’s financial capital and can be optimized through new ideas, new firms, and the careful creation of concepts of progress and stewardship in the minds of younger family members.
The third part of the book explains the options consultants have for transforming their practices to the wealth optimization model and covers the marketing and continuous client education activities that are required to attract and retain this market. This section is another highly detailed gold mine of ideas related to the dimensions of wealth management and its goals, strategies, structures, and processes. The personality traits of the affluent are offered along with their points of difference to further solidify the notion that consensus or coexistence at least is a critical goal for the adviser.
Any consultant interested in dealing effectively with private clients would benefit from reading this book. While the book deals specifically with the complexities of family offices and how to manage them profitably, it offers numerous insights that can be used immediately by consultants in refining and improving their service, communications, client education presentations, and marketing efforts. The ultrarich might have specific needs and motivations, but in the final analysis, they, too, are people who value an expert adviser who can solve their problems.
Brooks C. Sackett, CIMA, CFP, is president of Chief Capital Management, Inc., with offices in San Jose, Calif., and Spokane, Wash.; brooks@chiefcapital.com.
Excerpt from an article festuring an interview with Lisa Gray, appearing in Wall Street & Technology, March 22, 2005 (click here to see the whole article):
The family office is far from a new concept to the financial services industry. The first traditional family office was established by the Rockefellers in 1911, and its advantages - personalized, private and holistic wealth management - transcend to the more than 4,500 family offices in existence today.
According to Jon Carroll, cofounder and managing director of consultancy Family Office Metrics (FOM), the actual structure of a family office differs from family to family. Carroll adds that, in spite of the differences in structure, most family offices have five key functions: chief adviser to the family, investment management, financial administration, trustee services and back-office support services. He explains that family offices use custodian banks like Northern Trust primarily for custody, partnership accounting, reporting and investment analytics.
The biggest differentiator between traditional family offices and today's family offices is technology. More families are now looking for ways to streamline their operations and technology in order to cut costs.
"The thinking behind family offices used to be that you hire a staff to manage your money and whatever it costs, you pay. Nowadays, [families] are realizing that because of technology, they can make things more cost-efficient," explains Lisa Gray, author of The New Family Office. She adds that ultimately the advent of the Internet and other technological advances have opened family offices to alternative ways of structuring their businesses. "Technology is really creating more efficiencies for traditional family offices and it's also creating communication capabilities that we didn't have before," she says. "Becoming Web-based is probably the most important thing firms have to do" to be competitive in this market.
In The New Family Office, Gray illustrates an ideal virtual family office structure. The model set-up is a Web-based portal that integrates a complete network of outsourced family office advisers covering every aspect of necessary operations. The portal allows users varying levels of access into the operational interfaces, portfolio management tools, data warehouse and client family Web site. Access into the portal is entirely controlled by the designated family leader. "With family members living all over the globe, a virtual family office can facilitate the management of the family wealth, save time, save travel expenses and allow the family to meet physically once or twice a year to keep that necessary element in," says Gray. "It becomes a very flexible model that can easily be custom-tailored to each individual family's needs."
First of Its Kind?
In her book, Gray explains that typical activities in a family office include trade execution, reconciliation and performance reporting. Data feeds and reports from custodians are added to these functions as well. Downloads from various trust companies, custodians, prime brokers, investment managers, the general ledger and investment dividends must all be passed through and allocated to the accounts of the various family members. From there, the information is passed through a variety of K1 (an IRS tax form used for distributions from trusts or to report profits or losses on investments for partnerships) and other functions into the core books and records systems. Although many financial services institutions can provide technology components to accomplish one or more of these activities, Gray asserts that there's currently no firm in existence that's totally virtual in the sense that it ties together a complete network of outsourced family office advisers covering every aspect of necessary operations.
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