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
