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FAMILY OFFICE

ELITE SPECIAL EDITION

BNY Mellon
Cory McCruden

FAMILY OFFICES - UHNWI - WEALTH - PHILANTHROPY- FINE ART - LUXURY - LIFESTYLE


Subscription $100 per year www.familyoceelite.com
DOMOS FINE ART

DOMOS CONSULTANTS
FINE ART
DOMOS FINE ART has a portfolio of very Fine
Art on sale (O Market) on behalf of our clients
which include works by Caravaggio, Renoir,
Monet, Van Gogh, Matisse, Rembrandt, Picasso,
Rouault, Bonnard, Raphael and more.
DOMOS FINE ART
is experienced in dealing We oer the following services
with rare o-market Valuation and Sale of Fine Art
collections of fine art. Locate specific pieces of Fine Art
Assist in verifying provenance of Art
Auction representation

UK Oce | TEL: + 44 (0) 29 2125 1994 | SKYPE: domosfineart | info@domos.co.uk | www.domos.co.uk


FAMILY
OFFICE ELITE MAGAZINE

WHAT IS A FINE ART


FAMILY OFFICE US CONGRESS INVESTING
ENACT NEW TAX FOR FAMILY OFFICES

03 37
EXAMINATION
CAPLIN & DRYSDALE

ROLLS ROYCE
BLACK BADGE
25 BERNIE MADOFF
THE INSIDE STORY ON
EXPOSING MADOFF
FRANK CASEY

11 43
VIDEO ADVERTS MAYBACH
THE FUTURE OF ADVERTISING SESURITY & PROTECTION
WITH THE 600 GUARD

17 53
IMPACT INVESTING FAMILY OFFICE
IN THE FAMILY OFFICE MULTI-FAMILY OFFICE
SELECTION

21 HOLLAND & HOLLAND


EXPLORE THE WORLD OF
ANTIQUE WEAPONS
57
AFRICA THE SAFRA
OPPORTUNITIES FOR FOUNDATION

35
FAMILY OFFICES SAFRA FOUNDATION MAKES
ING BANK DONATION TO CLINATEC

25 61

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FAMILY OFFICE ELITE MAGAZINE
GULF STREAM 63
100TH G-560
COREY McCRUDEN
Cory McCruden BNY Mellon
HADHUNTERS 71 Wealth Management, Advisory Services
PROPER EXECUTIVE PLACEMENT

SUPERYACHT 73

7
CHARTER - LUXURY VACATION

FAMILY OFFICE
WHAT TO DO WITH CASH
77
MAN-VS-MACHINE
INVESTMENT
MANAGEMENT 79
PRIVATE BANKS 83
WITH AN INVESTMENT FLOVOUR

AUTHENTICITY
IN THE ART MARKET
95
IMPACT AND 101
PHILANTHROPY
OTHER STORIES...
FRANCK MULLER - P.91
SPIRIT YACHTS SHOWCASE - P.93
SCIENTIFIC EVIDENCE & ART FORGERIES - P.97
ALTERNATIVE RISK MANAGEMENT - P.107
QUALITATIVE OR QUANTITATIVE - P.113

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WWW.FAMILYOFFICEELITE.COM
What is a
Family Office?
Tom McCullough

Family oces originated over 100 years ago when the asset requirement is considerably less than that of
wealthy families, mostly in the United States, hired single-family oces, typically from $10 or 20 million
dedicated sta to manage and coordinate their diverse of net worth up to $500 million.
financial aairs. They were designed to look after
investment management, tax planning, succession, Whether operating as a single-family oce or a mu multi-
insurance, philanthropy and a myriad of other needs family oce, an important characteristic of the fam family
particular to the family. Names like Rockefeller, oce is their intimate knowledge of the familys famil
Carnegie, and Pitcairn are among the best known in values and generational issues, ass well as institution
institutional
North America. In Europe, private banks have been the memory of the familys aairs. family
irs. This allows the fam
main vehicle serving the wealthy and have been doing oce principals to speakk intelligently with third-party
third-pa
so for over 300 years. experts (accountants, lawyers,
wyers, etc.) and be a source of
general advice and counsel to the family on importa
important
There were often several reasons that drove families to issues as they arise.
set up a family oce.
Another benefit unique to multi-family oces is tthe
Assets had grown to a size where full-time professional resulting purchasing power. It provides participating
icipati
management was required; families with access to the widest range of investment
The family members were frequently too busy or opportunities and the top tier of advisory services at a
didnt feel qualified to handle the increasingly complex lower cost than if each single individual or family were
financial issues brought about by their wealth; or to contract those services on their own. When all is said
A liquidity event, such as the sale of a business, and done, the real value of a family oce is having a
required a significant range of coordinated decisions. trusted team of advisors to coordinate all the diverse
aspects of a familys financial lives.
Most family oces oversee the aairs of single families.
A relatively recent phenomenon is the multi-family Tom McCullough is Chairman and CEO of Northwood
oce, which has arrived along with the proliferation Family Oce a leading global multi-family oce based
of wealthy families in the past 20 years. Multi-family in Toronto, Canada and author of the new book Family
oces serve the needs of more than one family, and Wealth Management(http://amzn.com/0470824298).

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FAMILY OFFICE ELITE MAGAZINE
SUPERYACHTS
INTERVIEW WITH CHRIS CECIL WRIGHT

Family Oce Elite had the opportunity to interview We have clients who enjoy chartering in the Med but
Chris Cecil-Wright, who launched Cecil Wright & also many clients who wish to venture further afield
Partners as a boutique superyacht brokerage two years and incorporate elements of extreme sports and
ago. Specialising in the purchase, sale, build and charter adventure into their travels. Many people also now use
of superyachts. a superyacht as a base for extended family holidays.

WHY ARE SUPERYACHTS SO POPULAR AMONGST THE WHAT IS IT THAT YOU DO BEST?
WORLDS WEALTHIEST INDIVIDUALS? The most important aspect of our business is
understanding people, and not boats! Knowing about
Ultra-high-net-worth individuals enjoy not only the superyachts is a necessity but the dierence is in the
freedom that life on the water brings but also the detail and having a more intuitive approach to what
privacy that a superyacht oers. A stay in the finest we do. We take valuable time in getting to know our
hotel just cannot compare with the facilities and levels clients, understanding their
eir desires and
a then we can
of service on board a luxury yacht but most importantly, pre-empt their requirements.
nts. We always aim to surpass
the privacy that is achieved by being able to go where expectations and our mottoo is Fewer Clients, Serviced
you want, when you want and with no one else around Better.
is something that money cant buy. As demand for the
highest levels of luxury and the ultimate facilities on YOU HAVE A PASSION FOR FEADSHIP. CAN YOU E LAIN
EXPLAIN
board has developed, a superyacht also manages to WHY?
eectively amalgamate a place of work and leisure. We work very closely with Feadship,
eadship, who,
who in n my opinion,
Many of the yachts that we have for charter have both he water today.
build the finest boats on the oday. They have
board room and business facilities as well as extensive the ability to not only create
te the
t wow factor but also
leisure and sports facilities. They are also the perfect deliver the technical wizardry. Their attention to detail
environment for entertaining. Our clients want to is second-to-none, and they just do a great job! have
recreate everything that they have in their homes on been responsible for the construction
nstruction of someme of the
their yacht, so when working with them on the design largest Feadships in recent years, including the 77.
77.7m
and build or even just a charter, we go to great lengths TANGO, the 78.5m HAMPSHIRE RE II and the 99m MADAME
to ensure every aspect of their life is replicated. A GU. I have also represented the
he buyers and sellers of 15
superyacht enables people to travel to unbelievable pre-owned Feadships, so I do o know Feadship well andan
destinations but with the highest levels of comfort. am always impressed.

5
FAMILY OFFICE ELITE MAGAZINE
HOW DOES SOMEONE EVEN START THE PROCESS OF yachts. I can then put together a Dream Team to create
BUYING OR BUILDING A YACHT? the perfect yacht for the client.
Many people decide that they want to own a superyacht
having initially tried chartering. This gives them a taste WHAT DOES THE FUTURE HOLD FOR CECIL WIGHT &
of the reality that being on a yacht brings and it is very PARTNERS?
enticing! As a broker, we guide clients through the entire I started the business two years ago, having been a
process and talk through the options available, whether Director of Edmiston for twenty years previously. I
to buy or build a yacht and all that those options entail. am enjoying the challenges and rewards of having my
I will take clients to the shipyard and talk through the own brokerage and am looking forward to the future.
process as well as introducing them to designers, naval We have a small team based in our oces in Monaco
architects, etc. and London, and we are keen to remain small and
focussed. We oer a low-key, discreet and very personal
This is where the relationship that I referred to earlier approach, and we dont want to lose that as our clients
is so important. It is vital that clients trust their broker really value this aspect. The world of superyachts can
and are confident in their experience, knowledge of the be somewhat brash, but that is not what we are about.
market and ability to get the job done. I have a small Even our marketing materials are a little bit dierent
team of experts working with me at Cecil-Wright, so we send our clients and potential clients a quarterly
we oer a very personal but specialist service with newspaper rather than a glossy brochure!
extensive knowledge of sailing yachts as well as motor

14TH - 15TH JUNE 2016


MILLENNIUM GLOUCESTER
LONDON, UK

UNIQUE
The Agrimoney Investment Forum progra
program has been
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DESIGNEDWITHQUALIEDENDINVESTORSIN VIP OFFER
FOR FAMILY OFFICE ELITE READERS
OUTLININGTHEIMPACTINVESTMENTINAGRICULTURECANHAVEON
OUTLININGTHEIMPACTINVESTMENTINAG
APORTFOLIO ANDWHATRETURNSCANREALLYBEMADE
APORTFOLIO ANDWHATRETURNSCAN We have a limited number of
complimentary 2-day passes for
that you are fully up to date with the
The Forum will ensure tha &AMILY/FCE)NVESTORS
latest agri investment trends and will allow you to make 0LEASECONTACT*OANNE/AKES
INFORMEDDECISIONSWHENWORKINGWITHASSETMANAGERS
INFORMEDDECISION joanne.oakes@agrimoney.com
ORCALL+44 (0)207 202 0910

/FCIAL-EDIA0ARTNER
www.agrimoneyinvestmentforum.com

6
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CORY McCRUDEN VICE PRESIDENT
BNY Mellon Wealth Management, Advisory Services
Cory McCruden is a leader of BNY advancing gender equality and
Mellons Wealth Management leads the Investor Committee
business working with family for the 30% Club-Canada. The
oces and their advisors around 30% Club is an organization
the world and is currently based in that believes gender balance on
Toronto. boards not only encourages better
leadership and governance but
Bringing over 14 years of contributes to better all-round
experience in investment banking, board performance. We asked Ms.
consulting and working with private McCruden to write about the 30%
clients and institutional investors, Club, and the following is in her
she helps clients with succession own words
Management business, I became
planning and meeting their overall
chairperson of the Investor Group
wealth and investment goals. Studies show that women tend to
for the 30% Club-Canada. The 30%
save less and invest less than men.
Club launched in the UK in 2010
Cory is a Vice President and Wealth At the same time, women tend to
by Helena Morrissey, a BNY Mellon
Director of BNY Mellons Wealth live longerthat leaves them less
executiveto promote a voluntary
Management business in Canada. prepared financially for retirement.
eort to have a minimum of 30%
Passionate about supporting As the boomer generation ages, the
women on FTSE-100 company
entrepreneurs and committed to financial services industry needs to
boards. In Canada, the S&P/TSX 60
advancing gender equality, Cory do a better job of addressing the
Index is at 20.8%. So we still have
leads the Investor Committee retirement and planning needs of
a way to go.
for the 30% Club-Canada. She women of all ages.
obtained her Masters degree at
My role with the 30% Club-
Yale University, is originally from Research has shown time and again
Canada, gives me an opportunity
New York City, and now lives in that companies with a diverse
to work with Canadas top business
Toronto with her husband, who workforce are better positioned
leaders and investors to broaden
is an Assistant Professor at the to serve a diverse audience. So it
the pipeline of women at all levels,
University of Toronto, and son. makes sense that financial services
from schoolroom to boardroom.
companies with a proportionate
Ms. McCruden is a mentor through number of women in executive
Whats most important is
Catalyst and Women in Capital positions are often better able
that helping women advance
Markets and is a member of the to understand and anticipate the
professionally isnt a womans
steering committee for the 30 % needs of women as investors, as
issue: Its a business issue.
Club-Canada. well as employees.
Businesses that understand that,
and strive to empower all their
She is passionate about supporting When I moved to Canada in 2014 to
employees, can be more successful.
entrepreneurs and committed to support the growth of our Wealth
Its that simple.

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FAMILY OFFICE ELITE MAGAZINE
WWW.TIMELESSGALLERYGROUP.COM
INFO@TIMELESSGALLERYGROUP.COM
TIMELESS
THE BEA
GALLERY
BEAUTIFUL, UNIQUE, AND VALUABLE, IN ONE PLACE
The new era of art collecting is here. Timeless Gallery attention to every single detail. From the showrooms
Group is run by Joanna Segelstrom, who has more design to the personal service oered to clients and
than 25 years experience in the fields of fine arts and the professionalism of the team, there is plenty to
contemporary art and the young entrepreneur Mikael surprise even the most jaded investor. The gallery is
Segelstrom. Proof of this professionalism is the couples a creative hub and sta members have revealed that
expanding empire that now comprises seven galleries; several regular clients had never thought of collecting
six in Europe and one in Miami, Florida. The latter is an art before entering the gallery for the first time.
example of the strong professional relationships that
Mikael developed in the United States. TGG doesnt sell art it provides a base for understanding
its enigmatic world, oering people the opportunity to
The Segerstroms success is due to good artist define their taste, support artists, enter the world of
management, impeccable taste, painstaking attention free expression and, of course, to build knowledge of
to detail and strict client confidentiality. Most of us will the business. Many clients are invited to TGGs private
be familiar with the maxim that holds that success will art villa in Benahavs, one of the most desirable spots in
arise from following your passion, and this is exactly Europe, to enjoy the finest pieces of TGGs collection.
what the Segelstrom family has done. Moreover, they
turned Timeless Galleries into not only a hotspot for art After experiencing a couple of days in an environment
lovers and investors, but also a second home for many filled with fantastic art, architecture, food, music, cars
of them. and intelligent people, many find it dicult to return to
reality. Collectors are flown in to stay at Mikaels villa so
Timeless is outstanding for its tight relationships with they can experience living with art, proof of the mans
artists and lovers of exquisite art. It is a place where exceptional business mind and artistic sensibility. This
one can experience the beautiful, the rare and the is how luxury is defined by TGG the artistic should be
valuable in one space and feel part of one, big family. experienced in every single element of our lives.
This is a venue where business is conducted smoothly
and without pressure and where clients can make Timeless Gallery Group gained its reputation by
investment decisions while being treated like members providing top quality support for its artists, regular
of the family. feedback to its clients, amazing ROI results for its
investors and an unconditional passion for art, both
The luxurious side of art appreciation as a pleasure and as a profession. This ultimately has
The galleries oer a luxurious experience, not only via led to the Timeless Gallery expansion, a constantly
valuable art pieces, but also by paying the strictest increasing client interest generating the opening of

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FAMILY OFFICE ELITE MAGAZINE
the two new showrooms one in Marbella and one in of fine art markets is complex, TGG allows those with or
Miami. Many artists have already expressed an interest without inside knowledge to reap substantial benefits.
in being showcased in these state-of-the-art venues.
The collection is constantly increasing and, although Finally, apart from a potential increase in value, art
the gallery specialises in exclusive artworks, there is provides these additional financial benefits:
a range for every taste and budget. If you love art and
want to enjoy it, TGG will oer you the best, no matter Art provides a hedge against inflation and currency
what. This is another reason that TGG keeps expanding devaluation.
around the world. There is little risk of losing your principal if you
purchase from Timeless Gallery Group.
The investments of passion No minimum investment is required.
Not many realise that art is a valuable asset; already, Art investments enjoy favourable tax treatment.
TGG has built a serious portfolio of investors. This is Reduction of risk because of low correlation with
augmented by strong artist support from TGG founder other financial assets.
Joanna, the overseeing of all aesthetic, technical, legal Possibility of earning extra revenue by lending out the
and economic aspects, the High Net Worth Individuals work or of participating in events such as exhibitions
(HNWI) network and impeccable artistic taste. These and meetings of experts.
generate new assets daily for clients and investors. Art has no geographical risk and can be moved easily.
Art can easily be insured.
The Segerstroms predict that the proportion of all luxury
spending on art will continue to increase as investors The TGG team can use art to make your properties look
seek assets that will retain their value in the longer more sophisticated, increase your assets sustainability
term, especially in a period of economic uncertainty. and advise you on building a collection. You will be
Finally, there is a growing recognition of art as an surprised by the Timeless result.
investment asset class by TGG investors. People have
become more sophisticated in their financial and estate Art is Timeless
planning and have begun seriously to view art as an The Art raises the ethos, sophisticates and stimulates
investment. Some take a more in-depth and measured creativity and innovation. Experiencing Art is
approach to portfolio management and are willing to experiencing the beauty of nature it makes a man
consider diversification strategies that encompass better. Thanks to Art, feelings, imagination and ability to
more exotic investment classes, such as art and other the most personal reactions are awakened. It is the way
collectible assets. of discovering ones personality. That is why Timeless
Gallery Group wants to create an ambience where the
Last but not least, the current socio-economic context most beautiful pieces of art can be found to inspire,
creates a demand for real assets, because many to touch and to allow experiencing their wonderful,
serious investors lost money in the financial crisis by spiritual light through diversity. Timeless Galleries
investing in products they did not understand, and are is home to artists and audience and where they meet
turning back to things that are closer to their heart and without needless words. The nest of an aesthetic oasis,
which, at the same time, oer protection and a solid as well as an inspiring and developing community,
return on investment. because as Cicero once said, The Art is the philosophy
of life.
With financial markets still in flux, some HNWIs indicated
they are approaching their passion investments as Timeless Gallery Group is and has been working eagerly
investor-collectors, seeking out those items that are throughout these many years to create a serene working
perceived to have a tangible long-term value, which is environment and promote a magical scenery full of art,
exactly what TGG provides. However, as the operation beauty and passion.

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FAMILY OFFICE ELITE MAGAZINE


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ROLLS-ROYCE
AN ALTER-EGO FOR A NEW BREED OF CUSTOMER

BLACK BADGE
The substantive transformation of an icon
FAMILY OFFICE ELITE MAGAZINE SPECIAL

Sir Malcolm Campbell, Howard Hughes, Keith Moon, Yves Saint


Laurent, Muhammad Ali and our own Charles Rolls to name a few.
Torsten Mller-tvs, Chief Young gentlemen in a hurry, driven by their restless spirits to change
Executive Ocer Rolls- the world in their own way. Untrammelled by social convention, these
Royce Motor Cars disruptors lived life on the edge, believing the ultimate power to be self-
empowerment, pushing every boundary to realise their personal vision.
Black Badge is an attitude Glamorous and daring, they lived fast, worked hard and played hard.
to life, an aspect of the Rolls-
Royce brand that appeals to Todays generation of young, self-empowered, self-confident rule-
those people who are elusive breakers are just as uncompromising and unapologetic in their choice of
and defiant, the risk takers living and lifestyle as their predecessors. They follow the road less travelled,
and disruptors who break the live the unconventional life, darkly obsessed by their own pursuits
rules and laugh in the face of and accomplishments from which they derive a pure adrenaline rush.
convention. They are driven
by a restless spirit. They Their life is their entertainment, and they live it on their own terms.
play hard, and they change
the world.Technically and And when the day is done, and the battle is won, these
aesthetically Black Badge is supremely confident people engage with the night, they go
the alter ego of Rolls-Royce, where it leads, and take all it has to oer as their just reward.
darker, more assertive, more
confident and powerful, and As demanding in their lifestyle as they are in theirheir life pursuits, these
more demanding. With Black highly-driven people insist on great substance from om any symbol of theireir
Badge, we have created monstrate their
lifestyle. More and more, such individuals wish to demonstrate the success
uccess
the most commanding through a symbiosis between their lifes work and d their chosen
ch en brands.
presence on the super-
luxury landscape. It is a truly Over the last years, many such individuals have gravitated
transformative moment for towards the revitalised Rolls-Royce Motor Cars as the brand
our great brand. most appropriate to encapsulate their truly dierent lifestyles,
estyles,
much as their celebrated predecessors did in days past. past

Always pushing their own boundaries, they have asked


ked Rolls-Royce Motor
Cars to do the same. Excited by the infinite possibilities
ities that its Bespoke
approach oers, they have asked the marque to produce
uce a Rolls-Royce like

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FAMILY OFFICE ELITE MAGAZINE
Rolls-Royce Black Badge speaks to the darker, more
assertive, confident and demanding aesthetic of these
customers.
no other, a Rolls-Royce that not only appeals to, and projects,
our sensibilities, but is fundamentally dierent like us.

And, always ready to deliver a truly Bespoke answer to meet


the customers desire, Rolls-Royce Motor Cars has once
again demonstrated its true luxury credentials as the worlds
leading super-luxury brand. Rolls-Royce has transformed
the very icons of its brand to access a darker side of its
character more suited to this breed of successful people.

Rolls-Royce Black Badge speaks to the darker, more assertive,


confident and demanding aesthetic of these customers. As
a truly Bespoke response to their desires, the interplay of
brand and customer has had a transformative eect on the
appearance and substance of Rolls-Royce Ghost and Wraith.
The result is Ghost Black Badge and Wraith Black Badge.

Together with the Parthenon Grille, the famous Double R


logo and the Spirit of Ecstasy are the very embodiment
of the Rolls-Royce brand. However, these treasured
symbols of the marque have been willing to change
their identity in appropriate circumstances before.

In Ghost Black Badge it is important to ensure rear compartment


passengers comfort by maintaining Rolls-Royces renowned
Magic Carpet Ride. Rolls-Royce engineers used the flexibility
of the 6.6 litre V12 engine to make Ghost Black Badge a little
more menacing. Subtle engine output modifications see
power increase by 40hp (30kw) to 603hp (450kw) and torque
by 60Nm (840Nm) compared to current Ghost, whilst upgrades
to the 8-speed automatic transmission give Ghost Black
Black Badge was a
Badge an added sense of urgency in how it delivers its power. fascinating challenge for
Rolls-Royces engineers.

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THE NEXT TECHNOLOGY GOLD RUSH

BIO-PRINTING
BIOPRINTING BODY PARTS FOR TRANSPLANTS
Bioprinting involves the use of advanced printing technology to print live cells for use as
human organs for transplants; the cells then seem to be able to rearrange themselves
after printing.

The 3D printing industry has come a long way in the last few years and has for some
time been printing a diverse selection of objects in areas such as automotive, medical,
business, industrial equipment, education, architecture, consumer products, plastic and
metal items. However, while this seems like an incredible achievement, even more
incredible is the recent development of bioprinters. This technology that can construct
living tissue by outputting layer-after-layer of living cells will revolutionize the medical
field. 3D printed prosthetics and implants have already been on the market for a
number of years. Recently in the news, the first customized 3D-printed lower jaw was
created for an 83-year-old patient with a serious jaw infection. The FDA has also given
approval for a 3D printed implant that replaced 75% of a mans skull.

Future developments include keyhole bioprinters that can repair organs inside a
patients body during an operation; other developments have cosmetic applications
such as face printers that could evaporate existing cells while simultaneously
replacing them with new cells. Future technology could also give people the ability
to download a face template from the Internet and have it printed onto their own
face or have a saved template of their own younger face and have it reprinted
back on, later on in life. As bioprinting interacts more and more with the medical
fraternity, replacement body parts and organs will be a relatively simple and
routine task. In addition, as every organ printed will be from a patients own
cells, the risk of transplant organ rejection would be negligible.

According to Christopher Barnatt, the Associate Professor of Strategy and


Future Studies at Nottingham University Business School in the UK, I believe
that bioprinting will become a mass-use medical technology, largely because
it will be readily scalable, unlike current transplant techniques that are limited
by donor tissue availability. I expect bioprinting to enter an application in
the early 2020s for things like nerve and arterial graft transplants. Kidneys
will probably follow by the late 2020s, and more complex organs, plus in
situ bioprinting in the 2030s.

REPRINT DAMAGED BODY PARTS AND SKIN


REPRINT YOUR YOUNGER FACE AT ANY AGE
POSSIBILITIES FOR MEDICINE ARE ENDLESS

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FAMILY OFFICE ELITE MAGAZINE
PR
IN
TI
N
G
A
N
EW
FA
C
E

Bioprinted images created by and copyright (c) Christopher Barnatt, ExplainingTheFuture.com

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VIDEO VIDEO PRESENTATION AWARD WINNING COMPANY
A professionally designed video Video adverts are designed and
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Video Advertising
We can all identify with that age old saying social media is going to be hit or miss unless
One picture is worth a thousand words. you are paying a social media expert, who
knows who, what, why, where and when to
So what is a Video Promo,? Its simply Video target an audience. However, this is not easy
advertising that uses online or oine within the Family Oce Sector. This is a sector
interactive media to communicate with a that like to remain private, however, we have
target audience to promote a brand or service seen some service providers attempting to
reach out and oer their services to family
These come in many shapes and sizes such oces by buying one of the notorious lists
as the video promo on the facing page. Video of Family Oces that are floating around the
promos are now an essential marketing tool internet. We believe that any list that is for
to showcase a businesss service, corporate sale to all and sundry is nothing more than
profile, philanthropic project or political a spam list. This is a sure fire way to alienate
announcement. A Video promo can be used your business as opposed to promoting it. We
in a promotional material and PDFs and all know that the vast majority of such email
included in your companies website or used will hit the junk folder automatically.
as a TV advert. It goes without saying, if you
need to get the word out about your business Some other service providers attend dozens
then your brand needs to be recognized and of Family Oce expos and conferences
in every way possible and in every medium around the world each year in an attempt to
available. try and meet the desired connections within
this sector. This is worth considering, but you
In todays modern world advertising is still will have to attend a lot of these events to get
much the same as in days gone by. Yes, we now to know which events are full of people just
have social media and visual mediums such as like you, trying to sell their services or events
TV, Radio, and the Internet. But incorporating where family oce principals attend.
video adverts into a companys marketing
strategy like the one on the facing page has That said, the cost of attending these events
many benefits to a business.(click on the link may be quite substantial if you attend a
to view it online) few. With fees for Expo entry, promotional
material, flights, hotels and expenses this
While advertising for some, is done on the can add up quickly and may not produce the
cheap via online social media platforms, desired results you may be searching for.
others go the full distance. That said, without While many things have changed over the
the proper training or the required budget, years, advertising is still much the same, the

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FAMILY OFFICE ELITE MAGAZINE
YOUR COMPANY MESSAGE INTERACTIVE TRAINING VIDEO
Create a dedicated message to new Create a training video that will
and old clients about your business or save hundreds of hours hiring
services in a professional way. training sta.

One picture is worth a thousand words

Click on the image above to view the promotional video from DOMOS Fine Art
only thing that has changed is the technology. have to move with the times if we are to remain
Many publications now have both online and competitive. Advertising is the lifeblood of any
oine issues with the online taking over in the business. When advertising a business or service
past few years. Some publications have stopped in a publication, make sure you advertise with a
putting our hard copies entirely as the online publication that has the type of reach you need
version is reaching the same audience. Some to get your business noticed in the sector you
publications now have the facility to incorporate are targeting. This publication has nestled rather
video presentations and advertising into their snuggly into a niche position within this sector,
publications. that being the Family Oce sector.

Video presentations have proven to be very If you would like to learn more about advertising
eective as they can be utilized within a or a video promo advert, view our media kit
website, within a promotional pdf, TV, and on online or drop us an email
all computers and handheld devices. The visual www.ourmediakit.co.uk
medium is just getting bigger all the time, and we e-mail info@familyoceelite.com

18
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THE RETURN OF
BRITISH POLO DAY
400 guests and VIPs
British Polo Day returned this Amr Zedan, Dr & Mrs Steven Emirates Palace and tradi-
March for the first of its 2016 and Gillie Lamprell, Princess tional Majilis by kind invita-
events. Both Abu Dhabi and Alexandra Cantacuzene and tion of HH Sheikh Nahyan bin
Dubai played host to some Marc De Panafieu came to- Mubarak al Nahyan. Making
400 guests and VIPs includ- gether to celebrate the best their way through the city-
ing Sheikh Mohammed bin of UAE and British tradition. scape to the modern oasis
Khalifa Al Maktoum, Sheikha Taking in the very best the that is the Shangri-La Dubai,
Maitha bint Mohammed Arabian Peninsula has to oer, guests enjoyed an even-
bin Rashid Al Maktoum, HH guests embarked on an excit- ing with Jaeger-LeCoultre to
Sheikh Saeed Al Maktoum, ing itinerary which included celebrate the 85th Anniver-
Mr Mohammed Al Habtoor, an authentic dinner at Byblos sary of an icon the Reverso
Ms Pooya Ahmadi, Mr Hos- Sur Mer with traditional Royal timepiece - at the Dubai Polo
sam Alsaady, Mr Amr Zedan, Salute 21-year-old Quaich ex- & Equestrian Club, a Taylor
Dr & Mrs Hitesh and Minal perience, cricket match which Morris Volleyball tournament
Bodani, Hossam Alsaady, Mr saw Eton play Harrow at the at Cove Beach Club and a

Presented by RJI Capital, an international merchant banking firm...

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FAMILY OFFICE ELITE MAGAZINE
game of camel polo for The Thesiger Trophy. The Hackett
Rest of World Team won decisively 4-1 against the Inter-
continental UAE team in a light-hearted game of Bromp-
ton bicycle polo; a sport played in the Olympics over 100
years ago. The highlight exhibition polo match of the
evening The British Polo Day Plate saw the home team
RJI Capital Ghantoot Polo Team play the visiting Royal
Salute British Exiles. Following an ocial prize-giving
ceremony, guests sat down to a delicious three-course
dinner followed by a live charity auction raising a total
of $46,000 for Women And Health Alliance International
(WAHA) launched by Her Highness Sheikha Shamsa bint
Hamdan Al-Nahyan and Ending Domestic Violence, a UK
based charity under the patronage of Baroness Scotland
of Asthal, dedicated to finding eective ways to end do-
mestic violence worldwide. Guests bid fiercely for lots
including a stay on ultra-exclusive Velaa Private Island, a
safari of a lifetime to Kenya with The Safari Collection, a
special cigar dinner at Francos in London and a luxurious
retreat to Royal Mansour Marrakech.

On Friday 25th March the eve of the world-famous


Dubai World Cup British Polo Day Dubai brought a touch
of quintessential British equine heritage to the Emirate
under the patronage of Mohammed Al Habtoor, the Vice-
Chairman and CEO of the Al Habtoor Group at The Dubai
Polo & Equestrian Club. Once again, the opening match
saw Execu-Jet Guards beat British Silverware Cavalry 1-0
in the camel polo. Swapping camels for pedals, Hackett
Rest of World beat Taylor Morris UAE 3-0 in Brompton
bicycle polo. These preceded the two highly-anticipated
vintage Global Partnership Family Oces Desert Safari
polo matches between RJI Capital Oxbridge and Shangri-
which took guests through the rolling sand dunes whilst
La Dubai Gulf Polo and following which Royal Salute
also taking part in activities such as falconry. Rounding
British Exiles versus home side: Bentley Habtoor Polo.
o the action-packed itinerary that had something for all
the senses, Harrods also hosted an exclusive fragrance
As is fitting for such a glamorous Dubai setting, the days
dinner presented by renowned perfumer Roja Dove al-
polo drew to a close with an ocial prize-giving cere-
lowing special guests a sneak peek into the new Black
mony and after-party. Commenting on British Polo Day
Tier Fragrance launching this summer. On Saturday 19th
UAE Tom Hudson, Co-Founder of British Polo Day, com-
March, British Polo Day Abu Dhabi took place at Ghantoot
mented: This is now our 7th year in the UAE, and we are
Racing & Polo Club, the private royal polo ground of HH
very grateful for all the support we have received from
Sheikh Falah bin Zayed Al-Nahyan. The glamorous black-
our hosts and all our partners. Polo in the UAE is going
tie evening kicked o with two rather unusual takes on
from strength to strength and we are proud to have been
the traditional game of polo with the Bentley Cavalry
part of that journey.
team beating the Etihad British Army Guards 4-1 in a

Photo credit Sam Churchill

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WWW.SATOCONSULTANTS.COM
IMPACT INVESTING IN
THE FAMILY OFFICE
FIVE STEPS TO START
By Suzanne Hammer Hammer & Associates

Impact investing is an investing approach that investments with their values, produce competitive
intentionally seeks to create both financial return as returns, and make a significant impact on a local and/or
well as positive, social and/or environmental return global scale.
and one that is actively measured.
According to Peter Caerkey of Boncerto Ltd.: For a
Across the globe, people are looking to put their assets number of families, there is a wish to have a larger
to work on the worlds problems while retaining their scale impact on social issues which are just too large
wealth and legacy for the long-term. For this reason, for them to address purely through their philanthropy.
impact investing is attracting individuals, institutions, Through impact investing, families can put more of their
foundations and family oces the world over. resources to work with the aim of gaining social change.
It enables them to recycle funds invested to enable a
Whereas traditionally investors have kept their financial more long-term social impact, and also bring more of
goals and resources separate from their philanthropy, their investment skills and analysis to the investment.
impact investing oers an opportunity to give money Deals in this space, he said, can be innovative and
and make money. Individuals and families can align their excitingadding to the attraction.

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FAMILY OFFICE ELITE MAGAZINE
Some investors focus only on projects, not impact 1. Decide why impact investing is for you. Write a list of
investing funds. According to Tatiana Alexandra what matters to you individually and as a family. Where
Ward of Rex Clement Capital in Hong Kong, Its much is there overlap with other family members? Rule out
harder to find suitable, diligence worthy projects, but whether exclusive investment or philanthropy would
the families I work with appreciate the more tangible be more appropriate or eective. Why or why not?
impact of owning a real asset be that a wind farm, a
hydro plant or a training facility in rural Africa. 2. Engage an advisor. An advisor specializing in impact
investing can be brought in before, during or after the
Impact investing as a trend is in its early days, and it narrowing process of what to focus on and why. When
can be a complicated marketplace. There are barriers identifying an advisor, take your time. Rely on personal
to entry, among them, the definition. According to recommendations and a comparison of fee structure,
Lisa Parker, vice president of philanthropic services at type of opportunities in which sector, region, size of the
Whittier Trust Company, The term itself means dierent organization, etc.
things to dierent people. Some view it as avoiding sin
stocks and investing in companies with positive ESG 3. Do your research. If a particular social issue is
scores (Environmental, Social, Governance). Others see motivating you, research that issue (or engage others
it as investing in much dierent terms for example, to do so for you) so that you understand the social
funding social ventures in developing countries. Some element and the gaps in that marketplace. By building
expect market returns; others are not looking for your knowledge of the social challenge, you will be
significant returns but simply want their investable better able to identify opportunities for the largest
funds to work towards their mission alongside their social impact in that area.
charitable contributions. There are cases where impact
investing is returning as much as, if not more than, 4. Engage with others. If financial innovation and
traditional market investing, so it is not as straight- potential returns are your primary motivation, look to
forward as one might think. engage with other investors, understand the common
challenges and talk with others who are already
Beyond finding a common definition of impact investing, involved in impact investing.
other challenges include: finding opportunities,
which can be rare, and how to go about measuring 5. Learn by doing. Make a small number of initial
social returns, which can be a long and expensive investments in areas of interest and view them as
process. Finding projects that match a familys cultural learning opportunities. Within impact investing, many
preferences can add even more complexities. individuals have become involved by initially putting
to one side a small part of their philanthropic portfolio
While the challenges to impact investing are real, they to experiment with funds for which they have little
are not insurmountable. Most philanthropic families expectations of returns.
focus on traditional philanthropy first and dabble in
impact investing on the side. The families we work with To learn more about impact investing in family oces,
arent saying lets pull our philanthropy and do impact read the report Philanthropy in the Family Oce: A
investing, said Caerkey. Rather, they see impact Global Perspective, June 2015, produced by Hammer
investing as a way to leverage more resources for the & Associates and the Global Family Oce Community.
social good, and make their philanthropic money work Download the report at www.suzannehammer.com.
harder.
About Hammer & Associates
Family oces can play an important role in bringing Hammer & Associates is a full-service firm that works
scale to the impact-investing sector in the coming years. with a select number of family philanthropies. We
The most successful impact investments are those in form deep, long-term relationships with foundations,
which the family is fully engaged not necessarily family oces, and the advisors who serve them,
from a time perspective, but from the actual project/ helping philanthropic individuals and families pair
investment perspective. For family oces exploring their passion.
the possibility of getting involved in impact investing,
here are five steps to start:

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REAL ESTATE KEY TO
SECOND CITIZENSHIP
For High Net-Worth Investors
Nuri Katz is President at Apex Capital
Partners, a leading international advisory
firm specializing in investment consulting and
wealth management for multinational, high
net-worth clientele.

According to recent data, there are more than 211,000


ultra-high-net-worth investors (UHNWI) globally, with a
combined net worth of nearly $30 trillion, a 6% increase
from 2013. Experts are predicting that this number will
grow by another $10 trillion by 2020. As this investor
base continues to expand, many individuals realize the
need to provide security and wealth protection for their
families, as well as diversify their assets, particularly
given the state of todays global economic climate and
the increasing geopolitical instability worldwide. Nuri Katz
Apex Capital Partners
Recognizing the investment opportunities around
the world, one emerging trend among the ultra-
investing in an entity or instrument issued by the
wealthy has been citizenship-by-investment, which
government, such as a bond or promissory note;
provides UHNWI and their families the opportunity to
and, contributing to a government development
become legal residents or citizens of a new country
fund.
of their choice, through investment in real estate or
government programs. With more and more auent
Of the three options available, the most common
investors seeking out ways to invest in second
financially sound approach to dual citizenship
citizenship, especially in the real estate sector, financial
by UHWNI is through real estate. These types of
advisors who work with these wealthy individuals and
investment opportunities are mutually beneficial
their families should understand the intricacies of how
to both the investor and the participating
this process works and the benefits and challenges
country helping to create jobs and stimulate
associated with this opportunity.
the local economy through the injection of direct
investments from foreign investors, while also
Obtaining Second Citizenship Through Real Estate
allowing the investor to gain lawful and permanent
Investments
access to a more financially desirable region or
country.
In the past five years, the number of citizenship-by-
investment programs has more than doubled. These
Right now, there are approximately twenty nations
programs vary from country to country, but they typically
that oer citizenship or residency programs, with
fall into one of three categories: investing in private
most countries located in Europe, North America or
sector assets, such as real estate or a business venture;

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FAMILY OFFICE ELITE MAGAZINE
the Caribbean. The benefits and minimum investment citizenship. Challenges Associated with Obtaining
requirements vary tremendously depending on the Citizenship By Investment Ultimately, there is a
participating country. The least expensive country to great variety of citizenship by investment programs
oer second citizenship is Dominica, a small island in available to UHNWI, with the choices that vary based
the Caribbean that requires a minimum investment on available capital, desired location and the length
of $100,000, plus $1,800 in filing fees. of time required to obtain residence or citizenship.
There are, of course, dierent challenges associated
Grenada reinstituted its residency program in 2013 with each individual countrys program, which
and UHNWI can now immediately become a citizen financial advisors should understand in order to
for a minimum investment of $350,000 in real educate and advise their clients.
estate within the country. This program requires
that the government individually vet applicants and American UHNWI have additional issues to overcome
their family members, though it typically only takes in order to benefit from gaining a second citizenship.
about 60 days for applications to be processed, with The most common hurdle is the financial obstacles
passports issued shortly thereafter. that result from the Foreign Account Tax Compliance
Act (FATCA), which took eect in July 2014. It requires
St. Kitts and Nevis established their citizenship-by- banks worldwide to report to the U.S. authorities the
investment program in 1984, making it the longest accounts held by Americans abroad, meaning that
standing second citizenship program in the world. U.S. citizens must continue to pay U.S. tax regardless
It allows investments in pre-approved real estate of where they reside. With approximately eight
to be purchased for a minimum investment of million Americans living abroad, many have reported
$400,000. Antigua and Barbuda, which is home to problems with applications for and maintenance
the most active and prestigious yachting industry in of accounts locally as foreign banks have rejected
the Caribbean, can also be an option for a minimum American customers rather than comply with the
investment of $400,000. exhaustive demands of FATCA.

For more luxurious real estate oerings, UHNWI This has presented a challenge for Americans living
can look to countries like Cyprus or Malta, where or doing business overseas that, according to recent
second citizenship can be purchased for a minimum data from the U.S. Treasury, 1,335 expats renounced
investment of about $1.2 million. These programs their U.S. citizenship in the first three months of last
oer full access to the EU and is one of the least year. Moreover, almost 75% of expats say at least one
restrictive passports available for global travelers. part of their finances has become more complicated
In Spain, the minimum investment is $700,000, living abroad, whether that concerns new currencies,
while countries such as Portugal have a Golden Visa taxes or moving money abroad.
Program that oers non-EU investors a fast track to
obtaining a valid residency permit. Despite these obstacles, UHNWIs are continuing
to seek out second citizenship investment
In Cyprus, UHNWI can choose to invest 5 million opportunities around the world. They are looking to
in either state bonds, local real estate and other their advisors to understand the challenges, as well
developments, or local businesses. Alternatively, as the dierent minimum investment requirements
investors can purchase a 2.5m stake in a collective required by each country, in order to weigh up
investment opportunity, providing the total value the various government programs and real estate
of the plan is at least 12.5m. Applicants also need developments available worldwide in order to find
to buy a Cypriot residential property for at least the right opportunity that best meets their needs.
500,000 and maintain this after being granted

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OPPORTUNITIES FOR PRIVATE BANKING
AND FAMILY OFFICE BUSINESS IN AFRICA
ING LuxembourgRG
By Yves Ducat Private Banker ING Bank

Since the financial crisis of 2008, the global banking


environment as well as client behavior have
changed significantly.

FATCA, CRS, BEPS and, in general, the willingness of


states to combat tax fraud eectively have
transformed the banking landscape and have, in
particular, lead to the tightening of client eligibility
criteria by financial institutions.

Bankers have been empowered in their relationship


with their clients, and if some inconsistencies were
revealed by a KYC (Know Your Customer) check (for
example during a relationship review), the client was
required to rectify the situation.

Moreover many countries have set up special


procedures or have legislated in order to permit Yves Ducat
clients who failed to report income, to regularize ING Bank
their situation. participating countries of the OECD program. Some
emerging countries understood the opportunities
The enhancement of banks due diligence of this new environment, such as Morocco and Ivory
requirements are felt most strongly in financial Coast which have created the legal conditions (in
centers actively operating internationally, such 2014 and 2016, respectively) to enable
as Switzerland, London and the Grand Duchy of any person being a resident in these countries to
Luxembourg, resulting for some clients in a lot of regularize their situation and thus breathe new life
diculties when collecting the documentation into their economy and add a certain modernity.
requested by their financial intermediary.
In Morocco, the Contribution in Full Discharge of
Additionally, some clients residing in non- foreign assets law helped bail out the State to the
participating countries of the future CRS (Standard tune of more than 250 million but has mostly
for Automatic Exchange of Financial Account helped to inject new capital into the economy
Information by OECD) were also surprised by their andthereby boost investments in the country. From an
bankers premature requirement to provide the individual perspective, this law has however created
same documents justifying the compliance of a real earthquake in wealthy Moroccans habits who,
their tax aairs as those required from residents of accustomed to the highest level of discretion, found

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FAMILY OFFICE ELITE MAGAZINE
themselves after regularization in an unprecedented on the lookout for businesses on the continent that
situation: having to manage international patrimony are going to experience the greatest growth in the
in a fully open and transparent manner. 21st century, it is often during the due diligence
that the operation fails either because the African
This new situation has created some surprises. Many entrepreneur is poorly structured or because it is
Moroccans were faced with new and often structured through a SPV (special purpose vehicle)
complex situations, such as: derived from tax havens that are blacklisted in most
Taking assets out, previously owned through a Western states.
company, even oshore, could generate a tax
cost in the foreign country but also in Morocco. Yet these families are often in need of advice and
However the Contribution in Full Discharge support in order to prepare their company to cross
doesnt exempt future taxes such as capital gains, borders. These groups have the financial means to
liquidation proceeds or others. expand but often ignore the tools available to be
Holding foreign patrimony can necessitate the optimally structured, which is needed when becoming
requirement to meet certain reporting a multinational company.
obligations in the country where the assets were
located and may have tax implications such The same is true regarding the private wealth of
as wealth or inheritance tax. these families. Because of a lack of alternatives, a big
Foreign succession rules that may apply in some portion of their personal assets is often included in
cases on the transfer of assets located the structure of the company. They neither have an
abroad may be in contradiction with the wishes of the overall view on it, nor a detailed or a structured one
deceased and/or with the Moroccan and they often ignore its importance and profile.
law.
Depending on the nature of the assets, reporting The new global transparency rules are an opportunity
rules for the Moroccan authorities could for these families and businesses to clean and
be dicult to achieve. structure their assets, which is the only solution if
In many cases, the risk profile of the clients portfolio they wish to continue their international expansion
was not aligned with the clients and deal with partners who are very rigorous on new
expectations and management fees were higher than global rules.
the average levels.
But it is also an opportunity for Private Bankers and
In short, new situations that required expertise Family Oces to invest in these African countries
hitherto non-existent in Morocco: i.e. international where everything has to be done, at the dawn of a
wealth engineering. Unfortunately, these visionary century that looks exceptional in terms of growth for
governments in search of modernity are still too rare this continent, cradle of Modern Man.
in Africa, the ultimate emerging continent, where it is
often dicult for an African resident entrepreneur to Yves Ducat
engage with an international bank. Private Banker
African Markets
Large international law firms or Corporate Finance
and M&A (merging & acquisition) specialists realize
this every day. Although some African businesses,
often family ones, which by their activity, size or
location are potential targets of Private Equity funds

26
WWW.FAMILYOFFICEELITE.COM
CHIVAS LIVE WITH CHIVALRY
YOUR PASSPORT TO INTERNATIONAL STYLE AND LUXURY

Craftsmanship, generosity and a Trotter limited edition gift tin, a a vibrant tale of international
passion for travel are at the heart limited run of Chivas 12 Made for travel. Inspired by the tradition
of the new collaboration between Gentlemen by Globe-Trotter 20 of applying stickers onto ones
British luxury brands Chivas Regal inch Carry-on Cases and a Chivas luggage to proudly showcase
and Globe-Trotter. Renowned for 12 Made for Gentlemen by destinations visited, bespoke
handcrafting luxury suitcases and Globe-Trotter Steamer Trunk. luggage stickers were hand-drawn
leather goods, Globe-Trotter has by the British illustrator Andrew
partnered with Chivas to design an The Chivas 12 Made for Davidson to celebrate iconic cities
exciting series of three collectibles Gentlemen by Globe-Trotter and adorn the contemporary tin
for the whisky connoisseur and limited edition gift tin houses design.
world traveller - the Chivas 12 a bottle of Chivas 12 blended
Made for Gentlemen by Globe- Scotch whisky and showcases A first from Globe-Trotter, the

INTRODUCING CHIVAS 12 MADE FOR GENTLEMEN BY GLOBE-TROTTER...

27
FAMILY OFFICE ELITE
by Globe-Trotter Steamer Trunk is an original design
that will see proceeds of its sale donated to charity
The Princes Trust. It includes a beautifully crafted
mini bar with mirrored back for serving Chivas Regal
Scotch whisky. American white oak trimmed drawers
have been handmade to honour the oak casks
essential to Chivas Regal 12YOs rich complexity and
a hand engraved copper plaque made from a retired
Scotch whisky still assures its authenticity.

To be displayed from 5th October in Globe-Trotters


flagship store in Albemarle Street, London, the one-
o Chivas 12 Made for Gentlemen by Globe-Trotter
Steamer Trunk for The Princes Trust will retail at
12,000.

For further information:


www.chivas.com

Chivas 12 Made for Gentlemen Carry-On Case is a 20


inch trolley case that has been crafted to suit the needs
of the busy modern gentleman on short haul business
trips and city breaks. It can be stowed in the flight cabin
of all international airlines and features a customised
lining that elegantly intertwines a never-seen-before
Globe-Trotter archive design with the Chivas iconic
signifier. The sturdy, burgundy, vulcanised fibreboard
case also features wooden handles, brushed brass
hardware and an internal leather plaque to mark the
collaboration for posterity.

To showcase the true craftsmanship of Chivas Regal


and Globe-Trotter the Chivas 12 Made for Gentlemen

28
WWW.FAMILYOFFICEELITE.COM
US Congress Enacts Entirely New Tax
Examination and Collection Regime for
Partnerships and LLCs
Caplin & DrysdaleG
By By Charles M. Ruchelman

In recent years, the U.S. Internal Revenue Service


(IRS) and U.S. Congress recognized two important
divergent trends. While the use of pass-through
entities, such as partnerships and limited liability
companies (LLC), as business and profit-seeking
structures, was growing, the number of IRS
examinations of these entities was staying stagnant.
According to the IRSs own statistics, the percentage
of partnership and LLCs that were examined each
year for the past decade was less than one-half of
one percent. In 2015, the IRS examined only .51% of
the partnership and LLC tax returns that were filed. In
comparison, in 2015, the IRS examined over 11% of
all large corporate tax returns that were filed.

The IRS and the Congress appear to have laid the


blame for the low examination rate, and related lost Charles M. Ruchelman
tax revenue, to the complex procedures set forth Caplin & Drysdale
in the 1982 partnership examination laws, known
as TEFRA, the statute that originally enacted IRS with respect to the tax examination, litigation,
the unified partnership examination provisions and collection process. The Act repealed the
(TEFRA stands for the Tax Equity and Fiscal TEFRA partnership regime and replaced it with an
Responsibility Act of 1982). The inconsistent judicial entirely new set of rules. While the new regime has
interpretations of the TEFRA partnership rules, as well similarities to TEFRA, there are significant changes
as the agencys slow-moving enforcement and actual that will now require careful review and revisions to
implementation, demonstrated that these rules were certain tax provisions of partnership agreements. In
not appropriate for the changing partnership and LLC light of the new legislation, partnerships and partners
landscape. Accordingly, Congress made an important should now evaluate the current provisions of their
change in the law that all persons with partnership or partnership agreements and make fundamental
LLC interests should be aware of. changes to the tax procedure provisions.

Certain provisions of the Bipartisan Budget Act of Generally, the Act substantially changed (1) the ability
2015 (the Act) made fundamental changes to of the IRS to collect an underpayment of tax, penalty,
the rules by which partnerships, and entities that and interest from the partnership itself, (2) current
elect to be treated as partnerships for tax purposes partners exposure to tax liabilities of prior partners,
(e.g. limited liability companies), interact with the and (3) the powers entrusted in the partnerships

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FAMILY OFFICE ELITE MAGAZINE
designated liaison with the IRS (formerly known as the at the highest tax rate for the reviewed year. This
tax matters partner). Also, Congress provided the change in the law may require parties to consider or
Treasury Department with broad regulatory authority review indemnification provisions in the partnership
to implement the goals of the statutory revisions. agreement.
Therefore, partnerships should pay attention to the
issuance of new Treasury regulations in the coming III. Ways to Modify or Avoid Tax Collection at
months. Partnership Level: The imputed underpayment
collection process can be avoided or modified in one
Some of the statutory revisions that aect typical of three ways.
partnership agreements are as follows:
I. New Tax Terms and Concepts: The new regime 1. Elect Out on Timely Filed Return: First, if a
repeals well-known TEFRA terms (e.g., t tax matters partnership has no more than 100 partners and no
partner) and creates completely y new legal terms
term tnership (or an entity that has
partner is itself a partnership
and concepts including partnershipip representative, elect to be treated
elected reate as a partnership, like a limited
imputed underpayment, reviewed ewed year, and mpany), then
liability company), t n the partnership can make ana
adjustment year. To synchronize ze with the new annu opt-out election
annual ele on on a timely filed tax return.
Code requirements, these terms ms and concepts T preserve this option,
To o on, a partnership agreement
rship agreements.
should be incorporated into partnership agreements could be amended to t limit
mit the number of partners to
rship agreem
Reviewing and revising the partnership agreementsts 100 and to restrict the ability of other partnerships
cess if an
now will allow for an orderly process and when partnersh as a partner. If a partnership
to join the partnership
retur makes tax
the IRS examines a partnership tax return, elects out of the nenew regime, the partnership and
adjustments, and/or requires payments of additional exam ed under the rules applicable
partners will be examined
tax, penalties, and/or interest. urthermore,
Furthermore, taxpaye
to individual taxpayers.
ents will pr
revisions to the partnership agreements de
provide
ligations of the
clarification of the rights and obligations 2. Reviewed Year Partner
artner Pays Tax Wi With Current
partnership and the partners. Indiv ual Return:
Year Individual Retu with 45 days of
Second, within
receiving a notice of final partne
partnership adjustment,
II. Tax Underpayments To Be Collected from pa
any partnership, ess of size, may elect out of
regardless
Partnership: As under TEFRA, tax ax adjustments the imputed underpayment process so long as it
rtnership level.
will continue to be made at the partnership provides the IRS with a statement of each partners
However, unlike under TEFRA, unlesss a partnersh
partnership share of any adjustment to income, gain, loss,
is eligible to make an annual electionon and does,
do in deduction, or credit (as determined in the notice of
ributa
fact, make the election, the tax attributable to an final partnership adjustment). Under this procedure,
adjustment, and related interest and penalties, will reviewed year partners calculate their share of
be collected, subject to certain possible adjustments, additional tax due based on the statement described
at the partnership level. above (i.e., like an amended Schedule K-1) and the
reviewed year partners will pay the additional
When the IRS makes a tax adjustment, the amount with their respective current year individual
partnerships current partners (the adjustment year tax returns. An election under this provision, however,
partners) will eectively pay the tax for the partners increases the applicable underpayment interest rate
who were in place in the tax year for which the by two percentage points. The new statute requires
adjustment was made (the reviewed year partners). fast action by the partnership (i.e., 45 days) to perform
The tax to be paid is based on another new concept, computations and send the proper notices. Therefore,
a calculation called the imputed underpayment. a procedure should be put in place to accomplish this
Generally, the imputed underpayment is calculated procedural route.

30
WWW.FAMILYOFFICEELITE.COM
3. Modify Imputed Underpayment Where to settle a case or extend the statute of limitations
Reviewed Year Partner Files Amended Reviewed without approval from the other partners. This
Year Tax Return: Third, a partnership can reduce new statutory regime obviates the need of the IRS
the amount of the imputed underpayment if one to chase down each and every partner to sign a
or more of the reviewed year partners files an Form 870-PT (Agreement for Partnership Items and
amended return and pays attributable to the
ays the tax at Partnership Level Determinations as to Penalties,
adjustment allocable
adjust cabl too that partner. To implement
im Additions to Tax, and Additional Amounts) or sign a
this, the partnership
tnership must
ust submit information to the Form 906 (Closing Agreement On Final Determination
sucient to modify
IRS su modi the imputed underpayment Covering Specific Matters) in order to implement
Coverin
amount
a ount within 270 days ys of the notice of proposed examinations adjustments or a settlement. For
an examination
Verifying that an amended tax return
adjustment. Verifyin purposes, partnership agreements should
present purpos
has been filed by a reviewed
eviewed year partner may be revised tto reflect this new, critical designation. If
raise certain privacy concerns.
ncerns. A partnership thus there is no partnership designated representative,
establish a method that allows for
may wish to establi the Code gives the IRS the authority to designate
the implementation of o this alternative, rather than one. Certainly, partnerships and partners do not
undergo the imputed underpayment
nderpayment procedure. want to relinquish that selection right to the IRS.

IV.
IV Powerful New Partnership Representative:
artnership Repres These new rules apply to partnership tax years
The Code now mandates
ow man tes that the partnership beginning after December 31, 2017. However, a
designates a partnership p representative
represe instead partnership may elect to have the new rules apply
of a tax matters partner.
rtner. The partnership to partnership tax years beginning after the date
representative will have sole authority to act on
rep of enactment and before January 1, 2018. Given
behalf of the partnership and the partnership the many new legal terms and concepts, and the
and all partners shall be bound by actions taken potentially significant shift of the benefits and
by the partnership. Interestingly, this controlling burdens of post-adjustment tax items, existing
entity need not be a partner in the partnership. partnerships and partners should review and modify
Furthermore, the new rule significantly curtails the their partnership agreements. New partnership
ability of other partners to participate in an IRS agreements should accommodate the new
examination or litigation with the IRS. Therefore, partnership tax audit and collection regime.
partnership agreements may need to be adjusted to
provide contract rights to other partners that once Charles M. Ruchelman is a Member of Caplin &
existed as a statutory matter under TEFRA. For Drysdale, a Washington, D.C.-based law firm.
example, a partnership might consider whether the cruchelman@capdale.com / 202.862.7834
Partnership Representative has unbridled power

31
FAMILY OFFICE ELITE MAGAZINE

 
 
  
  


 
    

 


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BURGESS

BURGESS SILVER FAST


At 77 metres (252.6ft), SILVER FAST is the worlds largest and fastest aluminium motor yacht with conventional
propulsion. Her distinctive styling, with a sleek, streamlined hull and metallic silver livery was designed by
Espen ino. She is the fourth and most advanced vessel in the multiple award-winning Silver Series, whose
DNA is based on high calibre all-aluminium superyachts with fast, fuel-ecient credentials and long range
cruising capabilities.

SILVER FASTs remarkable performance was demonstrated last year on her 3,200 nautical mile maiden voyage
from Perth, Western Australia to Sri Lanka, which she completed at an average speed of 17 knots with fuel
consumption of only 400 litres per hour (106 US gallons per hour). Delivering a range of 4,500 nautical miles
at 18 knots, her powerful MTU engines can carry her to a top speed of 27 knots in optimum conditions, and her
long-range cruising speed is 20 to 22 knots. Proven for long ocean passages in all sea states, her slender hull
cuts through the waves with ease, and she is quiet and vibration-free for night-time passages at 18 to 20
knots. Quantum zero-speed stabilisers keep her equally comfortable at anchor. Her shallow draft of
2.6 metres (8.5 feet) makes her perfect for cruising the shoal waters of the Gulf, the Maldives, the
South Pacific and the Bahamas. SILVER FASTs airy, the contemporary interior was conceived
by Andreas Holnburger of Vain Interiors to be both fresh and luxurious. Teak paneling and
grey glass mirrors are complemented by innumerable custom finishes such as metallic
painted walls with leather steps on the central stairwell. Weight reduction is

33
FAMILY OFFICE ELITE MAGAZINE
achieved by the use of lightweight aircraft honeycomb construction. The main deck features panoramic views
from large picture windows and leads aft to the theatre room with huge plasma cinema screen. From there
you can head out into the winter garden a fantastic glass-screened, air conditioned space that allows for
flexible indoor/ outdoor dining whatever the weather. Wraparound sliding glass doors shield from wind and
rain without detracting from the view, while the mirrored ceiling adds light to the dining area below which can
seat up to 20 guests. The aft deck itself features comfortable raised lounge seating and a top-of-the-range
fully integrated 70,000 watt sound system.

The spacious sea level beach club on SILVER FAST has been expanded to allow for more gym equipment in
the comprehensive spa facility with customized sauna, hot steam room, massage room and beauty salon. On
the sun deck, the mirrored bar front converts into a TV to allow movies to be viewed from the glass-fronted
eight-person Jacuzzi.The innovative tender stowage area is accessed via forward gull wing doors and houses
two 7.4m (24.2ft) all-weather custom tenders. On the foredeck, the touch and go helipad is suitable for an
AgustaWestland AW109 or a Eurocopter EC135.

This ground-breaking superyacht is a real head-turner and oers speed, eciency and stylish luxury in equal
measure. - www.burgessyachts.com

34
WWW.FAMILYOFFICEELITE.COM
D&H OUR LATEST ARTICLE ON ANTIQUE WEAPONS

LAN

O
FROM FAMOUS LONDON GUNMAKER

LLAN
LONDON

OL
H D
A Tradition of Style, Adventure and Exclusivity..

EXPLORE THE WORLD OF ANTIQUE WEAPONS


HOLLAND & HOLLAND
EVER THOUGHT OF INVESTING IN ANTIQUE WEAPONS?
Learn what the expert gunmakers have to say!

Holland & Holland guns are and highly regarded London gun to delve into is classic sporting
celebrated throughout the world as
cele and rifle makers. Taken forward by shotguns and rifles. It is generally
the perfect combination
co of artistry his nephew, Henry,
He who became a recognised that the epitome and
and craftsmanship. To understand partner
p ner in 1867 (from then
t on the benchmark of excellent sporting
why, you need simply pick one up, company
co pany was known as Holland & guns and rifles that are produced
balance it in your hands, andd allow Holland),
H and), the company built a gun in the
t UK, so this is where our
your eyes to take in every
e ery detail of factory
fa ry in Kensal Green in 1898 search begins
begins. We must first take
its lines. which
w h has since been in continuous into consideration
considerati that condition is
use.
us key. Although
Althoug you may pay a little
Such an achievement
chievement does not more for something unique, totally
come into being by evolution
com To consider
nsider an antique or vintage original,
origi unaltered and in excellent
alone,
ne, even though Holland & weapons
we ons as an investment may not condition, you will not normally
land guns and rifles trace their
Holland be as daft as it would first seem.
seem not have a problem selling it
lineage b
backk to the year 1835. Its Like alll collectables, fashions come
c on. When looking for a good
other parent is cur
curiosity,
ty, the desire and goo so not everything is going investment, one likely to make
of the craftsman and gunm
gunmakerr to to be
b desirable all the t time. The reasonable return in the years to
see whether an improvement can rtainty is that, if carefully
one certainty come, the sound advice would
be made on accepted m methods. purchased,
sed, values
va never appear to to be to first look for something
The company was ffounded by go down but generally increase on with fairly standard specifications.
Harris Holland in LLondon in 1835 a regular basis of around 3 - 5% per By doing this it means that when
and by the turn of the 19th century year. There are many specific areas you come to sell you will appeal
had become
becom one of the best known of the market, but the most popular to a wider market, rather than

35
FAMILY OFFICE ELITE MAGAZINE
CONSIDERATIONS
1. Condition

2. Best gunmakers

3. Purchase price/future value

4. Enjoyment factor

just a few collectors. A second


consideration should perhaps be
the name. Holland & Holland, Boss
and Purdey will always command
a higher price as the original
standard of workmanship is higher
than the majority. However, a poor
condition best gun or rifle will not
hold or increase its value anything
like one in mint condition of a lesser
make. Your third consideration
must be what as an individual, are
you looking to achieve? If its just
pure investment then its down to
condition, originality and purchase
price, but to enjoy and make use of
the guns and rifles whilst you own
them, to me, is a bonus.

A great number of owners use


these collectables week after week
but take care to maintain their
condition. We must remember that
although considered antiques
these are working guns that were
made to be shot. It is not uncommon what others are showing interest having a bespoke gun made to
for someone to turn up to a shoot in. When looking at shotguns, a your measurements cannot be
with their one-hundred year old hammerless sidelock is popular, bettered. If its old you decide
Holland & Holland still in perfect but if you want a rifle, the big on every maker at various times
working order. So where should calibres are in demand. New or through time purports to be
we look to start with all this? Are Old? A very common question better than the next. The major
you a rifle or a shotgun man? Do indeed and something that splits advantage of buying old as an
you have a passion for old rather opinion, with some suggesting investment is that you can see an
than new? Maybe you like them they dont make them like they immediate return if you paid the
all. Decide what would benefit you used to. The plus side of buying right price. Remember to keep the
the most by looking what you can new is that the quality of todays following in mind, and you will not
use and enjoy, decide how much materials, manufacturing and go far wrong: 1.Condition, 2. Best
you wish to invest and then look craftsmanship is as high as it ever gunmakers, 3. Purchase price and
on the internet, at auction sites has been. The standard perceived future value and 4. Enjoyment
and in the shooting press to see gets better year after year and factor now.

36
WWW.SATOCONSULTANTS.COM
INVESTING IN FINE ART
Fine Art SPV: Buy and Hold VS Buy and Loan

Therefore, there are little running costs, no salaries,


no huge commissions and there can be attractive tax
incentives dependent on where the SPV is located.

The Buy and Hold SPV This is a rather simple process


and is predominantly utilized by the hard-core
investor as a vehicle to park funds for a long-term
period. The art that is owned by the Buy and Hold
SPV can be stored at a Free Port or another location,
home or oce until the investor then decides to sell.
Although this is horrifying prospect to most fine art
connoisseurs (individuals who reputedly have the
With the current instability in the world markets, more
ability to tell almost instinctively who painted a
and more Investors are paying attention to fine art as
picture), to your hardcore investor, its just business.
an asset class. Of course, one of the primary factors in
this sector, like any other, is conducting thorough due
We asked one art investor recently how he felt about
diligence on any art that may be under consideration.
the connoisseurs aversion to this Buy and Hold
process; he replied when the connoisseur saves up
One of the first issues in this process would be to
enough money, just like I have, then he can come back
ensure that the provenance and condition of fine art
and buy the art from me. Until then, Ill have if safely
must be right. If there is even the slightest of doubt
put away for them.
as to the validity of the provenance of any fine art, no
matter how attractive the painting looks, the obvious
Buy to Loan This is another option for investors to
conclusion is to pass on it. There are many other
consider, as investing in quality fine art and loaning
issues in relation to fine art that need to be addressed
it out to a reputable museum has some unique
as part of the due diligence processes; these may
advantages.
include taxes, export licensing, forensic examination
and so on.
This strategy also falls under the remit of Family
Oces, as investing in quality fine art, is in essence,
That said, investing in o-market Fine Art has a
preserving the wealth for the next generation. This
number of interesting advantages over traditional
may have a number of advantages, namely the
asset classes, as it is now proving to be a very
low costs associated with loaning it to established
attractive option for the wealthy. One way of
museums, this would be dependent on the terms and
achieving this is via a fine art SPV (Special Purpose
conditions of any loan agreement.
Vehicle) An SPV can be set up in most jurisdictions
and in a number of dierent ways, dependant on the
Should you need more information about acquiring
clients requirements. However, from an investors
fine art then please use the contact details below.
perspective, the SPV should be owned entirely by the
Investors.
DOMOS Fine Art

37
FAMILY OFFICE ELITE MAGAZINE
PULSE CINEMAS
Pushing the Boundaries of Home Cinema Style

From its humble beginnings in the late Seventies, a rack of Datasat processors and power amps; all
home movie viewing has come a long way. Not just driven by a Kaleidescape movie server?
with advances in audio and visual technology but
also with comfort and design. Even the home is The solution here, he explains is the super
no longer a restriction; youll see many a lavish covetable flex cinema set up, where a living space
private cinema on board yachts, in penthouse has a dual function and some serious wow-factor
suites or beside swimming pools. , at first, glance your beautiful living room oers
nothing more than a low-level Japanese dining
Since 2003, Pulse Cinemas have become the go-to table; cushions scattered around the floor and
consultants in the home cinema landscape. Pulse lighting that focuses the guests attention on the
supply inspiration and technical know-how in order gorgeous meal that has been served... Then, at
to push the boundaries in home cinema comfort, a touch of a button, like something from a Bond
sound and visual quality for their elite client base. movie, your beautiful living space becomes an
In Pulses book, there are no restrictions. Anything amazing cinema... Your Lutron lights dim, the
is possible; ideas are without limit. Home cinemas blinds silently fall from a slither in the ceiling,
are an interior design feature, and no detail is the hidden Runco projector and Screen drops into
overlooked. place and suddenly the generous Kaleidescape
oering of the latest blockbuster movies, in full
Use of space is important, Pulse CEO Mike Beatty HD quality, appears on screen for your guests to
insists , theres not a more fascinating experience choose from.
than spending the evening with friends and family
watching the latest blockbuster movie on your the Of course, whatever room the cinema is in,
big screen within your very own dedicated cinema. acoustics play a key role in the perfect set
But what if space doesnt allow for rows of Fortress up Cinema Acoustics oer a whole range of
Cinema chairs and a dedicated Screen Research acoustic panel treatments to improve the audio
screen, a projector shining from a darkened ceiling, performance of a room, explains Andy Jones,

39
FAMILY OFFICE ELITE MAGAZINE
Sales Director at Pulse , by using a combination server system. The newly available Encore
of absorption, diusion and bass control these product line allows movies to be purchased,
panels dramatically improve the listening backed up and saved to a cloud then watched
experience, increase immersion and reduce in 4K Ultra HD at any time. For the luxury cinema
listener fatigue. These acoustic panels are made environment, it seems, anything else would be
to order and can be customised with the clients inferior. Its the only choice for clients looking
own artwork or images, giving a completely for their cinema at home to recreate what the
bespoke solution. We have seen movie posters, director intended
family photos, artwork or even suede finishes
complete the room. With prices for a bespoke home, cinema
beginning at around 15K (and going up to
Sitting pretty? Pulse Cinemas insist that over million) another trend Pulse are quick to
the performance and quality of the seating highlight is that they are no longer the bastion
should match that of the technical equipment of the single male. Mike Beatty emphasises ,
and work closely with Californian company On the contrary, 95% of our dealers customers
Fortress to create stylish seating, right down are couples, choosing the cinema for the family
to the detail of the stitching. Whether your to enjoy. Home cinema is definitely no longer
penchant is for fringed red velvet reminiscent perceived as Dads toy; our business is to create
of a vintage theatre seat to a sleek leather finish beautiful cinema designs, and this includes
monogrammed with studs, Fortress chairs can choosing fabric for chairs, bespoke colour-
be created to diering back heights, reclining to schemes It is a family decision. People often
the angle of the customers choice. think home cinema is just for watching films, but
they are awesome for watching music events or
Another component that Pulse fully endorse is even playing console games.
the Kaleidescape system, which they describe
as THE high-performance movie and music www.pulsecinemas.com

40
WWW.FAMILYOFFICEELITE.COM
SHOWCASING THE AMAZING

1066 PIANOS

TRUSTED SUPPLIER OF THE WORLDS FINEST PIANOS FOR MORE THAN THREE GENERATIONS

Now in its third generation, even designed to be truly exceptional. In combine their many years of sound
today 1066 Pianos remains a the 1066 Workshops irreplaceable, expertise with the application
family-run business with a vision time-proven experience combines of scientific principles to truly
to carry forward its tradition, with computer-aided design exceptional eect.
craftsmanship and exceptional (CAD) to dramatic eect. True
technical knowledge from our craftsmanship meets state-of-the- Exquisitely tailored.
Cambridge workshops based in art design processes, and finely- As with a bespoke tailored suit,
England.With more than 10,000 honed cutting edges meet the your piano should be a perfect
square feet of space devoted very latest in laser technology. fit for you and you alone. It
to the line of work, The 1066 In brief: the wealth of our great should proverbially fuse with your
Pianos Workshops are among piano heritage combines with 21st fingers, becoming a part of you.
the few largest still in existence. century innovation to produce the Responding with fine alacrity to
Nowhere else in the world will very finest pianos in the world. your every whim. Likewise, the
you find such a unique variety piano should be able to express
of fine, handcrafted pianos. Finely attuned to perform. you through the roar of thunder,
Furthering our commitment to Our master technicians fulfil the or a light expression of joy and
quality, all work is carried out original designers vision with their laughter the piano should
at our family workshops by our outstanding ability, experience express your thoughts precisely as
Cambridge artisans, technicians and technical knowledge that you want them heard.
and craftsmen. enable the impressive dynamic
response for which a 1066 piano This is what is so uniquely special
Engineered to be exceptional. has become internationally about a 1066 piano. It is made
From initial concept through to renowned. They are the magicians especially for you.
their execution, a 1066 piano is of the 1066 Workshops, who www.1066pianos.com

41
FAMILY OFFICE ELITE MAGAZINE
A BESPOKE PIANO
pe d
r-
rm to e

How would you like your piano to look


fo 66 tun
10 ely

Whether you want a magnificent period


by fin

art case piece or a bespoke designer


piano, The 1066 Grand Hall we have an
outstanding selection of instruments to
choose from.

You can discuss your personal piano


na xce red

requirements. One of their experts will


l p-
tio e e ee

be delighted to talk through the options


b in
to eng

with you, whereabouts in your home it


will go, which size is ideal etc., and guide

you further along the path towards your


perfect piano.

1066 also specialise in sculpture


pianos, amazing sculptures with a fine
handcrafted acoustic piano inside each
one individually designed and bespoke
to be exactly as the client wants it.

A BESPOKE PIANO
AS YOU WANT IT

42
WWW.SATOCONSULTANTS.COM
43
FAMILY OFFICE ELITE MAGAZINE
The Bernie Mado Ponzi Scheme
WHISTELBLOWER FRANK CASEY
At least 339 hedge funds feeding victims from over 40 countries to Mado.

Bernard Mado was born on April wrong but because it went against that his fund had invested more
29, 1938, in Queens, New York. their ex-military ocers creed of than $300 million with a manager
He used $5,000 earned from Duty, Honour and Country. few people even knew was in this
a lifeguarding job to found his business. This manager demanded
investment company. Mado s Had the SEC been paying attention complete privacy, so much so that
built up his firm and before his to Casey and the team, investors anyone who admitted they have
incarceration, his estimated net would not have suered $Billions invested with him risked having
worth is $17 billion. He is the in losses. Casey said, If this fraud all their money returned but
former non-executive chairman grew large enough, it would bring his economic performance was
of the NASDAQ stock market and down the U.S. financial system and astonishing.
the mind behind the largest Ponzi the credibility of our regulatory
scheme in history. system. Regulators at the SEC, Unbelievable, month after
who were mostly attorneys, could month, no matter how the market
THE WHISTLEBLOWER never grasp or understand the performed, he made money using
Frank Casey is a former US Airborne fraud. The fraud succeeded not what is known as a split-strike
Ranger Infantry Captain with only because of the SECs but also conversion; Mado generated
39-years expertise in Corporate because a number of banks and 1% on the total investment per
Risk Management, Alternative wealth-managers were wilfully month like clockwork! Casey finally
Investments-Hedge Funds, Private blind, this in understandable as learned the name of the manager,
Equity, Business Development and there were making money from Bernie Mado. The same Bernie
Due Diligence. Frank Casey stresses Mado s feeder funds. While there Mado whose brokerage firm
transparency, liquidity, client are many victims of Bernie Mado s bearing his name is a well-known
control, and never compromising fraudulent activity, but there is market-maker and founder and the
absolute honesty in every another interesting story to this former Chairman of NASDAQ, one of
representation and execution. case, that of a small and secretive the most respected, even beloved,
group, who became known as The men on Wall Street.
The Mado case began thirteen Fox Hounds. For almost a decade,
years ago when Frank Casey and the Fox Hounds fought with the SEC Mado was also running one of
Harry Markopolos knew that to bring down Mado, supplying it the largest and arguably most
returns reported by investment with a mountain of evidence that successful money management
manager and broker Mado proved beyond doubt that Mado firms in the world. Casey is
were fraudulent. They set about was running his Ponzi scheme. impressed, but de la Villehuchet
documenting a case against Mado leads him to believe that if Rampart
using math and mosaic intelligence. Frank Casey, a Fox Hound member, can devise a similar strategy, it
They warned the SEC about Mado then an options specialist working could get a portion of Access $300
over and over again in the 8.5- at a firm named Rampart, was million investment. Casey returned
year period. Submission and after trying to convince pension funds to Rampart with financial data
submission fell on deaf ears, and to invest in a Rampart structured outlining Mado s strategy and
29-Red Flags ignored. Through financial product wrapping hedge showed it to Harry Markopolos, a
the SECs complacency Mado s funds to generate about 12% per Chartered Financial Analyst who
Ponzi Scheme was allowed to grow annum. Thierry de la Villehuchet, understood the choreography of
tenfold, to over $50 billion. Despite the co-founder and CEO of another numbers. Frank asked Harry to
these many setbacks, the group hedge funds specialist firm, Access create an investment product that
persisted, not only because it was International, explained to Casey could compete with Mado. Harry

44
WWW.SATOCONSULTANTS.COM
took a look at Mado s monthly returns, then looked at Early in 2001 Mike Ocrant an investigative reporter
Mados investment strategy, within five minutes he for the respected hedge fund journal Mar Hedge
said, This is a fraud. Maybe even a Ponzi scheme. And became the fourth member of this group and began
then it took him an additional four hours to prove that working on a story about Mado s secret investment
Mado was a complete fraud. fund. He couldnt believe what he found. Eventually,
he called Mado and requested an interview. Mado
As the team gathers more information about Mado, shocked him by suggesting he come right over to the
they realize there are only two possible ways Mado oce. He found Mado to be charming and direct, he
could be so successful: He was front running, meaning answered every question, and Ocrant left his oce
he was using information from his brokerage operation believing there had to be some mistake. Eventually
to illegally manipulate the market or secondly, he was his story about Mado s secret investment fund and
running possibly the largest Ponzi scheme in history. the questions that couldnt be answered ran in a
Most people who knew Bernie Mado would never Wall Street trade newspaper. It should have destroyed
have considered that Bernard Mado, a financial genius, Mado but no one even blinked. A week later, a much
a humanitarian, a man who contributed millions to more widely circulated Barrons picked up the story.
charity, could be a crook of epic proportions. In addition
to Frank Casey, Harry drew into the chase his protg, The team was certain this was the end of Mado. The
the equally intense Neil Chelo, a young member of articles raised too many questions and should have
several of the most prestigious financial organizations, brought down his empire. However, no one paid any
who sat directly across the desk from him at Rampart. attention to them. It was becoming clear that Bernie
The three colleagues began by gathering as much was too big to be brought down.
information about Mado s operation as possible.
The Fox Hounds began collecting as much information
The numbers continued to get bigger and bigger: as possible about Mado s money management
Seven-billion, Ten-billion. Incredibly, Bernie Mado business. Mado had warned his investors not to talk
was secretly running the largest hedge fund on Wall about the fund. For good reason, Harry had discovered:
Street. His business was completely unregulated.
Initially, Harry believed Mado was either front
running or engaged in a Ponzi scheme, but leaning
toward the latter theory. Neil and Frank werent so
sure, believing he was front-running order flow.
After all, who would believe such a highly respected
professional of Wall Street would be running a Ponzi
scheme. Finally, in May of 2000, the Team put together
their first submission to the SEC, a document outlining
the reasons Mado couldnt possibly be legitimate.
Among the twelve red flags listed that were in order
to be following this investment strategy Mado would
need to have access to about $7 billion in options
and he was supposedly trading his options on the
Chicago Board of Options exchange -- which had less
than $1 billion options available. Mado had up to
Seven billion of investors money in the strategy, and
he was growing larger by the day.

Whistleblower Frank Casey

45
FAMILY OFFICE ELITE MAGAZINE
MADOFF GUILTY OF 11 FELONY COUNTS
sentenced to 150 years in prison.

Mado was paying them far greater returns than any


other firm, returns far beyond what might be expected.

In 2002. Harry had finally created a product that could


generate returns that would rival Mado but with much
greater risk. Rampart and Access agreed jointly to market
the product and Harry went on a sales trip to Europe
with Thierry de la Villehuchet. They met with 20 private
banks, 14 of them admitted they had Mado, and each
of those 14 confidently explained to Harry that although
Mado was no longer accepting new money, they had
a special arrangement with him, and he accepted their
money, and only their money.

Later, Frank asked Thierry de la Villehuchet bluntly what


he would do when it was proven Mado was a fraud,
In 2009 Bernie Mado pleaded guilty
de la Villehuchet replied that it was impossible, he
to 11 felony counts securities fraud and
had done his due diligence, but admitted that if he was
was sentenced to 150 years in prison
wrong then he was a dead man. What was astonishing
to The Fox Hounds was the immense size of this scam. At
the 1999 investigation start, they estimated the fraud to
be as much as $5 billion, but what they learned caused
them to reassess that figure. Way upwards. Mado s
tentacles reached deeply into Europe and even South
America, and estimates of the fraud continued to grow
to $20, then $30 billion dollars. The team was tracking
30 Mado feeder funds. Only after Mado surrendered
was it revealed there were probably at least 339 hedge
funds feeding victims from over 40 countries to Mado.

During the next few years Harry, with the assistance


of his team, made four more submissions to the SEC,
eventually there would be a total of six, each one of
them carefully listing the reasons Bernie Mado was Charles Ponzi, was an Italian
running the largest Ponzi scheme in history. But no businessman and con artist in the U.S.
one would listen, and the scam imploded north of $50 and Canada, in the early 1920s he
Billion. In 2009, Mado pleaded guilty to 11-felony promised clients a 50% profit within 45
counts securities fraud and was sentenced to 150 years days, or 100-% profit within 90 days, In
in prison. reality, Ponzi was paying early investors
using the investments of later investors.
For More Information see Scam of the Century by This type of scheme is now known as a
CNBC, Frontlines The Mado Aair, No One Would Ponzi scheme. His scheme ran for over
Listen by Harry Markopolos-Wiley Publishing, the a year before it collapsed, costing his
Chasing Mado documentary available On Demand. investors $20 million.

46
WWW.SATOCONSULTANTS.COM
STAMP SOLD FOR $9M-5.6M
1856 -1cent Magenta $9.M - 5.6M Inverted Jenny below $3 Million

Mona Lisa of the stamp world

INVESTING IN STAMPS
RARE STAMPS COMMANDING HUGH SUMS AT AUCTION
Mona Lisa Stamp owned by convicted murderer John du Pont!
The worlds rarest stamp has sold left in circulation. The stamp has in a feature film, Foxcatcher, which
at auction for a record-breaking changed ownership over the years; is set to be released later this year.
$9.5 million (5.6million). The sale a 12-year-old Scottish schoolboy, John du Pont died in prison in
makes the extremely rare one-cent Louis Vernon Vaughan originally 2010, aged 72. The proceeds of the
postage stamp the most expensive found it in 1973, by, in a bundle of auction for the Magenta Stamp will
stamp to ever be sold. The Magenta family paperwork. To him, it was be divided, with 80% going to the
stamp measures 1 inch by 11/4 simply a new addition to his own family of du Ponts wrestling friend
inches and it bears the image of collection. Valentin Jordanov Dimitrov.
a ship with the former colony of
British Guianas motto, We give Experts describe it as The Mona Jane Blood, a collector and locator
and expect in return in Latin. The Lisa of the stamp world and it of fine and rare stamps said, This
image is in black on magenta paper. hasnt been displayed publicly is one of the very rare times that
since 1986. It was later owned such a valuable stamp becomes
The postmaster of British Guiana by John du Pont, the heir to the available for auction. This is a
created the rare stamp back in du Pont chemical empire, who great long term investment and we
1856 when a shipment of stamps was convicted of murdering the had a number of our own clients
was delayed from London. At the Olympic gold medal-winning who were bidding for the stamp at
time, it was one of three created wrestler David Schultz in 1997. the much-anticipated auction
and is thought to be the only one Steve Carrell is to portray Du Pont

47
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FAMILY OFFICE ELITE MAGAZINE
PHILATELIC
INVESTMENT
Investing in rare stamps, as with
any other investment, requires
a high degree of expertise. Rare
stamps are among the most
portable of tangible investments;
they take up little space but require Treskilling Yellow: U.S.Franklin Z-
careful storage as condition is one
of the most important factors in
determining the value of a stamp.
Other tangible investments
include art, antiques, precious
metals, rare coins and many others
that are all termed alternative
investments. Interest in stamps as
an investment tends to increase
when traditional investments are
not doing well, causing investors to
seek alternatives. The increasing
Penny Black: $5M Post Oce
age of the population in western
countries has also been credited
with the resurgence in interest in
JANE BLOOD Stamp Dealer:
stamps. Unlike stocks and shares,
Jane blood acts as an agent locating rare stamps says.
the majority of transactions in the
you really have to know what youre doing to be able
philatelic or stamp market take
to buy at right prices and realize a profit
place informally.

You have to know what perform better than cash in times latest auction has demonstrated
of high inflation. As a tangible and illustrates just how good an
youre doing to be able asset, a stamp cannot go out of investment in stamps or postal
to buy at the right prices. business like a company quoted history can be. Stamps purchased
on the stock market. Most stamps for investment do not normally
The market is certainly much are a relatively confidential have any special regulatory
smaller than the financial investment, unless bought at protection for the purchaser. In
markets, but it is not trivial a public auction; ownership is the United Kingdom, there is no
and has been estimated at 5 private and there is no public regulation of this area at all from
billion. Stamps can represent a register as there is for many the Financial Conduct Authority.
valuable diversification within a investments in equities. However, where investment is
wider portfolio. They are highly collective through a mutual fund,
portable stores of wealth and are Interest in stamp investment there may be some regulation
easily transported. Stamps are has increased significantly since of the activities of the fund,
not a financial asset and so may the sale of the Magenta, as this depending on where it is based.

48
WWW.SATOCONSULTANTS.COM
WWW.FAMILYOFFICEELITE.COM
PRESERVING AND PROTECTING
WEALTH AND REPUTATION

49
FAMILY OFFICE ELITE MAGAZINE
SATO Consultants is a global advisory firm that provides a comprehensive
service to a select clientele. SATO is particularly adept at assessing
potential vulnerabilities when dealing with the media or a media
crisis. In a fast-moving world of media and entertainment, our
clients need immediate results. SATO responds quickly with
innovative solutions to evaluate any internal or external
threats to our clients that may impact revenues and damage
reputations.
www.satoconsultants.com

MEDIA CRISIS PLANNING AND POLICIES


It is everyones worst nightmare: a POLICY DEVELOPMENT organization and key management,
media crisis that has snowballed out Developing an eective media crisis which will assist in identifying
of control and taken on a life of its policy will assist an organizations any potential sources of negative
own, posing a very real threat to an response to a media crisis. SATOs publicity.
organizations reputation. A hard- team of experienced consultants
earned reputation can be damaged can draw upon sector-specific RISK MITIGATION
by just one error of judgment that expertise to create an eective One can analyse identified risks
could cause irreparable damage to media management policy that by reviewing the probability of
an organisation or to an individual. will preserve an organizations negative press or bad publicity
What is the answer in such a reputation and address any issues occurring and the resulting
situation? that can lead to negative press. consequences such risks can pose
to an organisation and therefore
MEDIA CRISIS POLICY EVALUATION AND REVIEW plan eective damage limitation in
The answer may be a media crisis If an organisation is forward- a worst-case-scenario.
policy that would have specific thinking in its approach to
criteria in place to rapidly respond media management and has CONTINGENCY PLANNING
to negative media or bad press. a media management policy Robust contingency planning in
It is, therefore, critical to have a in place, SATO can conduct a media crisis is paramount for
media crisis policy in place, not an annual review, making the an organization to counterpoise
only to limit any potential damage necessary improvements and (suggest counteract) negative
but to counter any negative media recommendations as required. press. Such planning can provide
or press before a problem has time many benefits in terms of reducing
to escalate. RISK EVALUATION bad publicity and minimising
All organizations have an informed any potential damage to an
MEDIA MANAGEMENT understanding of risk; it is, organizations image. Where risks
It is also imperative to develop therefore, essential to evaluate an are not addressed, contingencies
media management plans and organizations risks from potential must be put in place instantly to
policies by identifying the key negative press or bad publicity. react to a media crisis and limit the
strengths and limitations within This evaluation would include impact posed to an organisation by
an organizations infrastructure. a complete review of the entire a hostile press.
This will assist in formulating an
eective strategy that is crucial in Protecting the wealth and the
dealing with the press and media
or a media crisis. reputation for the next generation

50
WWW.SATOCONSULTANTS.COM
LONDON ON WATER YACHT & BOAT SHOW
LONDON YACHT,JET & PRESTIGE CAR SHOW

These exciting events are running with...

PRESTIGE LONDON
THE INSIDE TRACK
Located at Old Billingsgate, a 6th May 2016) will display and exclusively showing visitors the
g visito
prestigious Thames-side exhibition present companies from around latest yachts launched
ed and a wide
centre, and at St. Katharine Docks, the world that create the globes variety of designs of the future.
Londons premier marina village, most exclusive luxury items.
more than 120 exhibitors and One of the most eagerly
gerly awaited
6,000 visitors attended the first London is arguably one of the most features of the event will
London Yacht, Jet & Prestige Car important international market undoubtedly be the supercar and
Show in April 2015. for superyacht and luxury yacht prestige car grid. Building
lding on the
builders, being home to more fantastic display of cars at T The
Following this success the show than twice as many billionaires London Yacht, Jet & Prestige
Prest e Car
has been developed into three very and millionaires than any other Show 2015, this years event ent will
special events by joining forces city in the world. One of the present several superb cars rs and
with Prestige London, showcasing major attractions of this event is specialist car dealers, s, including
includin
Londons premier luxury goods and the participation of many of the McClaren, Noble, Tesla la Mansory
services and London on Water, worlds top superyacht builders: and for the first time Ferrari and
an exclusive on-water yacht and Nobiskrug, Lrssen, Blohm + Voss, Lamborghini. Possibly the most
boat show located at St Katharine Amels, Abeking and Rasmussen, special car at the event will be the
Docks. Designed to appeal to Azimut Benetti, Pendennis ultra-exclusive Ferrari LaFerrari,
aFerrari, the
those who enjoy the finer things Shipyards, Sunrise Yachts, Princess, fastest road-going car everver built by
in life, Prestige London and The Sunseeker London, Westport the famous Italian brand. Alongside
London Yacht, Jet & Prestige Car Yachts, Spirit Yachts, Fincantieri, this, a selection of the worlds to top
Show held at Old Billingsgate (4- plus many more. Some will be private jet and helicopter er dealers
de

51
FAMILY OFFICE ELITE MAGAZINE
and charter agents are exhibiting
at Old Billingsgate. Leading names
such as NetJets, Xclusive Jet and
Sikorsky helicopters will be on
hand to discuss your airborne
travel requirements.

As well as yachts, jets & cars,


connoisseurs of luxury goods and
services will also be in for a treat.
The Prestige London element of
the show features an exclusive
presentation of companies
engaged in interior design, luxury
furnishings, fine art and sculpture,
exclusive audio visual technology,
fine watches, jewellery, objets dart
and fashion. If you are thinking of
talks on luxury asset acquisition, & Prestige Car Show, London On-
investing in London property come
focusing on the three themes of Water (4th-7t May 2016) will
and see the experts exhibiting at
air, land and sea, will be held from present the UKs leading marques
the show, such as Harrods Estates,
4th 6th May at Old Billingsgate. of luxury sail and power boats
who can advise you where and
Created for superyacht owners with several choosing the show
when to invest.
and high net worth individuals, to premiere new boats for 2016
the seminars will be hosted such as the extraordinary Glider
Visitors will also exclusively be
by The Superyacht Owner and SS18 and the superb Discovery
able to view highly sought after
Superyacht Buyer, and organised 58. Britains major luxury yachting
collectors items from our event
by Superyacht Events. brands such as Sunseeker,
sponsors Ulysse Nardin and
Princess, Fairline and Spirit Yachts
Senturion
turion With entertainment and
The summit will take place over among others, are all supporting
cclient
nt networking an iimportant
three consecutive mornings and and displaying yachts at this event.
factor
fa or of the inaugural London
will focus on the problems and Located just a short walk from
Yacht,
Ya t, Jet and Prestige Car Show
pitfalls of owning, buying and Old Billingsgate at St Katharine
and Prestige London, the 2016
an
managing lux luxury assets. Each Docks next to Tower Bridge, this
eventt will display enhanced
ev
day will con
concentrate on a specific wonderful display of yachts and
facilities
fac ties to accommodate this.
commod
commodity; private jets, property boats is rapidly developing its
Featuring
Fe ring a VIP sponsor lounge,
and superyachts respectively. place on the calendar as Londons
private
pri e meeting and function
With a targeted audience of largest and most prestigious On-
rooms,
roo s, plus champagne, seafood
industry stakeholders and a Water Yacht & Boat Show.
and sushiushi bars overlooking th the
chance to engage with leading
River Thames, Old Billingsg
Riv Billingsgate is
panelists from the luxury industry Show tickets for all three events
the perfect meet clients,
rfect venue to me
during daily Q&A sessions, the are now available to purchase
friendss or simply en
frie enjoy a day out
event is sure to be an unrivalled online with up to 30% discount
shroud in luxury. Designer fashion
networking opportunity for o the on-the-door price. Visit
shows will add even more to
anyone involved in the purchasing www.prestigelondon.org (general
this unique occasion, with three
of luxury assets. ticket price covers access to all
evenings of fashion shows planned
three events).
in association with Fashion TV. In
Running along side Prestige
partnership with The Superyacht
London & The London Yacht, Jet
Group, a cutting-edge series of

52
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M

53
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FAMILY OFFICE ELITE MAGAZINE


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WORLDS FIRST PASSENGER CAR WITH HIGHEST LEVEL PROTECTION

MAYBACH S600 GUARD


The special-protection version of the Mercedes- the Maybach S-Class remains mobile during and after
Maybach is the first vehicle to be certified with the an attack and is, therefore, able to exit the danger
highest ballistic protection level VR10 for civilian zone.
vehicles. These guidelines specify that the bodywork The new Mercedes-Maybach S 600 Guard has been
and windows must be able to withstand hardened ocially certified by the Ballistics Authority in Ulm;
steel core bullets fired from an assault rifle. When it for the first time, it meets the requirements for VR10
comes to blast protection in accordance with Directive protection rating according to Directive BRV 2009
ERV 2010, too, the Mercedes-Maybach S 600 Guard Version 2 (Bullet Resistant Vehicles). These guidelines
leads the luxury class. With the new record, the specify that the bodywork and windows must be able
Mercedes-Maybach emphasises its exclusive position to withstand hardened steel core bullets fired from
as a Mercedes-Benz flagship in terms of occupant an assault rifle. The vehicle also has an ERV 2010
protection, too. The price of the Mercedes-Maybach S rating (Explosive Resistant Vehicles). The test criteria
600 Guard is 470,000 plus VAT. used to determine this rating are not in the public
domain. After inspection by Germanys Federal Oce
The Mercedes-Maybach S-Class fuses the perfection of Criminal Investigation, the vehicle was approved
of the Mercedes-Benz S-Class with the exclusivity of without any constraints.
Maybach. At 5453 mm long and with a wheelbase of
3365 mm, the flagship of the Mercedes-Benz model The Guard principle: sophisticated integration of all
range is 20 cm larger in both dimensions than the protective elements
S-Class Saloon with a long wheelbase. Rear passengers The armouring of the Mercedes-Maybach S 600 Guard
benefit from this increased size, as well as from follows the principle of integrated protection based on
standard equipment that includes executive seats on many years of Mercedes-Benz experience in building
both left and right and other exclusive details such as special-protection vehicles. The key advantages are:
innovative voice amplification. Outstanding strength and stability thanks to
specific reinforcement of the base structure which is
Heads of state and business leaders en route have integrated into the bodyshell production stage.
never been as comfortable and simultaneously as well The high level of comfort is maintained by
protected as they are in the new Mercedes-Maybach sophisticated integration and intelligent overlapping
S 600 Guard. The armoured version of the Mercedes of all protective elements.
flagship delivers the highest levels of ballistic and Already at the bodyshell stage, protective components
blast protection available for non-military vehicles, of special steel are integrated into the cavities between
at the same time oering unsurpassed standards the body structure and the outer skin. Special aramid
of spaciousness, ride comfort and luxury on-board and PE components help ensure the protection
features. The rear seats have been repositioned oered by the vehicle. Intelligent overlapping
further back, adding to the sense of privacy. systems at particularly critical points, such
as material transitions and interstices,
Part of the protection concept is that it takes a very provide comprehensive ballistic
keen eye to distinguish the armoured version of the protection.
Maybach from its series-produced counterpart. A
series of special technical features also ensures that The windows are a

55
FAMILY OFFICE ELITE MAGAZINE
fixed and essential part of the protective elements, 2014, was the first vehicle to be fully certified with
and particular attention was paid to selecting the the highest ballistic protection level VR9 (according
appropriate materials and thicknesses. The windows to BRV 2009, version 2). When it comes to protection
are coated with polycarbonate on the inside for against explosives, the S-Class proved its capability
splinter protection, and have outstanding visual by fulfilling the requirements of ERV 2010 (roof,
characteristics, despite their laminated structure. floor, sides) and Germanys Federal Oce of Criminal
Investigation.
The interaction between all the components provides
the occupants with a highly eective protective Experience: Mercedes-Benz has been building
space which not only includes ballistic protection, special-protection vehicles for over 85 years. It
but also comprehensive protection against explosive started way back with the 1928 Nrburg 460 model
devices. In the event of an explosive charge when Daimler-Benz became the first company to
detonating at the side of the vehicle, the armouring begin factory-fitting saloons with special protective
protects the occupants as eectively as it does in features to shield the occupants from gunshots and
an assault with explosives beneath the vehicle: the explosives. Mercedes-Benz also developed specially
new underbody armouring, already tried and tested protected variants of subsequent luxury-class and
in the S-Class, entirely covers the underbody under prestige vehicles such as the Grand Mercedes
the occupant compartment, a unique feature in the 770 and the 500 model. Emperor Hirohito of Japan
civilian special-protection segment. personally selected an armoured Grand Mercedes
as his ocial car. Today the vehicle, delivered in
The Guard family: special protection ex-factory 1935, can be seen in the Mercedes-Benz Museum in
In addition to the new Mercedes-Maybach S 600, Untertrkheim.
the Mercedes-Benz Guard range currently includes
S-Class, G-Class and GLE models. With special- Many politicians and heads of state followed the
protection vehicles in six model series, Mercedes- emperors example and entrusted their safety
Benz oers a more extensive range of special- and security to Mercedes-Benz special-protection
protection vehicles than any other manufacturer. vehicles. From 1965 onwards Mercedes-Benz
As in the case of series-produced models, the full oered numerous models with special protection. In
manufacturers warranty also applies to the models addition to the legendary Mercedes-Benz 600 Saloon
in the Guard family. All the Mercedes-Benz service and Pullman Saloon models, in the 1970s and 1980s,
outlets worldwide are also able to service, maintain the range included the 280 SEL 3.5 and V8 S-Class
or carry out any necessary repairs to the Guard models, the 350 SE/SEL and 450 SE/SEL as well as
models. the 380 SE/SEL to 560 SEL. Since 1979, Mercedes-
Mercedes-Benz G 500 Guard: The G 500 Guard is Benz has also been building G-Class models with
equipped with a protective systems.
5.5-litre V8 engine and highest protection to VR7
(according to BRV 2009).
Mercedes-Benz GLE Guard: Available as GLE 350
d 4MATIC and as GLE 500 4MATIC. As a special-
protection vehicle, the GLE Guard meets all
requirements of protection levels VR4 or VR6
(according to BRV 2009) and ERV 2010.
Mercedes-Benz S-Class Guard: Available as an
eight-cylinder (long-wheelbase S 500) and as a
twelve-cylinder (long-wheelbase S 600). The special-
protection version of the new S-Class, presented in

56
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Jan van Bueren
& Thomas Ming

MULTI-FAMILY OFFICE SELECTION


ON
by Jan van Bueren & Thomas Ming
Family oces are in fashion. A growing number of a relatively small number of people le use family oces,
wealthy families are considering the use of a multi- it is not an easy task for a family to
o find and select the
family oce, and an ever-increasing number of most suitable provider. That said, as a familys wealt
wealth
companies are starting to oer family oce services. and future well-being strongly depend pend on the cchoice
oice
of the right provider, the selection n process should
ould be
A family oce is a company that supports wealthy taken very seriously.
families with the management, organisation and
maintenance of their wealth. Although there is no NO TWO MULTI-FAMILY OFFICES ARE THE SAME
set minimum, the use of a multi-family oce (MFO) Within the MFO universe there is no one size si fits all
is mostly considered by families with wealth above solution for every family. Most MFOss oer tailor-made
twenty-five million US dollars. As wealth keeps and completely incomparable services. ices. Some of the
increasing worldwide, the rise of the family oce providers are specialised in philanthropic
nthropic or wealth
model is a natural development: beyond a certain planning services whilst others focuss more on lifestyle
amount of wealth, (financial) needs grow beyond pure management or administrative services vices in order to
private banking services, and complementing typical improve the familys quality of life. This
his dierent angle
banking services with those oered by MFOs makes is often related to the origin of the family oce and
sense. Where most (private) banks advertise, are well- the experience/background of its founders; indeed,
recognised and have oces on the high street of whether the founder is a lawyer or a for former banker
cities such as Zurich, London, New York and Singapore, will significantly impact the scope of his/her oering.
most MFOs are defined by their discretion. Also, as only Even when MFOs mainly oer asset management

57
FAMILY OFFICE ELITE MAGAZINE
services, significant dierences may occur between the into its financial situation, for example by oering
providers. There can, for example, be a focus on certain consolidated reporting and acting as the central point
types of investment, on pure asset allocation or on of contact with banks, or it can act as the coordinator
reporting and consolidation services. The type of client of external advisors like trustees, lawyers, tax advisors
focused on, the size of the familys wealth or the region and real estate agents. But it may also specialise in
out of which clients are serviced may also vary widely more practical and operational support, coordinating
from one provider to another. household sta, acting as a private secretary and
making travel arrangements for the family.
An additional reason MFOs are so diverse is the fact
that, with the exception of the United States and TAKING THE PROCESS SERIOUSLY
Luxembourg, they are not regulated in most jurisdictions It is advisable to visit and analyse several providers
even though the asset management component of before choosing an MFO. Which questions to ask when
their activities is usually regulated by the financial visiting dierent providers, what type of MFOs exist
supervisory authorities. As MFO services are oered to and what type of services they oer is important
the public without a licensing procedure, the result is a information that can take time to gather.
very dierent oering with respect to both the actual
services provided and the quality of those services. Where the primary motivation for a family in searching
for an MFO is that they no longer want to deal with
HOW TO SELECT A MULTI-FAMILY OFFICE numerous banks and a large number of (financial)
The preservation and protection of wealth are often intermediaries themselves, our experience has shown
the main drivers behind the use of family oce that families often do not know their own needs that
services. This is why the location of the actual oce well, or are not aware of what kind of services are
should lie at the heart of the selection process. An oered by dierent MFOs. They, therefore, struggle
MFO should preferably be located in a politically and to find the right fit, i.e. the appropriate MFO that will
fi nancially stable jurisdiction such as Switzerland, the
financially oer them the best-suited services.
United Kingdom or Luxembourg, in order to safeguard
the
he wealth and wellbeing of the family under all As the MFO market is far from transparent and it is
circumstances.
ircumstances. A family oce which is located in the not easy to compare dierent providers, families
home
ome country of the family can seem like the right fit, often start their search by being referred by friends
but
ut might also turn out to be the Achilles heel of
o the to the MFO they are using. Here it is often forgotten
whole
hole set-up at precisely the moment when stability that dierent families have dierent goals and needs
and
nd protection are what the family needs. In practice, for MFO services, and that one size fits all does not
it is this kind of consideration which is often overseen exist in the MFO industry. Also, as for the choice of a
or ignored by families, either because
bec they have not private banker, the connection one has with the MFO
beenen properly advised or because
becau they simply consider sta is crucially important, as they become a part of the
a set-up
et-up in their home country
coun as being more practical. familys life and usually remain in place for generations.
If only for this reason it is advisable to visit and analyse
WHATAT AND WHY? several providers before deciding which MFO provides
Apart
art from location,
lo the type of services sought by the better match.
the family (what) is another important factor to take
into account
a during the selection process, as most FOSS Family Oce Services Switzerland (FOSS),
MFOs tend to focus on a specific selection of services, is part of the wealth planning services of Union
rather than on a wide array of them. As most providers Bancaire Prive, UBP SA in Switzerland. FOSS is
cannot be compared in any way, it is also important a web platform developed by Jan van Bueren
that the family stakeholders establish which goals they & Thomas Ming specifically to support families
actually seek to fulfil by hiring a family oce (why). with the selection of a multi-family oce.
A family oce may focus on giving the family insight
www.switzerland-family-oce.com

58
WWW.SATOCONSULTANTS.COM
READ THE LATEST ARTICLE ON LUXURY CHALETS
LAVISH FACILITIES
SPECIAL PERMISSIONS FOR RE-DISTRIBUTING THIS ARTICLE ARE NEEDED, CONTACT US

The exciting world of skiing...

LUXURY CHALET
A SKI AREA OF 600KM
When Ultimate Luxury Chalets spaces. In Courchevel, for example, pristine piste maintenance,
ce, a vast
first launched in 2005, a luxury the previous top dog in terms of ski area, covering approx.x. 600km
ski chalet could be classified as size was the vast Chalet Edelweiss of runs, a huge choice of pistes
such if the property had fully en- at 3,000m. This season sees the oering great skiing for alll abilities
suite bedrooms. Nowadays, there introduction of the Chalet Apopka, and with plenty of opportunities
nities for
are whole new benchmarks being a chalet that will span 4,000m beginners and early intermediates
mediates
set season after season that now and includes a 26m swimming to learn or to master their parallel
provide guests of the most sought pool, an additional indoor/ turns. Couple these ski related
after luxury ski resorts in the outdoor swimming pool to the pluses with the fact that thehe Three
Th e
Alps with a whole new level of master bedroom, and a plethora Valleys is now home to 12 Michelin elin
sumptuousness. Private swimming of facilities even including a golf starred restaurants, and shopping
opp
pools, hot tubs, massage and driving range! Things just got silly!! boutiques in Courchevel oer all
wellness centres, and extravagant of the latest ranges from Fendi,
home cinemas are now a standard Although some international Gucci, Chanel, Bognor, Moncler ler and
wish list inclusion of our discerning markets are down in their touristic many more, it is easy to see ee why
clients. It seems that in the key visits of resorts such as Courchevel, Courchevel remains the No.. 1 ski
resorts of Courchevel, Megeve, Val particularly on the Russian side, destination in many peopless eyes.
dIsere, Verbier and Zermatt, new there is a new wave of visitors
chalets are popping up each year with a huge demand for the resort When discussing the best properties
perties
that simply try to out-do the older coming from the United Arab available to rent in Courchevel,
hevel,
chalets by oering more lavish Emirates and South America. The we would, without doubt, have hav
facilities and much larger living lure of Courchevel is obvious.. to include the aforementioned

59
FAMILY OFFICE ELITE MAGAZINE
Chalet Edelweiss, spread over six
levels and with eight luxuriously
appointed bedrooms. The chalet
has a huge area dedicated to
wellness with a 13m pool, hot
tub, sauna, Jacuzzi and a superbly
equipped gym. For those that like
to entertain or simply want to carry
on partying after the nightclubs in
a resort close their doors for the
night, there is even an in-house
personal nightclub with DJ booth!

A personal favourite has to be the


Chalet White Dream. Immaculately
finished and white washed, the
chalet gives o an aura that
encourages you to believe that you
and to establish themselves as of Megeve. It spans 1,350m of
are staying in a fairytale chalet,
the coolest chalet for clients to living space and sleeps up to 26
tucked away in your own winter
be wowed. The Chalet No 14 is guests in unrestrained luxury. As
wonderland. Its not the largest or
one of the undoubted contenders with all of the top-end chalets
the grandest chalet in Courchevel,
for this mantle, equipped with 13 the obvious inclusions are the
but it oers a charming location for
bedrooms sleeping a total of 26 indoor swimming pool, hot tub,
its guests to enjoy a celebration or
guests. The chalet is, as standard, steam room, private nightclub and
gathering of friends and family in
equipped with a 10m indoor pool, cinema. The chalets attention to
the mountains.
a wonderfully cosy cinema, indoor detail is impeccable, and it is most
and outdoor hot tubs, and oering definitely one of my top 10 chalets
Verbier iss home to som
some stunning
a team of 16 dedicated sta who in our ever-expanding collection.
ski
ki chalets,
cha ts, with the largest on th
the
will wait on the guests and address
rental market
arket being the Chalet
their eve
every whim. The Chalet Ma Datcha holds a
True Blanche,
nche, spanning 3,000m.
location that is very hard to find
The chalet
ch et has not one, but nine
Then comes the choice
c of those and impossible to beat in Megeve.
treatment rooms dedicated to
treatm
looking for a more discreet Being a freestanding chalet
pampering
pampe g the 18 guests that
location, one of the most sleeping up to 14 people in 7
it can occupy. Chalet True
charmin
charming and authentic ski resorts bedrooms, the chalet is situated
Blanches entertainment on oer
Blanche
in the Alps, where fine dining just a short stroll from the centre
is so vast
va that you will struggle to
and boutique shopping are in of Megeve and the central lift
comprehend
compre nd finding the time to
abundance, and with a refined station of Rochebrune. The chalet
head out
ou onto the mountain. The T
elegance that captivates its has a picture postcard outdoor
chalet features
f ures a state-of-the-art
state-of-t
visitors. We are talking obviously swimming pool with neighbouring
private
vate cinema,
ema, a sushi and vodka
about the resort of Megeve, just hot tub on the vast terrace. Inside,
bar, chic private
rivate nightclub,
n pool
an hours transfer from Geneva it oozes sophisticated luxury, yet
table, an impressive
mpre wine cellar
airport. with a very traditionally styled
and a huge private gymnasium.
dcor.
As Verbier is such a desired
Opulence is situated on the
corporate destination, over recent
legendary Rothschild hillside of For further information
years there has been a significant
Mont dArbois with stunning views Ultimate Luxury Chalets
increase in properties set up to
of the surrounding mountains T +44 (0) 1202 203650
cater for these company groups

60
WWW.FAMILYOFFICEELITE.COM
SAFRA FOUNDATION MAKES
DONATION TO CLINATEC
Edmond J. Safra Foundation

The Edmond J. Safra Foundation makes a new major


donation to Clinatec. The foundation will match each
euro donated to Clinatec, up to 5 million, through the
end of its eight-month fundraising campaign

Mrs. Lily Safra, Chairwoman of the Edmond J. Safra


Foundation, recently announced a major matching grant
donation to Clinatec, the pioneering biomedical research
center. The Foundation will match every donation given
to Clinatec, euro for euro, up to a total of 5 million euros.

The objective is for Clinatec to raise 10 million euros


in its fundraising campaign. The matching grant
challenge is open to all: philanthropists, corporate
sponsors, foundations or individual donors. Proceeds
will be used for medical research projects at Clinatec
on neurodegenerative diseases, motor disabilities and
cancer.

As one of the founding donors of Clinatec, the


Edmond J. Safra Foundations 5-million euro donation
demonstrates its continuing commitment to this leading Mrs. Lily Safra signing the visitors book at the
research center, co-founded by Professor Alim-Louis Mmorial de la Shoah (the Holocaust Memo-
Benabid and Jean Therme, Director of Technological rial) in Paris, with former Minister Simone Veil
Research at the CEA (the French Alternative Energies in the background. The Edmond J. Safra Edu-
and Atomic Energy Commission). cation Institute at the Mmorial de la Shoah
organizes programming for the 30,000 young
Clinatec, the Edmond J. Safra Biomedical Research people who visit with their school classes each
Center, is a unique research facility utilizing the year, as well as groups of police ocers, health
latest technologies micro- and nanotechnologies care professionals, army ocers, and elected
and electronics to treat patients. At the heart of the ocials.
research and development center is a hospital service
that includes a surgical unit and laboratories. today: a unique place where research is entirely
devoted to patients well-being. Mrs. Lily Safra
The multidisciplinary team comprises more than a commented: Three years have already passed
hundred doctors and biologists, as well as scientists from since we had the privilege to inaugurate Clinatec,
the CEA, Inserm, the Grenoble Hospital and the Joseph the Edmond J. Safra Biomedical Research Center. In
Fourier University, all under the leadership of Professor this short period of time, the Center has reached
Benabid. Professor Benabid thanked the Foundation and all of its objectives, and in a remarkable way. I am
Mrs. Safra, for their renewed commitment: Once again, delighted to provide renewed support for Clinatec
it is a great honour and demonstration of confidence through this additional 5 million gift. Professor
of Mrs. Lily Safra, for our past and upcoming research. Benabid and his colleagues represent hope for
You have been part of the Clinatec project from the millions of patients and their families. I know my
start. Thanks to you, Clinatec has become what it is husband would have been proud to be associated

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FAMILY OFFICE ELITE MAGAZINE
with their eorts. Professor Benabids findings in the Safra Foundation draws continuing inspiration from
area of Parkinsons disease have earned him several its founders life and values and supports hundreds
prestigious prizes and international recognition, of organizations in over 40 countries around the
including the 2014 Lasker-Debakey award. Professor world. Its work encompasses four areas: Education;
Benabid has notably initiated the development Science and Medicine; Religion; and Humanitarian
of high-frequency deep-brain stimulation of the Assistance, Culture, and Social Welfare. Clinatec
subthalamic nucleus, a surgical technique that The Edmond J. Safra Biomedical Research Center
decreases tremors and restores motor functions in teams of medical doctors, biologists, mathematicians,
patients with Parkinsons disease at an advanced engineers and other specialists bring a unique,
stage. More than 150,000 people in the world have multi-disciplinary approach to diagnosis and
already benefited from this treatment. treatment of neurodegenerative diseases cancer and
motor disabilities, and development of innovative
biomedical devices to improve patient lives. The
teams comprise personnel from the Grenoble
University Hospital Centre, CEA, Universit Joseph
Fourier and Inserm.

Clinatecs current projects include:


Adapting a brain-computer interface to an exoskeleton
system to provide mobility to quadriplegics. Clinatec
teams already have demonstrated the feasibility
of controlling equipment attached to the body and
connected to the human cortex. This project awaits
human trials.

The start of clinical trials for the Near Infrared


Radiation (NIR) project, which is investigating the
progress of Parkinsons disease through the neuro-
protective eect of near infrared light. When applied
to the precise spot in the brain where PD and other
diseases cause irreversible damage, near-infrared
radiation can prevent damage. By protecting the
neurons, this process could avoid the gradual
degradation of the patients faculties and the major
disabilities that follow. An intracranial NIR system is
Mrs. Lily Safra visits the Edmond and Lily Safra currently under development.
Childrens Hospital in Tel Hashomer, outside Tel
Aviv, one of the leading childrens hospitals in the The fundraising campaign is led by Alain Mrieux,
Middle East. Over the past decade the Edmond and chairman of Institut Merieux, an international
Lily Safra Childrens Hospital has developed from medicine and public health concern focused on
a small pediatric medical division into a unique diagnostics, immunotherapy and nutrition. Since
and well-regarded tertiary medical service, treat- its beginning, the Mrieux Institute has worked on
ing children from Israel, the Palestinian Authority, developing biology and innovative medicine that is
and throughout the region. accessible to all. This is an ambition we share with
Clinatec, one of the worlds most unique research
centers, Mrieux said. Together with Clinatec, we are
Edmond J. Safra, one of the 20th centurys most taking part in the fight against diseases that can aect
accomplished bankers and a devoted philanthropist, all of us, and by supporting Clinatec, we are joining a
established a major philanthropic foundation to great scientific, medical and human initiative.
ensure that needy individuals and organizations
would continue to receive his assistance and
encouragement for many years to come. Under the
www.edmondjsafra.org
chairmanship of his beloved wife, Lily, the Edmond J.

62
WWW.FAMILYOFFICEELITE.COM
GULFSTREAM
MANUFACTURES
100TH G650
HIGH SPEED CRUISE Mach 0.90 / 956km/h
RANGE 7,500nm / 13,890 kn/h
G650 DATA
Gulfstream Aerospace Corp. announced recently that it has
PERFORMANCE manufactured the 100th G650. The ultra-long-range business jet was
Range - 7,500nm.13,890km delivered to the customer on Nov. 14, 2014.
Crusie Speed-Mach 0.85
High Speed Crusie-Mach0.90 The production of the 100th G650 is a testament to the demand for
Takeo Distance 6,299 feet this incredible aircraft, said Larry Flynn, president, Gulfstream. It truly
Initial Cruise alt 41,000 ft set a new world standard for performance, range, speed, safety and
Max Crusie Alt 51,000 ft comfort when it entered service in December 2012.

WEIGHTS The aircraft was certified by the Federal Aviation Administration on


Max Takeo Weight 103,000lb September 7, 2012, and by the European Aviation Safety Agency on
Max Landing Weight 83,500lb December 21, 2012. The aircraft can fly near the speed of sound, with
Max Zero Fuel weight 69,500lb a maximum speed of Mach 0.925. It has a range of 6,000 nautical
Basic operating weight 54,000lb miles/11,112 kilometers at Mach 0.90 or 7,000 nm/12,964 km at Mach
Max Payload 6,500 lb 0.85. It can connect passengers nonstop from London to Los Angeles
Payload & Max fuel 1,800 lb and Beijing to New York.
Max Fuel Weight 48,200lb
Since it entered service, the G650 has proven it is a performance
ENGINES leader, said Scott Neal, senior vice president, Worldwide Sales and
Two Rolls Royce BR725 A1-12 Marketing, Gulfstream. The G650 has claimed 42 speed records and
secured an around-the-world speed record. Its more fuel-ecient than
AVIONICS many other aircraft, oers customers one of the most comfortable cabin
Gulfstream PlaneviewTM II experiences and is equipped with industry-leading safety features.

TAKEOFF THRUST The G650 has the largest business-jet cabin and provides passengers
16,900 lb with wider seats, more aisle room and the ability to control the cabin
entertainment, temperature and lighting with a smart device, such as
PASSENGERS an iPhone or iPod. The large windows, quiet cabin and low cabin
11 - 18 altitude improve comfort and reduce fatigue. Passengers can work,
connect to the Internet or relax before arriving at their destination. The
G650 features the PlaneView II cockpit, which includes standard state-
of-the-art Enhanced Vision System (EVS) II and the Gulfstream Synthetic

63
FAMILY OFFICE ELITE MAGAZINE
GULFSTREAM AEROSPACE
G650 Manufacturing Plant
Vision-Primary Flight Display (SV-PFD). EVS provides pilots
with real-time images of the aircrafts surroundings and
greatly improves situational awareness in low-visibility
conditions. In zero-visibility conditions, pilots can rely on
SV-PFD to understand the position of the aircraft in relation
to the runway, terrain or obstacles. Gulfstream was the first
to implement these safety technologies in business jets.

Gulfstream also recently delivered the first fully outfitted


G650ER business jet to a customer, ahead of the 2015
projected delivery date. Gulfstream announced the G650ER
in May of this year. The aircraft received type certification
from the U.S. Federal Aviation Administration five months
later.

In todays fast-paced world, our customers need to travel


longer legs at faster speeds, said Scott Neal, senior vice
president, Worldwide Sales and Marketing, Gulfstream.
We are proud to be able to oer a product that meets the
needs of our customers. I commend our employees, from
engineering to manufacturing, who have worked to develop
and design such a superior aircraft.

The G650ER travels near the speed of sound with a max


speed of Mach 0.925. At Mach 0.85, it can carry passengers MAX SPEED MACH 0.925
7,500 nautical miles/13,890 kilometers, and at Mach 0.90,
6,400 nm/11,853 km. It connects more international cities
and oers more nonstop destinations, from Hong Kong to
THE G650 ER
RANGE 7,500 NAUTICAL MILES
New York, and Los Angeles to Melbourne, Australia.

Photographs Copyright GulfStream

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WWW.FAMILYOFFICEELITE.COM
FERRARIS HOMAGE
TO HOLLYWOOD AND BEYOND

To celebrate Enzo Ferraris birthday, Hollywood is not limited to its role to include the F430 Schumacher
a new exhibition was unveiled at in the films themselves. Many actors voiced in Cars, complete
co with big
the Museo Enzo Ferrari in Modena, and actresses are or were devoted cartoon eyes. We also picked
pick the
entitled Red Carpet. As the name Ferrari owners also. Paul Newman, Thomassima,
sima, an American-style
suggests, the exhibit is a tribute to for instance, even competed a 365 Ferrari sculpted by designer Tom
Ferraris role on the Silver Screen GTB4 in legendary races such as the Mead on n 250 GT running gear, to
and beyond. 24 Hours of Daytona, while Steve symbolise
se the many Maranello
Maranel cars
McQueen owned a whole slew of that have
e appeared on screen
sc en in
This exhibition brings together the Ferraris now much sought-after by disguise, not least in the Fellini-
models used on screen with clips of collectors. directed segment
segme of Histoires
them in action in an homage of sorts Extraordinaires,
nair , The Racers and
to the world of film and television Marilyn Monroe adored Ferraris The Love Bug.
g.
which was so quick to spot their star too the white 250 GT Cabriolet
quality and give them their moment Pininfarina featured in this On a racingg track, movies of the likes
in the spotlight: from the famous exhibition was one of her favourites, of Grand Prix, Le Mans and, mo
more
Magnum P.l. 308 GTSs to the Miami in fact. Peter Sellers, Nicholas Cage recently, Rush
Rush are the reasons why
Vice Testarossa, the 512S used in Le and many other famous faces a contemporary
porary Formula 1 car is
Mans and the 375 America driven also fell under the Prancing Horse the symbol ol of the event. Because
by Sofia Loren in Boy on a Dolphin. spell. Like any exhibition, this one Ferrari would
uld never have existed
exi
But Ferraris relationship to has taken a little artistic licence without the e track.

65
FAMILY OFFICE ELITE MAGAZINE
REAL ESTATE IN THE
FAMILY OFFICE PORTFOLIO
How to Add Quality Real Estate to Your Portfolio
DJ Van Keuren is a Director for a Real Estate Family Oce
based out of Colorado. He has over 25 years of experience
in real estate, finance, fund management and investing.
DJ is a graduate of Harvard University, author of real
estate investing for family oces, founder of www.
usfamilyocerealestate.com, and sits on many Family
Oce panels regarding real estate investing for Family
Oces.
Real estate is an important part of any portfolio, especially
for family oces. Real estate has many benefitsfrom
the use of leverage, tax-free growth, and tax deferment
to depreciation and mortgage interest deductions, and
especially the opportunity for families to build legacy
wealth. A good property in a good location can be a long-
term family asset, providing cash flow, appreciation, and
tax benefits for generations to come.
DJ Van Keuren
Because of these benefits, the question then becomes:
Arsenault Family Oce
How can a family oce invest in real estate and maximize
the benefits that real estate has to oer? challenges facing your family or family oce related
The options available to family oces are 1) direct to estate planning, transferring wealth to subsequent
investing, (or a subset of direct investing), 2) fund generations, building a business, and creating or
investing, and 3) investing through publicly traded preserving wealth. The question then comes down
entities such as REITS or individual stocks of real estate to: How does a family oce evaluate a potential real
and real estate-related companies. For the purposes of estate partner?
this article, we will focus on direct investing through
joint ventures, separately managed accounts, limited Although you may want to add a few more items to
partnerships, and club investing rather than when the your list when evaluating a potential partner, the
family or family oce invests directly and manages the following are five items that real estate investment
property themselves. banking firms and institutions consider before
investing with a real estate partner. This should help
Choosing the right real estate asset to invest in is more with your evaluation of a partner as well as touch
of an art than simply investing in what appears on the on some of the areas that should be explored by the
latest broker flyer or what is oered during a phone call family oce during the due diligence process.
from a real estate operator. To choose the proper asset
and opportunity, one of the best ways to add real estate The five areas are: partners experience, partners
to your portfolio is to partner with another family oce strengths, partners track record, the economic
that has created its wealth through real estate. After all, viability of the investment(s) or opportunity, and
as a family oce, this group will also understand the alignment of interests with your potential partner.

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FAMILY OFFICE ELITE MAGAZINE
Partners Experience during those times? The track record says a lotit can
What is the partners experience? Does the real estate give insight into the future relationship with your real
partner have experience in similar types of deals, estate partner. Dont take your partners word for it; be
property types, and geographic markets for the asset sure to confirm the track record.
that the partner is asking the family oce to invest
into? Does the partner er have an excellent reputatio
reputation in Econ mic Viability of the Invest
Economic Investment Project(s)
vestment strategy, a proven track
its field, a focused investment ck vestment opportunity must be
The investment b carefully
record, and management ment by a team of exp enced
experienced revie d to ensure its economically feasible and
reviewed
professionals? p tners ability to secure financing, whether it
the partners
come from
comes rom public, commercial, or private sources. The
As the family oce willill look to its
it partner for relative fundi sources and profits earned must be legitimate
funding legitim
-to-day operations
expertise in the day-to-day perations of the real tr sparent. Also, you should understand whether:
and transparent. w
estate opportunity, it mu
must have complete confidence oject is able to cover operating ccosts over its
The project
in the partners ability to manage the project not only lifetim and generate an acceptable rate
lifetime r of return for
during good times but also w whenn things dont turn out an the
you and he family oce.
rket changes dir
as projected or the market ion.
direction. oject is flexible enough
The project eno to adapt to future
change
changes in n user needs, ownership,
o laws, regulations,
Partners Strength andd ec omic fluctuat
economic uctuations.
balan
Does the partner have both a strong business balance ects fina
The projects nancial models proposed to the family
sheet and a personal balance sheet to comple complete the oce by the partner are aggressive or conservative?
suggested project(s) andnd weather any storms?
sto How Ideally, you should understand your potential returns
many projects does the partner have in their pipeline from three vantage points: the worst-case, best-
nities are th
and how many opportunities they evaluating on a case, and middle-case scenarios. Too often, all that is
monthly basis to choose from? IIs the partner spreading presented to the family oce is the best-case scenario.
themselves too thin, or do they have the capacity to There are similar properties with similar markers from
see each of its projects through to fruition? The last existing or recent sales:
thing the family oce wants is to see an investment the cap rate projected at purchase or sale;
fail because the partner spread itself too thin or took any increase in percentage in rent over the
on too many opportunities because the market was estimated period; and
hot. Lastly, if you are investing as a Limited Partner Construction costs and price per square feet are
or LP, make sure that your documents do not make applicable; for example, if everyone is renting a
you liable for any recourse or carve outs as part of the space for $100/month, the last thing you should
joint venture or investment. This should be standard expect is $150/month.
so that the only financial risk you assume concerns the
capital you invested, but it is better to check before the Alignment of Interests
transaction is completed in case a problem exists. Conceptually, in the majority of partnerships, the
family oce is considered a Limited Partner (LP) and
Partners Track Record is a passive partner in the management of the deal.
When evaluating an investment with a real estate Investment and risk management considerations, for
partner, the following questions must be asked: What example, are entirely delegated to your real estate
does the partners history show? Have its returns been partner, who is also considered the General Partner
consistent? How long is its track record? One year? (GP)but that brings us back to what you are looking
Five years? Twenty years? If the partners track record for and hoping to accomplish: finding an experienced
started in 2010, ask whether its success is simply due partner that you can trust and rely on. The success of
to a favorable market. Has the partner weathered the partnership model relies on the interests of both he
multiple real estate cycles? If so, how did it perform passersby.parties being adequately taken into account.

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One way to address still-existing shortcomings in the than what the true costs are for the property. Although
alignment of interests is to implement what we will it is fine for the general partner to charge fees, you still
call here an enhanced alignment model. The goal of need to have a good understanding of what they are
such a model is defensive: to ensure that the real to ensure a proper alignment of interests rather than
estate Partner or GP and its managers deliver on the a structure that benefits the partner regardless of the
agreed-upon investment objectives, undiluted by investment outcome. The end purpose of fees is to
other interests. compensate the general partner for the expenses that
it occurs, rather than to serve as a profit center.
The financial structure associated with partnerships
varies greatly; however, a typical investment might Conclusion
provide for leverage or debt of 75% on the property Forming a partnership with a real estate operator or real
(of which should be non-recourse to the family oce), estate family oce is an exciting way for family oces
with the limited partner(s) providing 80%90% of to gain exposure to real estate as a direct investment,
the equity and the general partner investing 10% which, is an important addition to any investment
20%. All equity will receive a pari passu return to an portfolio. Such partnerships free the family oce from
agreed-upon level or preferred return, after which the the tedious and time-consuming task of looking at and
general partner receives a disproportionate share of evaluating enough deals to make a good decision, and
the returns, referred to as a promote. Promotes are to operate the property from purchase to sale.
negotiated so that the partner, based on leveraged
internal rates of returns (IRRs) at the time of refinancing Many families have created their wealth in a variety of
or sale, could earn an additional 25%50% above a ways. From chemicals and food businesses to hedge
certain equity return. funds, each familys wealth is created from expertise
in its respective industry. Knowing that, one of the
As the operator of the asset, the GP is generally able best ways to gain exposure to real estate is to find
to earn market rate fees for its services, such as another family oce that created its wealth through
development and property management fees. real estate. After all, by combining a partners history,
track record, and awareness and understanding of the
Some family oces prefer a simple structure of a real estate industry with your capital, one family oce
50/50 split with minimal fees going to pay the can benefit from another real estate family oces
basic expenses of the transaction. Sometimes, general experience and, ultimately, from this important asset
partners will want to charge fees that may be more class.

69
FAMILY OFFICE ELITE MAGAZINE
NOVEMBER 3-7, 2O16

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THE HEADHUNTERS
Proper executive placement
By Alan J Cutts,
Why you should use a specialist to say, it took five weeks to find four from a qualitative opinion to a
executive search consultant to fill potential candidates for the client, more quantitative conclusion.
those key roles? each of whom could all tackle the job The simple fact is that no one can
in hand. This was choice enough to compete with the combination
Many years ago we were called in reach a happy conclusion for them. of experience and objective
to meet with a well-known, global, In addition, the client did not have to knowledge about a specific industry
investment house. The company had pay another huge retainer up front, segment that a specialist, targeted
been searching for a key investment just a small fee to cover the initial search consultant brings to the
desk head for many months and had research. The final fee was simply table. Add to this the ability to think
retained an expensive and high based on the contract given to the out of the box and produce lateral
profile international recruitment successful applicant, without extra solutions for dicult assignments,
practice to find an appropriate percentages for entertainment, often where none appear to be
individual. They were now at their messengers, contingencies and evident, and you will understand
wits end as the only candidates that estimated bonuses Also it is why the specialist search consultant
had been put forward on a shortlist important to note that there was no can command both a reasonable
were people they knew already that fee due at a notional second stage; (hopefully not exorbitant) fee and,
did not have any confidence in to we prefer to be paid on results. more importantly, a great deal of
undertake such an important role. On the other side of the coin we respect in the market from both
The search company had produced have often been called in to meet clients and candidates.
a mountain of research and had a client when their management
taken nearly six months, eectively team has exhausted its collection of Serious search consultants generally
to produce no real results. little black books and Linked in/ work on a mandated, retained,
outlook contacts. basis because the initial retainer
When we walked into the meeting engages both parties, committing
we were confronted by the Head To succeed as a specialist head- them to each other and building
of HR and the chief investment hunter a search consultant has a relationship and atmosphere
ocer. The Head of HR picked up a to be remarkably good at finding of mutual trust; the surrounding
beautifully bound report from the appropriate candidates and filling contract defines the relationship
incumbent executive search firm complex vacancies with unique and etiquette going forwards. Also,
and threw it on the desk in front of blends of skills. They should provide retained relationships protect the
us; she said, we have paid 60,000 clarity by acting as an objective client from the depredations of
for this heap of rubbish (my word filter that functions on the facts, the a contingency only environment.
not hers) and it is completely markets opinions and on their own O limits applies to retained
worthless. After we had examined informed understanding that has clients for an agreed time after
the research, we had to agree. It been built on years of experience the latest retained placement is
was totally irrelevant and the vast in their market, supported by eective normally twelve months
majority of its content was either the candidates responses to or longer as agreed. Hopefully the
out of date or way o message. She a comprehensive array of key relationship between the search
asked us if we felt that we could questions that allow us them to consultant and client will develop
pick the assignment up and turn it build reports that are an eective so that they need never think again
into a silk purse. We picked up the way of comparing like with like. An about time limits on o limits in any
sows ear and ran with it! Suce it excellent consultant strives to move case and the interests of client and

71
FAMILY OFFICE ELITE MAGAZINE
consultant will totally converge. there should be no rocket science or even when the client has initially
The combination of true objectivity witchcraft involved). A good search rejected someone who would seem
and total familiarity with the and its corollary good conclusion to be a great candidate! Conversely,
nuances of a role and the culture depend on some very simple factors if a candidate checks out badly, a
of the hiring company means that and the responsibility for defining good search consultant should not
hiring a specialist executive search these is shared between the client let their hearts overrule their heads;
consultancy to concentrate on and the search consultant. they should be prepared to drop
mission-critical vacancies more than them like a hot potato. A large part
justifies the outlay, and the speed at Firstly, it is important to insist on of specialist search consultants
which they can work should not be a coherent job description. If the skills is their understanding of the
underestimated. Generally, most of client and the consultant do not market and their ability to take
the delays that occur can be laid at know what is needed, they are on informal references without trying
the door of the hiring company. This the road to nowhere. The document to hear what they want to hear or
is understandable because clients should not be War and Peace, ignore what they do not want to
have busy sta with demanding far from it; what is needed is an hear.
schedules, they have huge demands agreed understanding of the role,
on their internal diaries and often its responsibilities and limitations, Finally, in the complex mix of
there are shadowy politics at play and the ideal mix of experience relationships between candidates,
behind the scenes. Additionally, and qualifications expected from clients and consultants a major
head-hunters are realistic enough suitable candidates. Obviously, we skill on all sides is the ability to
to understand that they are rarely at all want to hire someone we can be responsive and decisive, even
the top of the clients priority lists trust and like, but without some kind in the most trying circumstances.
for lots of reasons! of definition nothing can happen. We all really appreciate good
decision-makers who listen to
In terms of timescale, the time Secondly, the search consultant valid arguments, make considered
lapse from initial briefing to first will seek commitment from the decisions and articulate them well.
interviews should not take any client and needs to know the full This is how we make that perfect
longer than 8 weeks and quite background to the hire including the hire. To quote client views on what
often can be quicker than that. In negative points; good candidates we bring to the table:
addition, you should expect that will be insightful, plugged into
all the candidates put forward can their markets and probably very Your success with us is founded
more than tackle the job in hand good at researching. It helps us to on your understanding of the
and each will bring unique skills have the answers to those awkward knowledge and skills you bring
to the table. The clients ultimate questions that they will pose and and your ability to communicate,
decision will be based more on to become ambassadors for the relate, and work with us. The
cultural and personality issues than client. Often the consultant will candidates understand that youre
raw ability and experience. The aim be candidates first ever point of not just trying to deal, but are
is to find the very best person for contact with their client so they genuinely in this game trying to
the job. As an industry our measure need to understand, thoroughly, get the right results, knowing that
of success is long term; we like to the clients marketing, goals and your reputation and your business
hear that the people we have placed culture. Consultants, should be flourishes by doing just that
are thriving after years in their willing to take long shots as well
roles and that they have become as certainties, because creativity The soft skills of recruitment are so
valued members of their teams. can unearth really special people important, and thats what you guys
Anecdotal and procedural elements where none would be apparent. bring to us. A sense of individual
to assignments are fine; all of us Also, as trusted consultants, they rather than a commodity, and I thank
probably have a good idea of what a should be able to articulate their you for that.
recruiter should be doing (after all, views and make recommendations, www.alancutts.com

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DREAMING
DRE
EAM
MING OF TH
THE PERFECT HOLIDAY...

SSUPERYACHT
SUPE
ERYA CHARTER
THE UL
ULTIMATE
ULTIMA LUXURY VACATION

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FAMILY OFFICE ELITE MAGAZINE
Eastern
Mediterranean
Croatia and
Montenegro
Endless sunshine, sparkling sea,
beautiful beaches and absolute
indulgence: these are the synonyms traditions of the countries covering little seaside villages and towns,
of a perfect vacation! With the this area. While the French Riviera oering an array of restaurants,
Spring just around the corner, our and Italy are traditionally the cafs, art galleries, souvenir shops
desire to relax on a beach, sip on a most frequented locations by and boutiques. Croatian cuisine
refreshing cocktail and bathe in the superyachts, Croatia, together oers fresh Mediterranean dishes,
warm summer breeze ceaselessly with Montenegro in the Eastern with plenty of seafood, vegetables
increases. We have been waiting Mediterranean are steadily gaining and local specialities, accompanied
for this vacation all year round in popularity. by locally produced selection of
and want to make sure that it is as wines.
flawless as possible. Embarking on Dotted with seemingly endless
a luxury yacht charter, you can rest amount of islands and islets, One of the most prominent tourist
assured that you will be pampered Croatia boasts immense natural destinations and a great starting
day and night, while eortlessly beauty coupled with charming point for a charter vacations,
discovering multiple destinations, architecture of terracotta roofs and Dubrovnik is amongst the most
thanks to the made-to-measure warm, inviting locals. It is home to important cities to visit in Croatia.
travel itinerary carefully planned numerous UNESCO World Heritage A UNESCO World Heritage Site
ahead of your departure. sites, awe-inspiring natural parks since 1979, the city is known
and water falls. White beaches, as the Pearl of the Adriatic
The Mediterranean Sea is without crystal-clear waters, river canyons, thanks to its truly beautiful and
doubt the most popular summer glittering lakes, combined with mesmerising Old Town, adorned by
destinations for yachting, oering your superyachts water toy Gothic, Renaissance and Baroque
beautiful weather, stunning natural selection, provide for unlimited fun architecture, narrow cobbled
environment, rich architecture, and entertainment. Cobble-stoned streets and an endless amount
vibrant atmosphere and colourful streets wind through charming of museums, art galleries and

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monuments to visit. Once the sun sets, Dubrovnik dinner at one of the best local restaurants set in the
lights up to unveil a fabulously sparkling atmosphere exotic gardens of the 16th century Garibaldi mansion.
with numerous fine-dining restaurants, high-end Following day, cruise to the Palinsky islands, renowned
nightclubs, wine bars or discotheques to visit. If loud for its secluded coves and stunning beaches. This
music and dancing is not your thing, you could sample is a great place to unwind, snorkel, swim or simply
some of Croatias excellent wines in one of the relaxed sunbathe relaxed, away from the hustle and bustle of
and quaint little wine bars or sip on a late night coee the busier destinations.
watching the passersby.
An exceptional final destination and situated just
A popular stopover for jet sets, movie stars and south of Croatia, Montengro is often included as part
discerning clientele, the Croatian island Hvar prides of a yachting vacation in the Eastern Mediterranean.
itself on boasting captivating Gothic palaces and It is famous for its breathtaking Bay of Kotor (of Boka
impressive 13th-century walls, as well as buzzing Bay) and the recently developed and very exclusive
atmosphere and nightlife. For a quieter, yet still very Porto Montenegro marina in Tivat. Known as the
exciting excursion, Mljet oers a unique stopover for southernmost fjord in Europe, the Boka Bay is home to
families, or groups of friends travelling together. It is mimosas, kiwi, palm, agave, oleander and pomegranate
known as the most beautiful and the greenest islands plants. Kotor, located in the Boka Bay, is yet another
of the Adriatic. It is home to the Mljet National Park, famous UNESCO World Heritage town, representing
incorporating two salt-lakes: Veliko Jazero and Malo an old coastal and cultural centre boasting charming
Jazero, encircled by rich forests and mesmerising churches and ancient squares. Some of the most
nature. popular destinations in Montenegro include the
14-kilometre long Velika Plaza (Grand Beach) located
Leaving Mljet, set o to the magnificent historic in the southern part of the country - a perfect place
town and island of Korcula, famous for its traditional for kitesurfing or windsurfing. Tara Canyon, a UNESCO
Knights dance, celebrating the Turkish assaults on the World Heritage site and the second deepest canyon in
island. The island itself is covered with heavy pine, oak the world, oers impressive waterfalls and number of
tree and cypress forest. Thanks to its unique historic sandy beaches to escape to.
heritage, it is amongst the most interesting islands to
visit. From Korcula cruise to the nearby island of Vis www.charterworld.com
and enjoy a leisurely day, followed by an exquisite World.reservations@charterworld.com

Photos Heesen Yachts

75
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SATO CONSULTANTS
Family Oce Services
RIGHT TO BE FORGOTTEN SERVICE - MEDIA CRISIS PLANNING AND
POLICIES - PUBLIC RELATIONS - REPUTATION & MEDIA MANAGEMENT

SATO Consultants is a specialized consultancy firm to Family Oces and UHNWIs.

Tel: +44 (0) 20 7193 8870


www.satoconsultants.com - info@satoconsultants.com

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Regulatory Changes to Money Market Funds
WHAT SHOULD A FAMILY OFFICE
DO WITH THEIR CASH
Securities and Exchange Commissions decision to tighten regulations
tions on money market funds
fun
TWO YEARS TO IMPLEMENT CHANGES
by Michael Kastner - Halyard Asset Management LLC

allowed to maintain a stable Net redemption


gate or a redem ion fee is needed,
Asset Value and will, instead, be in which cacase they can apply either
required to allow the NAV to float. both. Given
or both iven that U.S. government
In addition, all fund companies, MMFss invest almost exclusively in
MM
individual as well as institutional, the massive, highly liquid Treasury
will be allowed to temporarily bill market,
rket, such a gate is not likely
block investor redemptions, also needed. However, simply
to be neede
known as gating, and impose a the possibility of an exodus odus may
redemption fee of as much as 2% be enough to discourage inve investors
in the event of a mass exodus of from using government MMFs
investors. Such an exodus would funds. One only need needs to look
be defined as a 10% fall in assets back two years for ssuch a risk, as
under management over the course Congress threatened
threate to default on
of one week. When investors come Treasury securities. While
maturing Trea
Recently, the Wall Street Journal to understand that a 200 basis they
hey avoided
avoi default, had they not,
reported that U.S. regulators point fee could be imposed on a its likely there would have been a
s lik
approved rules intended to prevent money market fund thats paying mass exodus out of Treasury paper
a repeat of an investor exodus out them no more than a handful of and a flight from government
of money market funds during basis points, theyre likely to look MMFs.
the financial crisis, referring for an alternative.
to the Securities and Exchange The catalyst for the added
Commissions decision to tighten The likely alternative to Prime regulation is that despite the
regulations on money market funds would be U.S. government presumption of being safe, stable
funds (MMFs). We believe the rule MMFs, funds that invest only in U.S. investments, some MMFs are not
changes do the exact opposite and Government debt. Those funds will always very well managed. Based
will likely worsen an exodus, and be required to hold at least 99.5% upon SEC rule 2a-7, the funds are
perhaps even hasten one. The of their assets in government paper, allowed to hold up to 5% of a single
commission gave fund managers thats an increase from the current issue and up to 10% exposure to
two years to implement the minimum of 80%. Additionally, a single guarantor, an intolerably
changes. U.S. government MMFs will not high level of concentration for
be subject to the mandatory a fixed income portfolio. In an
The most significant change, at redemption gate or fee imposed attempt to understand the riskiness
least initially, is that Institutional on Prime MMFs. That is unless the of MMFs, we analyzed a number
Prime MMFs will no longer be board of the fund decides that a of the largest funds. We were

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FAMILY OFFICE ELITE MAGAZINE
shocked by the composition of one changes to money market funds, maturity at two years, establish
of the top 5 household name what should a family oce do with a minimum weighted average
funds. The top 10 holdings of the their cash? Family oces typically credit rating of A, and maximum
fund totaled 49% of the portfolio, carry high cash balances in MMFs holding per position of 2.5%.
with 15% of the fund invested in to meet cash flow needs and as By moving cash to a separately
Japanese banks (including 7.1% dry powder for unexpected managed account, the family oce
invested in the bank of Mitsui investment opportunities. Such immunizes itself from both the
Sumitomo alone), 20% invested an arrangement may no longer be risk of having their cash gated and
in 10 dierent European banks, feasible given the potential for lock the detrimental eect on return
and 10% invested in Canadian up and fee imposition. That could when the MMF manager is forced
and Australian banks. When the be a blessing in disguise given the to sell securities in a falling market
next financial crisis hits, its highly high concentration risk and lack of to meet redemptions. While its
likely that the 20% allocation to diversification discussed above. possible that the separate account
European banks will weigh on the Instead, family oces should may incur a mark-to-market loss
NAV of that fund. Similarly, should adopt a cash management strategy during such a run, the manager may
the Japanese stimulus program fail similar to that of many Fortune not be forced to sell into a falling
and bank defaults rise, the large 500 corporations. The CFOs of market and if the manager holds
Sumitomo position may impact those corporations hire third-party the securities to maturity, would
the fund negatively. That, and a managers and work with them to incur no loss at all. In eect, the
number of other possible scenarios, establish a separately managed family oce gains full transparency
are likely to test the resolve of the account of fixed income securities and decision-making over their
fund management to maintain governed by a strict investment cash assets while broadening the
liquidity and resist the temptation policy statement. A typical cash diversification of the portfolio.
to impose a 2% redemption management investment policy
fee. With the coming regulatory statement would cap maximum Halyard Asset Management LLC

BEAUFORD HOUSE CHELSEA LONDON


Beaufort House Chelsea, is the Kings Roads premier This exclusive venue has won a number of awards
brasserie and private members club. Set over including Best Private Members Club in the
four floors and boasting a brasserie, two-cocktail London Lifestyle Awards, and it was also voted
bars, an exceptional penthouse champagne bar, Best Private Members Club in London and is
a stunning private members lounge, as well as deserving of such an accolade. Beaufort House has
a surround sound meeting room complete with established itself as a much-needed breath of fresh
state-of-the-art screening facilities, Beaufort air for the Kensington and Chelsea area. From film
House excels where other venues merely strive. It premieres and magazine launches to high-profile
has developed a reputation for outstanding service guests, musicians, actors and socialites, preserve
and beautiful yet comfortable interior, making it of the rich & famous, from royalty to rock stars,
Londons ocial home away from home and one Beaufort House has asserted itself as The club in
of Chelseas premier venues. the heart of Chelsea, London.

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WWW.FAMILYOFFICEELITE.COM
A long-recurrent debate in the field of investment management

MAN - VS - MACHINE
The arms race of machines has already come a very long way
WHO WILL WIN OUT IN THE END?
by Con Keating

and the long term with economic and trend-following strategies,


performance, and the degree to where machines reign supreme.
which the companies, in which we Markets are mixed games; partly
have invested, participate in that exogenous, against nature, but
performance. predominantly endogenous,
against others. The game against
It is amazing how few fund managers others is a strategic game; it is zero-
consider the development of the sum in the sense that my gains are
labour versus capital share of someone elses losses. The game
national output when discussing is concerned with predicting the
long-term prospects, the most behaviour of others. This aspect
fundamental division of the is the subject of intense research
cake, but that is getting ahead of by the computer scientists, with
ourselves. The properties of long- natural language interpretation
term investment dier profoundly and sentiment analysis as poster
from the short-term. In the short children.
This is a long-recurrent debate term, returns are dominated by
in the field of investment changes in the prices of assets but There is little doubt that these
management. To open this issue in the long-term, income dominates techniques will advance greatly,
up in a meaningful way and avoid returns, and asset prices are almost and perhaps even to the point
confusions, it becomes necessary irrelevant. of passing the Turing test of
to consider dierences in time indistinguishability from human
scale. This is the short-term versus The exponential comes into its own, interaction. This is an arms race,
long-term question. The dierence and the power of compounding ever more powerful; ever faster
between weather forecasting and reigns supreme. The market machines are needed. The strategic
climatology is a very useful analogy. adage, that time in the market is game of development drives even
In the field of weather forecasting, more important than the timing of more development in an unlimited
we use some of the largest and markets, remains sound. In the short process of infinite regress, where
fastest computers in the world, term, market returns are negatively the only limitation is one of cost
but we cannot forecast accurately correlated with economic output, at some point the investment cost
beyond a few days weather but in the long-term, returns are is not justified by the potential
forecasting is fundamentally strongly correlated with long- reward. In the long-term, volatility,
short-term. Climatology is very term economic growth. In the is broadly in line with the volatility
dierent; we can rely on it being short-term equities and bonds are of national output. Rather than
warm in summer and cold in winter; highly volatile; this arises from the being some unexplained property of
monsoons, snow and floods are endogenous game between market mean reversion, this is convergence
highly predictable. The investment participants and speculators. This to economic reality. While this is
counterparts are that the short term is the world of hyperactive trading, not always immediately apparent
is concerned with market behaviour and information-free momentum in the patterns of seemingly

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chaotic securities prices over time, it problem is simple; for decades, new
is more clearly demonstrated in the housing construction has languished
foreign exchange markets, where at around 50% of new household
a relatively small stock is turned formation. The remedy is far more
over manically. The result is a dicult, politically; when more than
short-term series totally dominated 50% of voters are house-owners,
by noise, but where, in the much they are most unlikely elect any
longer term, basic macroeconomic party that does not serve their
pressures prevail. In the long-term interest.
diversification is concerned with the
number of eectively independent Surveys have asked fund managers
sources of income, while in the short what they consider the long-term
term it is all about the happenstance to be, and the most common answer
diversity of periodic returns, and received has been 3-5 years. When
relative price performance. we look at fund managers turnover
in active portfolios, it is clear that, in
The arms race of machines has fact, the overwhelming majority are
already come a very long way, to operating to a timescale of between
the point of flash crashes and the a few months and two years. If we
inexplicable behaviour of the ten- take the long-term for investment
year US Treasury bond on October to be that term beyond which
15. The domination of financial non-market sources of cash flow
markets by short-term speculation dominate returns, then we see that
is not benign. Volatility is, as Black the long-term over the history since
Scholes formalised for us, the 1900 of the London Stock Exchange
speculators friend; it drives up has been a little over thirteen years.
premiums or prices. The problem Prospectively, the lower income
with these higher prices is that this yields prevailing today imply that
lowers the income yield available the long-term now is a little over
to investors. The higher volatility twenty-five years.
will also drive a wedge between the
annual returns of the short-term and The most important facet of our
the compound geometric returns long-term future is that it is largely
of interest to long-term investors; the product of our own decisions
twenty percent price volatility and actions, where the socio-
lowers long-term returns by 2% per political aspect can dominate
annum. Short-term speculation is the technological or economic
more than a beggar-my-neighbour dimensions. The choice of man
game, it literally steals from the versus machine is really no choice;
future. every day, we decide to take an
umbrella or not depending upon the
To make these points a little more weather forecast, but we book our
concrete, consider the UK housing holidays based on the climate. Of
market. For several decades, course, the weather forecast does
we have seen ever-increasing not aect the climate, but short-
house prices, greatly assisted by term speculation most definitely
munificent mortgage leverage, and does aect long-term investment
now our children cannot aord to performance.
buy anything. The diagnosis of the

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COLLECTING AND INVESTING
1. Woman with a Mirror 2. Marguerite-Flower 3. Builders

IN CHINESE MARKET POCKET WATCHES


From the time of the Jesuits first treasures returned to Europe with a Mirror (in the Louvre
encounters with China in the after the burning of the Emperor Museum). It is framed with swirls of
late sixteenth century, the gift Qianlongs Palace in 1860, and in half pearls and rubies, and despite
of timepieces to the Chinese the aftermath of the Boxers siege its superb quality, neither the
imperial court became a de rigour of the European legations in 1900. watch mechanism nor the enamel
requirement of trade, dominated The continuing chaotic state of painting is signed. The second
until the late eighteenth century by the country after that provided example, by the premier Geneva
British made clocks and watches, further opportunity for significant firm of Piguet and Meylan, has
but from the late eighteen century repatriations. the back decorated to represent
through to the 1930s dominated a marguerite flower. Each enamel
by Swiss watches and automata. So what is the Swiss Chinese petal is painted with dierent floral
market watch? The three examples motifs, and delineated by lines
The golden age for these pieces shown, made c.182030 are gold of half-pearls (over 300 in total).
was c.1790 to 1840 when the cased, with a white enamel dial, The centre shows a landscape,
Chinese market could aord the quarter repeating, (sounding the probably by the Swiss artist Jean-
sumptuous watches made by quarters on two gongs within the Louis Richter. The third example
the combined skills of Genevan watch), and with a sweep centre shows a watch with an automaton
enamellers, goldsmiths, jewellers seconds hand. The Chinese liked scene, in which the figures of
and watchmakers. This trade was the centre seconds hand because workers in multi-coloured gold,
promoted from the early nineteenth it showed that the watch was hammer and saw, whilst the water
century by numerous Swiss houses alive. The decoration of each of flows via a rotating millwheel, all
having establishments in China - these watches is outstanding. The accompanied by a melody played
at Canton, Tianjin, Shanghai and back of the first has a fine enamel by a tiny musical movement. With
elsewhere. Many of these imperial painting, after Titians Woman all antiques, the better the quality

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FAMILY OFFICE ELITE MAGAZINE
the greater the value, in this case now greatly increased
by the interest of Chinese collectors. Watches from the PHILANTHROPIC CAUSES
Swiss golden age command the highest prices at auction
that, over the last twenty years, have grown substantially.
Watches with these fine enamels are typical $35,000 UNIVERSAL FILM AND
$65,000, but with fine jewellery decoration, this price can
rapidly escalate to over $200,000. Examples include a fine FESTIVAL ORGANISATION
watch by Ilbery with a fine enamel waterfront scene that
fetched $231,750 in 2012, and another, by perhaps the
best firm making these watches Piguet and Meylan, with
minute repeating and an enamel of Venus and Cupid in the
same year fetching $700,000 (both sold by Antiquorum).

A popular automaton scene on these watches is of a The Universal Film & Festival Organisation
dog attacking a swan, the dog making a barking noise. A (UFFO) was founded to support and
good example of this automaton watch in Sothebys New implement a best business code of practice
York sale in June of this year fetched $130,000. These for film festivals throughout the world. It is
manufacturing techniques are also found in Swiss bijou now dubbed FEST-COP, and its logo is now
terce often including watches, which were also popular a familiar sight at many film festivals. The
UFFO is a global not-for-profit voluntary
Chinese market items. However this genre is even more
organization, and it created its remit of a best
diverse and sumptuous, and accordingly overall much
business code of practices for film festivals
more expensive, as shown by the sale of a small singing
to combat the high level of corruption that
bird flask by Sothebys New York in June, which fetched blights the industry.
$2.5 million.
Its president is legendary actress Maureen
The Chinese market watch, embodying beautiful enamels, OHara and the organization now has at least
automata and complex watch work, and an incredible 225 film festival members.
diversity of creativity poses diculties for the investor in
judging what to buy and what to leave. Enamels are easily UFFOs FEST-COP is entirely voluntary,
damaged, are very dicult to restore, and, even if well free and easy to implement. Also, it is a
done, never have the same appeal as an intact piece, but blueprint for filmmakers in deciding which
complex watch, musical, and automata mechanisms can all, film festivals to do business with. Only film
festivals that have subscribed to the UFFO
at a cost, be restored. The investor and collector must have
best business code of practice are entitled to
a good deal of knowledge, and good advice to venture into
use the UFFO logo.
this market. Nonetheless, for the astute investor this field
has provided many rich rewards, and Chinese interest in The organization is now seeking a
the genre remains unabated. benefactor to help it move forward with its
plans to further its remit and to create an
Ian White; the writer of this wonderful piece is researching online porthole payment system to ensure
the export of timepieces from Europe to China over the filmmakers can deal with film festivals via a
period 1580 1840. He is the Author of English Clocks trusted source. The porthole will also act as
for the Eastern Markets and the Author of The Life and a distribution platform and as an online TV
Collection of Gustave Loup (18761961).He is currently channel.
writing a book on the Swiss made Chinese-market watch,
provisionally entitled, The Majesty of the Chinese Market UFFO is now planning the Best of Festivals
event and bringing the member festivals,
Watch.
their best films, actors, directors and
producers to one event that will rival the
dri_white@hotmail.com
biggest events in the world.

Email info@uo.org. - www.uo.org

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WWW.FAMILYOFFICEELITE.COM
PRIVATE BANKING NOW COMES WITH
AN INVESTMENT BANKING FLAVOUR
by Christian Fringhian
Partner, co-head of Reyl Corporate Advisory & Structuring
SPECIAL PERMISSIONS FOR RE-DISTRIBUTING THIS ARTICLE ARE NEEDED, CONTACT US

In a time when Swiss private banks are being forced


to revamp a business model relying heavily on
wealth management, it is worth paying attention
to a stimulating initiative currently taking place in
Geneva. Located in the heart of the city, near the
Old Town, REYL & Cie has been actively engaged
over the past few years in renewing its approach
to private banking, thus opening new perspectives
for the entire Swiss financial sector. The main idea
underlying its approach consists in completing its
wealth management services with high added-
value corporate advisory services. In the view of its
executives, who favor a cross-border entrepreneurial
clientele, private bankers with corporate banking
DNA might very well make the best wealth managers.

The aftermath of the 2008 financial crisis has taken


a painful toll on Swiss private banks. The Swiss banks do not necessarily see them as an area of focus,
financial marketplace has certainly displayed overall corporate assets obviously fall into the category.
strong resilience, but its banks still need to cope with REYL & Cie has therefore committed to filling the gap,
constant margin erosion. Increases in costs due, in eager to prove that corporate advisory and wealth
particular, to new regulatory constraints, are forcing management can develop synergies aimed at creating
the wealth management industry to re-examine its long term sustainable value for clients.
value proposition as well as its business model. Swiss
private banks are thus incentivized to innovate and REYL & Cie was created in Geneva by Dominique Reyl
find relays of growth in order to remain competitive. in 1973 as a wealth management boutique. His son
In that regard, the corporate angle certainly deserves Franois, who joined, in 2002, initiated a significant
more attention. diversification program. Over the past 14 years, REYL
& Cie has developed a diversified range of financial
Rather than focusing strictly on financial assets, services which now encompass Wealth Management,
the bank has widened its value proposition to the its historical core business, Asset Management,
customers asset base in its entirety, no matter how Corporate & Family Governance, Corporate Advisory
complex it might be, to the extent that it now includes & Structuring and most recently Asset Services.
corporate advisory services. Partners at REY & Cie are Across these five distinct yet complementary business
confident that a private bank needs to move beyond lines, the bank is developing a client base consisting
portfolio management, and must be able to address all mostly of institutional investors and cross-border
constituents of their clients overall wealth. Although entrepreneurs with an expansion strategy geared

83
FAMILY OFFICE ELITE MAGAZINE
towards high growth regions such as South-East Asia the harsh realities and challenges of developing a
and the Middle East. business, acquiring over precious time experience.
REYL & Cie has the particularity of being a private bank
The Corporate Advisory & Structuring business line managed by former renowned investment banking
was launched in 2013 with the ambition of assisting professionals.
international entrepreneurs in the most critical
stages of their business expansion. Drawing on an Franois Reyl, CEO of the bank, embodies this concept
interdisciplinary team with in-depth expertise, REYL of convergence. Between 1995 and 2002, he worked
& Cie covers most sought-for areas such as strategic at Credit Suisse First Boston in London, where he
advice, financing strategies, capital raising, balance executed numerous mergers, acquisitions, leveraged
sheet restructuring and optimization, recapitalization, buy-outs as well as equity and debt capital markets
mergers, and acquisitions. Over the past two years, it
tions. Ov transactions. This is the kind of background that our
has also acquired a solid know-how in i the particular clients value, says Franois Reyl. They prefer to talk
field of private debt bt financing, an innovative
innovativ yet o a private
to vate banker who un understands how important
aordable funding solution looking
olution for entrepreneurs loo g their businesses
sinesses are in building up the
their wealth.
for an alternative to bank
ank lending.
The p file of Lorenzo Rocco di Torrepadula shows a
profi
However, corporate advisory
visory services add
ad up to a larger simila
similar pattern. Lorenzo worked with Franois Reyl
picture. The value we e create at tthe corporate level in Lo on, at Credit Suisse First Boston, which he
London,
contributes substantially growing
ally to gro ing the asset base, also left
l in 2002 to join REYL & Cie. A partn
partner and
says Christian Fringhian,
ian, whoho heads this business memb
member of the Executive Committee, LoreLorenzo is now
line. Here lies our key selling
elling proposition. In many co-res nsible for the Banks wealth management
co-responsible
ways, we ensure our clients that the development of activit
activities in Switzerland.
their corporate assets will be fully integrated
tegrated into the
overall wealth management
ment process. Also a partner
artner and a member
m of the Executive
Commi
Committee, e, Christian Fringhian
F is in charge of the
We have succeeded in aligning wealth managemen
management rporate Advisory
Global Corporate A & Structuring practice. He
services with corporate te advisory services in an has gained over time a solid expertise in this particular
integrated way. Few banks provide this
anks can actually pro field. His career first took him to JP Morgan, in 1992, and
kind of approach. Many used to having
y of them are use then on to Deutsche Bank in Paris and London. Next,
separate divisions which h can create challenges when he moved to Barclays Capital, where he led the Public
interacting with each other.
her. REYL & Cie, on the other Sector Solutions group, developing and managing a
hand, can quickly and eciently
ci mobilize a multi- range of advisory services in the areas of Debt Capital
disciplinary team around a joint project. Our main Markets and risk management.
strength is that we understand the central role played
by the company in the wealth creation process. We have Wealth Management might be our core business
always considered companies as assets in their own line; he sums up, but the corporate advisory is a big
right and we have assembled the resources required part of our genetic code. REYL & Cie might still be a
to incorporate the entrepreneurial dimension of our newcomer in the corporate advisory landscape but the
clients into the wealth management framework. banks latest performances suggest a promising future.
Five years ago, REYL & Cies assets under management
For REYL & Cie, adding Corporate Advisory to the accounted for CHF 4 billion. At the end of last year, they
value proposition follows a natural path. Companies were closing in on over CHF 11 billion. The corporate
have always formed a familiar work environment for advisory expansion clearly contains a recipe for success
the banks managing partners who have previously and, as such, it is certainly catching the attention of
distinguished themselves in well-renowned other Swiss wealth management firms in search for
investment banks. For years, they have dealt with relays of growth.

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NEW GENERATION PRIVATE EQUITY
Leading the mega trend of European SME Acquisitions
dubbed the greatest transfer of wealth in historyG
by Stephen Greenwood

A recently established new-generation PE fund has


opened up to investors the prospect of high rewards
generated by combining the acquisition of profitable
SME businesses with employee ownership. This ethi-
cal investment hybrid is the Acuity Private Equity Fund
and predicts 25% plus returns annually over the ten
year life span of the investment. One of the most suc-
cessful business models operating in current markets
is that based upon employee ownership. The best
known example of this is the John Lewis Partnership,
dubbed the socialist on the High Street. All 69,000
permanent employees are Partners who own John
Lewis department stores, Waitrose supermarkets, an
online and catalogue business, johnlewis.com and a Stephen Greenwood
direct services company, Greenbee.com, with a turno- Acuity Management Limited
ver of nearly 7bn last year.
ity equity. The Fund is executing a strategy that directs
According to research carried out by the Employee this ethical approach to acquisition towards the de-
Ownership Association, employee-owned companies mographics of the baby-boomers born between 1947
consistently outperform the FTSE All-Share, with a and 1957. Thousands of grey entrepreneur business
9.9% boost to share value (Martin Conyan and Rich- owners across the EU are now turning 65 years old and
ard Freeman, Shared Modes of Compensation and want to retire but wish to leave in such a way as to pro-
Company Performance, National Bureau of Economic tect their legacy and see their sta rewarded. This has
Research, Working Paper 8448). Other research shows been called the greatest transfer of wealth in history
that this model outperformed the FTSE-100 through- but the financial crisis of 2008 means that these busi-
out the post-credit crunch crisis, generating 174% nesses, while established and profitable, are finding it
greater earnings per share (EPS). All very well, but how dicult to find buyers.
can this include a return for external shareholders?
The principal architect of Acuity, Stephen Greenwood, Many of these businesses now face the very real pros-
believes that an answer to this conundrum has now pect of disappearing, eectively wiping out decades of
been skilfully engineered. This is the only fund in the dedicated work and destroying the livelihoods of their
world that acquires the majority equity of between employees, with the knock-on negative impact that this
60%-70%, for example and creates employee owner- will have on their local communities. Nearly a third of
ship by allowing the employees and managers to own all the 19.3 million SMEs in the EU are owner-managed
30-40% and benefit from higher growth for investors businesses (OMBs) set up by the post-war generation.
and co-ownership with employees he explains. Col- Many of these businesses would, pre-2008, have been
laborating in a Joint Venture with Close Brothers Mer- up for sale. According to the European Commission re-
chant Bank enables the Fund to use only small slices ports on Succession there are 690,000 profitable trad-
of equity investment while still obtaining the major- ing businesses that must find new owners each year for

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FAMILY OFFICE ELITE MAGAZINE
the next ten years. This will continue up until 2025 and the targeted return is more than 25% for the life of the
involve businesses worth an estimated 27.3 trillion Fund. Greenwood himself has some form in this regard
that must find a new owner. as he was involved in a joint venture with Mitsui Sumito-
mo that acquired a portfolio of 122 SMEs over 15 years
Before the credit crunch, the exit strategy for such busi- for 600 million that was worth more than 1 billion at
nesses was relatively simple: a management buy-out the time of disposal. Highlights included the acquisition
(MB0. The credit crunch put an end to that, devastat- of the North West chemicals company Multisol for 31
ing the MBO market is so that there is barely any activ- million, which was valued at 80 million on exit.
ity compared to pre-2008 levels: less than 10%. The
reasons are two-fold: the banks will not lend and the Greenwood and his team have developed three new
private equity houses are only interested in the bigger buy-out frameworks or intelligent buy-outs that are
businesses, typically 60 million plus (as shown in Pri- tailored to acquire the SMEs that private equity houses
vate Equity Demystified 2012 by Prof Mike Wright and ignore, those worth between 1m and 25m. These
John Gilligan). For business owners of the baby boomer IBO vehicles are unique to Acuity and are registered as
generation succession is the key issue as there is no easy intellectual property and legally protected as such. The
way of realising the true value of their business while three types of framework are Management Involved Buy
also safeguarding jobs and creating the conditions for Out (MIBO); Management and Employee Involved Buy
future growth. Out (MEIBO); and Employee Co-Ownership (ECO). These
are based on sharing the ownership of the business
The option to sell to the employees preserves what is and its increasing value - with managers and employees,
unique and special about the business its DNA while but taking a long view.
ensuring that it is owned and managed by people who
share the values and vision of the outgoing owner. Em- Again, unlike traditional private equity houses, Acuity
ployee ownership also preserves jobs and the contribu- plans to keep the companies in which it invests for 10
tion that the business makes to the economic viability years, not five, and so that investors will benefit from
of the area in which it operates the aim of many social long term dividends. In fact, Acuity has already bought a
enterprises. small number of businesses and is expecting to distrib-
ute its first dividend in May this year. Though the amount
There is a ten-year window of opportunity in which the to be paid has yet to be decided, the Fund says that al-
Fund can take its pick of the very best SMEs available. ready the return on investment has been an extraordi-
The Fund has six basic criteria in selecting suitable busi- nary 560% due to the eect of gearing. The Acuity Fund
nesses: oers an alternative investment for sophisticated inves-
Ten years of profit tors who want to diversify their portfolio with exposure
Strong managers in the developed economies while remaining true to the
Recession resilient social values of economic security and job creation. It
Defined market niche also oers a potentially high earning investment at a
Unrealised growth potential time when yields from many conventional asset classes
Long-term dividends are sharply diminished.

The Fund is currently invested equally within the three The Funds combination of a high yield with a social im-
sectors of Industrials, Procurement and Media but the pact has led to a number of coinages, with some terming
strategy is based upon demographics rather than being it The Ethical Acquisition while others prefer Socially
sector specific and neither is it limited by geography: it Engaged Capitalism. Based on the Berkshire Hathaway
will acquire SMEs in any EU state. The team behind Acu- model, the Funds strategy is for long term investments
ity has put a lot of eort into creating buy-out vehicles that oer a high yield while being risk-averse so that the
that create what Greenwood terms a low risk environ- initial capital is protected and secure.
ment for investment that will also deliver high rewards www.acuityag.com

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Art Finance & Law
Art Law Foundation Conference Series by Anne Laure Bandle & Sandrine Giroud

Anne Laure Bandle Sandrine Giroud

The practice of art financing and between art funds and hedge funds, to other asset classes such as gold,
investment is representative of the peculiarities of portfolio and equities, and wine. She chaired the
the development of the art market rket fund management, the dierent first round table discussion which
over the p past decades.. IIts no types of loan
loans against art collateral, explored whether the Art market
longer exclusive to a small group oup and the risks and rules for art needed more regulation. David
of players and has as grown in size,
ize, investments. The series is organ
organised Arendt, Managing Director at the
scope and figures. The market
mark has in partnership with Falcon Fine Luxembourg
Lu Freeport and Philip
also transformed
tr sformed the purpose
purpo of Art, Sothebys, LALIVE, borro and Homan, Founder and CEO at the
buying
buy g and holding art. Genera
Generations
ons Oblyon. Fine
F Art Fund stated that they
ago,
go, collectors owned masterp
masterpieces
ces welcome existing regulation, as it
like treasures; they bought what hat The first conference of the made the Art market more ecient.
they liked. Today, as art prices haveve series was held in London
Londo at the Karen Sanig, Head of Art Law at
soared, art buyers can consid
consider a Institute of Contempo
Contemporary Art and Mishcon de Reya, stressed the
profi
ofit as part of their decision. attracted a wide range
r of industry diculty of finding a consensus and
professionals, media and students. creating a law. She warned that the
Last November,
Novembe Geneva-b
Geneva-based d Several experts
ex demonstrated to law is not always suited to govern
Art Law Foundatio
Foundation launched a e
what extent they can foresee and Art related issues, particularly
conference series on Art Finance & reduce
red the risks in art investment with regard to authenticity
Law: Risk, Ru
Rules and Opportunities and why Art as an asset class is disputes. Instead, the art market
in Art Investment.
In This aims to particularly challenging when has begun to regulate itself. The
examine
exam the growing practice of compared to other types of assets. speakers seemed to agree that
art investments and the use of art overregulation might kill the Art
as an investment asset. With the Melanie Gerlis, Art market editor market. An example was provided
help of many renowned speakers at The Art Newspaper and author by Marco Mercanti and Stefanie
from academia and practice, the of the book Art as an investment?, Berloa-Spadafora CEO and Head
series explores securitisation of art warned of the risks that art of Legal at Oblyon. They showed
as an asset class, the dierences investment entails by comparing Art how applicable export laws in Italy

87
FAMILY OFFICE ELITE MAGAZINE
made art business dicult, thereby of such businesses shows the Top legal experts such as Luc
causing a lack of growth in Italys markets thirst for liquidity. Thvenoz and Xavier Oberson
Art market. The afternoon session of the University of Geneva, and
on art lending was introduced The second conference of the James Carleton of Farrer & Co LLP
by Anna Dempster, Associate series will take place in Geneva on will also share their expertise on
Professor at the Sothebys Institute 26 January 2015. Jointly organised the issues of banking, finance and
and editor of the book Risk & by the Art Law Foundation and tax law related to art investment .
Uncertainty in the Art World. She the Centre for Banking and
underlined the limits of traditional Financial Law of the University of These experts will, in particular,
economic models when applied Geneva, it will approach the topic look at issues of compliance in the
to the art market. The markets of art finance and law from the art market: banking compliance,
idiosyncrasies, including factors perspective of players of the local provenance, authentication and,
which cannot be calculated, such market such as Frdric Dawance against the background of an ever
as emotions, call for expert advice of Banque Lombard Odier & Cie SA, attractive art market, discuss the
in order to successfully manage the Manuela de Kerchove of Schroders, recurring question of a need for
risks tied to art transactions. During Yann Walther of the Fine Arts Expert more regulation.
a roundtable discussion, various Institute and Yves Bouvier of Natural
players in Art lending explained Le Coultre. Other international As Andy Warhol once said Making
their model and due diligence on experts, including Jan Prasens of money is art and working is art
an art assets title, authenticity Sothebys Financial Services in New and good business is the best art.
and quality. Further legal issues in York and Fabian Bocart of Tutela This conference series will be an
art lending were enumerated by Capital in Luxembourg will provide opportunity to have a sense of
Amanda Gray, Associate at Mishcon their view on the evolution of art our time and examine whether art
de Reya. Overall, the expansion in as an asset class and the risks and investment has become an art in
art lending models and the growth opportunities in art investment. itself.
THROUGH THE DIN
Philip Watson, Head of Global Investment Lab,
Citi Private Bank. The Global Investment Lab is a
unique team dedicated to helping Family Oces
better understand their investment portfolios
supporting their needs in areas such as portfolio
construction, asset allocation, risk management
and investment strategy.

Family oces require simple and cost eective solutions


for their diverse day-to-day challenges. One area of
concern that surfaces all too frequently is the question
of how to best manage portfolios of disparate assets.
These are frequently advised by a collection of third
party providers, all with dierent custody arrangements
and advisors.
Philip Watson
Bringing the Contours of the Hill into Sight Citi Private Bank
On the surface, the inherent diversification within the
multi-custodian and multi-advisor model appears to
the US slowdown at the start of the year. The tension
satisfy many. However, the challenges this places on
in the Crimea seems like an age ago. Family oces
family oces often outweigh the benefits. It is not
have needed to navigate these and more so, their
uncommon for a family oce to be managing five or more
eect on investment portfolios. Living through
banking relationships, with hundreds or thousands
the moment is one approach. Another has been
- of positions of negligible size within the overall
for family oces to cross proactively examine and
portfolio. While the original premise was to diversify
stress the portfolio to identify potential sensitivities:
risk, the unintended consequence is a heavily diluted
Unravelling risks inherent in a portfolio, fathoming
and unwieldy portfolio. This leads to portfolio inertia:
the outliers, and distinguishing the likely from the
even strongest performing assets end up contributing
probable. Irrespective of risk profile, this approach
very little. Moreover, the practical realities of combining
works for many for the way that it not only identifies
investment oversight with administrative governance -
the risk but helps quantify them about others. The
multiple statements, dierent vehicles, myopic (possibly
old truism investors chase returns, not asset classes
conflicting) advice - can lead to an overall absence of
continues to apply today with a noticeable absence
clarity on the big picture. These requirements - with
of cult in any asset class. Family oces are adept to
their associated cost and time pressures - are akin to
deploying capital across the cycle dynamically both
juggling balls: the situation is manageable until it isnt!
by asset classes and product type. In this environment,
Bringing the contours of the hill into sight before taking
however, it is the underlying risk dynamic that is
the journey up is a critical step. Once that lens is in place,
important, and while solutions change, the underlying
the family oce can focus on making holistic, objective
risk may end up remaining static. Perhaps amending
and proactive decisions.
the adage to investors acquire risks, not asset
classes may be more appropriate. Throwing water
Risk - What Really Matters?
on conventional approaches, family oces need an
2015 has been a year abundant with mini crises, most
approach that cross-examines their portfolios in an
recently a global growth panic, a Greek debt crisis, and
alternative way: linking consequences to implications.

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FAMILY OFFICE ELITE MAGAZINE
The modern investor seeks to classify risks as exposure especially, family oces are increasingly seeking
factors that identify what is driving returns. This solutions for downside risk management and refining
factor analysis, as the name suggests, applies complex their approach to risk management.
mathematics to categorise a portfolio into a set of
actionable factors. By way of example, these factors Among the most prominent trends is a deliberate shift
might include macro factors such as US industrial to redefine the purpose of portfolios from benchmark
production, specific market (e.g., Latin American orientation to an outcome-based solution. In turn,
equities), or factors such as valuations. Identifying this has raised the prominence of an absolute return
which factors a portfolio is sensitive to (out of literally strategies - including hedge funds - as invaluable
hundreds of potential ones) can help guide a family sources of risk-adjusted contributors rather than solely
oce on the key drivers of return and isolate potential alpha. Family oces are also increasingly deploying
duplications in risk. well-defined segregation strategies that result in
separate pools of capital run to dierent mandates.
This additional information is also vital in identifying This may be by asset class, risk, motivation (e.g. pre-
the right solution. With the result being that family, defined level of income) or exposure groups. This
oces can make a better-informed decision on whether brings the contours of the hills back into sight and
to hedge or diversify current portfolio positions. Such is especially relevant for family oce portfolios that
detailed analysis also provides assurance to the family are often unbalanced in risk due to concentrations in
oce that investment exposures are indeed intended. family businesses.

Across the world, we are seeing increasing need for Finally, raising the overall governance level from the
factor analysis among family oce clients. Take very outset through strong investment guidelines with
the recent case of a Latin American family oce clear accountability has been the solution for others.
that managed over $500 million, predominantly This process, though involved, ensures all parties
comprised of a handful of strategic companies. Their including all third party managers are in sync from
concern was how to design a complementary portfolio the beginning. While the exercise is non-trivial - this
without duplicating existing risks. In another case, practice can be supported in a variety of ways through
we dissected the investment portfolio of a Northern some tools and capabilities.
European family oce that managed more than $500
million. Our analysis found that 54% of overall In the end, these developments in managing disparate
risk was concentrated on Western European market assets amount to an end state of preparedness. Family
returns, despite its initially diversified geographical oces want to make informed decisions - with expert
appearance. advice that transforms such complexities into simple,
digestible solutions. And while no one has a crystal
On other occasions, the driver for running factor ball, time and again, we have seen that it is the most
analysis is an initial concern regarding a specific risk. progressive and adaptive family oces that succeed.
One family oce based in South East Asia expressed
concern of interest rate and currency risk within their
portfolio. The findings of the analysis led to a right
sized solution that was tailored to hedge these
particular risks. For these examples and so many more,
the family oce needs are unique. The challenges
they face, however, run in parallel.

Risk Management Takes Disparate Forms


Risk management remains a core part of the family
oce day to day. At this stage in the business cycle

90
WWW.FAMILYOFFICEELITE.COM
MASTER BANKER

FRANCK MULLER

Unveiled in 1995, The Master Banker Collection is celebrating its


20th anniversary with a new model: the Master Banker Index Map.
Drawing its inspiration from the as well as two other world time its modern yet undeniable
businessman of Wall Street, the zones indicated by two hours distinctive look. The line is fitted
Master Banker oers 3 dierent and minutes counters either at 6 with an automatic movement
time zones, all adjustable with oclock or at 12 oclock. and comes in the elegant and
the same crown. Thus its owner timeless
can instantly see the time at the The sun-stamped dial adorned
stock exchange location of his with a map of the world Cintre Curvex shape.
choice, throughout the world. highlights the worldwide To suit every businessman the
The dial features the home time character of this model. This watch is available in a large
in the center (hours and minutes) timepiece combines function, range of colored dial and comes
aesthetics and in gold, platinum 950 and
THE BANKER horological stainless steel with a colored
DISPLAY: complexity. The alligator leather strap.
new sporty and
Central hours, minutes and seconds
stylish luminova The new Master Banker: an
Two time zones that can be set to the minute
at 12 and 6 oclock with date at 8 oclock index give utterly new design and a sporty
this timepiece look for an emblematic model.

91
FAMILY OFFICE ELITE MAGAZINE
Adapted from a Holland & Holland catalogue produced between 1910-1912

STILL MAKING THE WORLDS FINEST


SPORTING GUNS AND RIFLES
D&H
LAN

O
LLAN

LONDON
OL

H D

33 Bruton Street, London, W1J 6HH | www.hollandandholland.com | +44 (0)20 7499 4411
SPIRIT YACHTS SHOWCASE
JAMES BOND YACHT
to appeal to a distinguished
owner looking for an iconic
British yacht with the style and
performance to match. This
elegant, modern, classic yacht is
suited to an owner who desires
a balance of racing and leisure
cruising. Down below, Soufrire
cru
has a forward owners cabin as
well aas a double cabin aft, both
of which have en-suite facilities;
owner and guest privacy.
ideal for o
Sporting a powerful rig and an
impressive displacement
d of just
over eight tonnes, Soufrire
excels on llonger passages when
racing but still has the capacity
ill ha
required forr cruising
cruising.
British classic yacht company to dbut anand enjoyed subsequent
exhibit renowned Casino Royale cruising
years cruis g and participating in
During her recent re refit in the
yacht at London luxury show.. competitive rracing.
ing.
Spirit yard in Ipswich, Suolk,
Spir
Luxury yacht designer and builder er
Soufrire
So fresh coat
rire was given a fre
Spirit Yachts will be showcasing the Spirit Yachts CEO and
nd head designer
of paint on her elegant ice blue
o
iconic 54-foot yacht, which starred
arred comments,
Sean McMillan com ents, Soufrire
coloured external
oloured hull, and all exte
alongside Daniel Craig and nd Eva was designed specifically
ally for Casino
varnish was stripped and re-
Royale following th the production
varnished where necessary. The
companys search for a classically
interior woodwork has been re-
elegant, unique, British b built yacht.
lt yac
varnished where required, and
The scene in which Dan Daniell Craig
C
all equipment from the engine to
and Eva Green glide into VenVenice on-
the rigging has been inspected
board, Soufrire granted her a place
and serviced.
film history. What better
in British film
place to re-launch her to the public
Green in Casino Royale, at this than London; the home of James
years London on Water show at St Bond?
Katharine Docks from 4th 7th May.
Ocially named Soufrire, the On display in berth C09 at the
yacht was sold following her movie London show, Soufrire is designed

93
FAMILY OFFICE ELITE MAGAZINE
Private Banking.

Sometimes 3 letters
make all the difference
Because you shouldnt have to compromise to
achieve excellence, ING Luxembourg offers
you a full experience in Private Banking.
Our experts in asset management, lending
solutions, wealth analysis and planning keep
up-to-date to offer you the most relevant
advice regarding your overall situation.
www.ing.lu/privatebanking

ING Luxembourg, Socit Anonyme 52, route dEsch, L-2965 Luxembourg R.C.S. Luxembourg B.6041
AUTHENTICITY IN THE ART MARKET
AN IMPORTANT ISSUE THAT MUST ALWAYS BE ADDRESSEDRG
Are there more fakes on the art market these days or is
it that we are now flushing the perpetrators out into the
open and becoming cognisant of the scale of the issue?
Since Actor Steve Martin bought a fake Campendonk in
2004 from a Parisian dealer, many other works by its
notorious forger Wolfgang Beltracchi, not to mention
numerous others, are still deemed to be in circulation.
Great art market minds have been coming together in
the US and Europe to debate how to tackle crime in the
art world. This autumn in London alone we witness at
least three conferences addressing the idiosyncrasies
of trading art and artefacts. Market regulation and
bad practice were the subject of Septembers Art by: Pandora Mather-Lees, Art Advisor, SIGILLUS
Business Conference in Westminster. Then in October
Institute exist to protect and validate an artists
international law firm K&L Gates held a seminar solely
repertoire, reputation, copyright and moral rights.
focused on authenticity and now in December; Fake
The committee produces a catalogue raisonn - a
or Fortune - On the Issue of Forgery of Russian Avant-
comprehensive listing of the approved and known works
garde Art takes place at the GRAD cultural space in
by an artist. While this assists buyers to purchase works
Fitzrovia.
ocially recorded as authentic, the art world is full of
petty issues, protectiveness and professional jealousies
The Guardian back in February 2014 suggested that
that can lead to works not being included that should
90% of the works on the Russian Art Market are
be. Von Brhl argues, that the ocial compilation,
forgeries. This is a staggering figure by any standards,
traditionally a printed publication, is deemed to be
and the art market needs to address the problem of
definitive, yet it should have the flexibility to reject
how to verify what is passing hands as more serious
or accept new additions - the solution being an online
collectors, often across a chain of sale, suer from dire
database. Getting In to the book is so very critical to
financial consequences and tarnished portfolios.
selling a work at the right price that authors can be
It is a market full of intermediaries, often trading across
liable for prosecution if they do not publish a work
borders with anonymous clients. Handling stolen, fake
that is, by many accounts, considered an original. The
or suspect artefacts is often not deliberate and a dealer
French Supreme Court ruled in an appeal, ordering the
can unwittingly be an arbiter of bad practice and could
Wildenstein Institute to accept a Kees van Dongen to
be prosecuted for fraud in the worst case scenario.
the ocial list. Its argument? Failure to do so would
Berlin lawyer Frederike Grfin von Brhl pulled no
have a significant impact on the works marketability
punches when she opened the K&L Gates debate
for the owner.
with the pertinent question Who will supervise
the supervisors? There is nothing to stop a self-
On the flip side, authentication committees dont have
appointed committee setting up to authenticate an
it easy. Legal costs can escalate out of all proportion,
artists oeuvre and some boards have comprised
and they have been sued and coerced into making
questionable or compromised ocials. As a result,
positive statements about a work of art they genuinely
hapless buyers have been fooled by sham certificates
have doubts about. The Pollock-Krasner board was
validating fake artworks. Even where genuine, the so-
even shut down, bankrupted, over a law suit about a
called committees of experts can also be a law unto
disputed work. Equally there are cases where artists,
themselves. Foundations such as the Wildenstein
Picasso included, leveraging Doit dauteur, their Moral

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FAMILY OFFICE ELITE MAGAZINE
Right, have disavowed genuine works. The auctions own when a scientific examination is carried out in
houses tend to come under a lot of scrutiny here conjunction with applied historical expertise with their
because of the public nature of their activities, the large resident art historians.
numbers of works of art passing under the gavel and
the soaring values which result in higher stakes when a Are there other ways to verify what you are buying
forgery surfaces. At the Authenticity debate, Sothebys at auction or from your trusted dealer? Not for
Cecilia Fletcher suggested that the criticism frequently existing works on the market, however Aris Title
levelled at Auction houses trading in these works is insurance company is sponsoring a novel technology
unfair. Their experts carry out careful due diligence, that can be embedded into a painting in the form of
based on years of experience in specific fields and go a scannable label that will verify the owner and the
out of their way to verify the artefacts they take on work. The somewhat unwieldy named Global Center
board. How rigorous is this due diligence in practice, of Innovation for i2M Standards is doing for art what
however? Sarah Charles, Senior Legal Counsel with companies such as Spectra Systems does for the luxury
Christies, says that they typically take three steps. The goods industry fighting fraud with complex technical
first is basic connoisseurship using the appraisers and innovation. The organisation is working globally and
experts in the appropriate departments and second already has early adopters for its solutions. While one
there is the careful verification of provenance and imagines that any unbreakable code will eventually
associated documentation. Finally, scientific analysis be cracked by hackers, Aris CEO Lawrence Schindler
is carried out. makes a strong case for the robust nature of i2M and
such a measure, when supported by an industry with a
This form of materials analysis is now becoming serious problem that inhibits its ability to trade, must
more accurate and also cost eective. Science is now surely be applauded.
enabling buyers and sellers to have more confidence in
trading art as techniques improve. It can rule out the There is an analogy here with house insurance.
possibility of a work being a forgery and is a critical Properties with alarm systems pay lower premiums
part of the due diligence loop. Laboratories such as and are less at risk from burglary. Leaving ones door
Art Analysis & Research run by Nicholas Eastaugh, the unlocked altogether is plain stupidity and prevention
scientist famous for nailing Beltracchi, have a suite of is better than doing nothing. A system like i2M needs
forensic gadgets at their disposal that would not be out to become industry standard throughout the world and
of place in a James Bond film. These tools include bought into by all the various stakeholders to succeed
highly sophisticated digital X-ray, UV and infra-red and that is a tough call, so the market will be following
analyses, deep specialised imaging and microscopy. its developments.
This is all good stu and helps to eliminate doubt,
but what if a client taking a highly prized Rembrandt Meanwhile back to Russia and the final word on
to market doesnt want to know the truth in case the the value of these public symposia from Natasha
work, which he paid millions for, turns out not to be Butterwick Director of Butterwick Russian Art Gallery.
worth the canvas it is painted on? Nicholas Eastaugh Natasha and James Butterwick have been fighting for
says, We believe scientific analysis in combination transparency in a world of pandemic corruption which
with a comprehensive understanding of artists use of goes back as far as the Cold War when many works with
material represents the future of due diligence in the murky provenance were smuggled into the West: The
art market and demand for it is expanding rapidly. That very public battle against Russian fakes and especially
is why we are investing in our capabilities to stay ahead those who provide these second rate paintings with
of forgers while expanding both our geographical certificates of authenticity is reaching its apogee
reach and the talent in our C-suite Generally this kind reports of arrest warrants soon should become public
of intricate detective work can be applied to works on knowledge. Such conferences are a vital cog in the
paper, canvas, sculpture, ceramics and of course wood machine to finally bring this absurdity into a wider
with radiocarbon dating. AA&R claims the science domain.
has limited value in isolation; it really comes into its

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SCIENTIFIC
EVIDENCE
Reveals Art forgeries in Geneva, Switzerland
Kilian Anheuser: Executive director, Head scientist
FAEI - Fine Arts Expert Institute

Today art forgery scandals With 20 years experience, Dr To address specific questions
regularly fill the news as paintings Kilian Anheuser, FAEIs Director other techniques may be used,
and other works of art are taking and head scientist says, Our team for example, to identify modern
on an increasingly important role of specialist scientists, paintings industrial organic pigments
as an alternative investment. In conservators and art historians introduced to paint formulations
a market where traditional art search for inconsistencies in a at more recent dates. This
historians alone can no longer painting. We always start with type of examination requires a
guarantee authenticity, science a thorough visual examination micro sample measuring a few
comes to the rescue. At Geneva of all the elements that make tenths of a millimeter, taken
Freeport, FAEI Fine Arts Expert up a painting: stretcher, canvas, with the tip of a scalpel under
Institute (www.faei.org) in painting ground, the dierent a microscope. The sample is
partnership with SGS Art Services paint layers, and finally the varnish. then analysed using state-of-
(http://www.sgs.com/en/Arts-and- To us, the back of the painting is the-art analytical instruments.
Culture.aspx) provide scientific just as important as the front.
authentication services for Following the examination, the
paintings and other works of art. Imaging in infrared and ultraviolet client will receive a report verifying
light will reveal the artists whether the artists materials
Scientific examination of works of original underdrawing and recent and working practices match
art began in the 1960s in museums restorations. X-radiography authentic references or if there are
and other learned institutions. reveals concealed damages as significant dierences. Also, it will
For many years, these services well as the artists handwriting. demonstrate to what extent the
remained primarily a subject of These examinations are non- painting has been restored. Sandra
academic interest with studies invasive and provide important Mottaz, paintings conservator at
restricted to museum paintings. information to distinguish FAEI, confirms, The latter is an
However, in recent years new between an original and an ancient extremely important element
services tailored to private clients or recent copy. Valeria Ciocan, not only for the collector and
are oered by independent an imaging specialist at SGS Art indeed any person appreciating
laboratories that benefit from Services adds, It is fascinating a work of art, but it also carries
an extensive range of specialist to be the first person after the important implications for its
reference data gathered over the artist to see the original drawing valuation. Jacqueline Couvert,
years by academic institutions beneath a painting, a design a senior scientist at FAEI, sums it
worldwide on many of the well- that takes us back to the very up, Around 80% of the paintings
known artists from all periods. moment of creative inspiration. that we examine turn out not to

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be the work they were taken for when they were purchased
by their current owners. This does not necessarily mean they
are forgeries, they may for example also be high-quality
historic copies. For many centuries, artists learnt their trade
by copying old master paintings. The resulting works often
have become collectibles in their own right. However, at FAEI
we believe that the owner has the right to know, as well as his
insurer or a potential buyer. There are positive surprises too,
for example when an elaborate underdrawing is indicative
of an original design rather than a second version or a copy.

As works of art are highly individual objects, the scientific


approach has to take into account the period, the presumed
artist, the technique and other features. Dr Isabelle Santoro,
scientist and project coordinator at FAEI, explains, FAEI will
issue a detailed quotation, free of charge, on the basis of a short
questionnaire filled in by the client, and of photographs of the
painting in question. All information remains fully confidential.
As some of the analytical equipment is portable, certain
investigations can also be carried out on the clients premises.

Conveniently situated inside Geneva Freeport, a hub of the


international art market, the laboratory serves a variety of
clients, ranging from private collectors to art dealers, insurance
companies or professional investors who require scientific
expertise as part of their due diligence procedures. Yan Walther,
Managing Director of SGS Art Services, points out, Owners
of paintings often come to see us only when doubts have
already arisen about their works. In order to avoid undesirable
situations we highly recommend that a condition report and
a technical examination should be a standard element in any
pre-sales procedure similar to a home survey or a technical
inspection before the acquisition of a vintage motor car.

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CANNES COLLECTION
G
ALL YOUR HEART DESIRES
Cannes Collection is a brand new show, debuting in Eric de Saintdo, former organizer of the Cannes
June 2016, conceived by friends and collaborators Yacht Show.
Bertrand Foche and Eric de Saintdo, both renowned Michel de Rohozinski, President of Azur Hlicoptres.
for putting on international shows such as Premire La Squadra, Agency specialists in experiential car
Classe, Whos Next, Fame and the Cannes Boat & marketing who manage all test drives during Le
Yacht Show. Mondial de lAutomobile in Paris.
Romain Ra, Horology expert, retained by the auction
Cannes Collection is based on evolving notions of house Artcurial.
luxury and hopes to inspire and delight a discerning,
global clientele who seek convenience, speed A visit to Cannes Collection promises to be a truly
and service as well as world-class quality and unforgettable experience with the opportunity to try
performance. many of the fabulous items showcased. Sail a yacht
out into the Bay of Cannes and see how she performs
Here you will find yachts from 20m to 60m, private on the open water or take a beautiful car for a spin
planes, helicopters, prestige cars and motorcycles, with an experienced driver at your side. Take a trip
art, property, travel, objets dart and morea selection over the old town of Cannes in a helicopter or peruse
of the very best brands and finest products carefully impeccable timepieces and stunning contemporary
curated in one of the worlds most beautiful cities. art in one of the modern pavilions. A number of
auctions of exceptional and rare pieces will be held
Held from June 2nd to 5th, Cannes Collection is during the show culminating with a charity dinner
scheduled to run immediately after the famous in support of The Womanity Foundation, created
Cannes film festival and the Monaco Grand Prix, two and chaired by Yann Borgstedt, whose mission is to
landmark events that draw the eyes of the watching improve the access to quality education, training and
world and which, for many visitors to the Riviera, empowerment for disadvantaged girls and women.
represent the beginning of the Summer Season.
The Old Port of Cannes, one of the most beautiful
In fact, everything at Cannes Collection will be Mediterranean ports, will host CANNES COLLECTION,
available to try and to buy, lease or order right away thanks to the commitment and confidence of the
to enjoy over the coming summer. A concept summed City of Cannes and the Nice-Cte dAzur Chamber of
up in the shows rallying cry WANT IT NOW? HAVE Commerce and Industry. The perfect showcase for
IT NOW! hosting this new event, the strategic location of the
port facilitates the display of prestige automobiles
Cannes Collection will be held around the famous and motorcycles, helicopters and private jets around
Old Port in Cannes, a unique and iconic location in an extraordinary selection of yachts up to 60 metres
a city that already hosts some of the most important long.
shows in the world, boasting as it does a beautiful
harbour and bay, fantastic hotels, restaurants, bars Cannes Collection runs from June 2nd to June 5th
and nightlife. At the show itself, an exclusive network 2016. Further information is available at
of sector experts and specialists will be on-hand to
oer advice and insight including: www.cannes-collection.com

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IMPACT AND
PHILANTHROPY by Christopher Carnie and Wolfgang Hafenmayer

There is a Babel of new terminology in philanthropy. We six reasons for the growing interest in impact:
talk about impact investing, social enterprises, Social A new generation of philanthropists, with new
Impact Bonds, soft loans, patient capital, quasi- demands
equity and crowdfunding. We talk about Programme Growing professionalism in the philanthropic and
Related Investment or Mission Related Investment non-profit sectors
and philanthropic banks (an apparent oxymoron, A search for sustainability in investments
until one, realises that these are foundations acting as The identification of significant social and
philanthropic banks.) environmental problems, and opportunities
The entry of foundations
These and a range of other terms have been created by o As grant-makers interested in impact
the new professionals operating in the non-profit space. o As investors interested in impact
This is a flowering of new, or substantially recycled, tools The potential for catalysing system change, by
for philanthropy designed to meet the needs of the new demonstrating impact
generation of philanthropists and their advisers.
NEW GENERATION, NEW IMPACTS
IMPACT Some people say that venture philanthropy started in
Impact is the theme of many, perhaps most, of the the 1960s, says Wolfgang Hafenmayer, Head of Societal
conversations that one has with philanthropists. It is Impact Advisory at Trusted Family, but it only really
used in a number of ways, with a range of meanings. took o in the 2000s when business people came into
Impact is used to mean a measurable change in society the sector. They brought their business mind-set, that
or in the environment, normally with the implication of people who had made a lot of money quickly. The
that this is a change for the better. It is linked to the word impact investing field emerged here. They focused on
investment to mean an investment that brings both organisations that could link making money and doing
financial change and social or environmental change good. This link is present, says Wolfgang, in all asset
with, again, the hoped-for changes being positive. classes; in all of them you could find ways of making a
positive impact.
Why do we hear so much about impact? Interviews and
research conducted for a forthcoming book authored by Judith Symonds, a consultant in philanthropy, strategic
Christopher Carnie Uncovering Philanthropy in Europe: planning, and public aairs, says that the younger
A practical guide (Policy Press, 2017) suggest at least generation want to be certain to have an impact, and

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to control where their money goes. These ideas were diculties and contradictions inherent in measuring
underlined by a Dutch philanthropist and social investor philanthropy; There is a real demand [amongst
interviewed for the book, who said that social impact is philanthropists] to understand impact. They are used to
new for our family. It combines two things - doing good, working with KPIs [Key Performance Indicators]. When
and you can reuse money multiple times. We are an [the foundation board] interviewed me [for this job]
entrepreneurial family, so we like the entrepreneurial they asked me about KPIs. I said that the foundation
logic, the discipline, and rigour. With a social impact was working with complex social and/or cultural issues
approach, you become co-owner rather than just which are not always measurable in the way that an
donor. But there are nuances, and this philanthropist industrial product can be measured. Measuring social
is not solely interested in impact; his motivations mix impact needs a long-term vision that is not always
giving with the measures of eciency that impact compatible with short-term projects.
oers. Social impact is a complement to [traditional]
donations. We have been an impact-first social investor INVESTMENT, SUSTAINABILITY, AND IMPACT
for a long time. Impact is part of a convergence of ideas. It has emerged
as the basis for a class of investment. Investment
IMPACT, THE PROFESSIONAL APPROACH with impact that creates both financial and social or
Impact could be a way of expressing your professional environmental value is a fast growing class of assets.
status professionalism through impact measurement The annual J.P. Morgan/Global Impact Investing Network
as Serge Raicher, co-founder of EVPA expresses it. (GIIN) survey of the sector for 2015 (Saltuk, 2015)
reports a 7% growth in capital committed between
Funders, fundraisers, and sta in the field have become 2013-2014 and a 13% growth in the number of deals,
more professional, says Arnout Mertens, General with survey respondents managing a total of US$60
Director of Support Services at Salvatorian Fathers and billion in impact investments.
Brothers in Rome. We are moving away from charity
to impact. Governments are imposing more stringent Through the growth of impact investments more and
rules. They dont fund without a needs assessment, more people were arguing that every investment has
and if we dont have a financial [management] manual an impact, the only questions are weather this impact
in place then the project does not get the grant. We is positive or negative. And many people would argue
need three quotes for bills of quantity - in places where today that we are at a point in human history, where we
even basic literacy may be a problem. There are visits cannot aord more investments with negative impact.
from funding organisations, financial audits There has
been a significant change in funder attitudes over the FOUNDATIONS OF IMPACT
past two years. Arnout debates the practicality of all Foundations in Europe seek impact in their grant-
of this. Salvatorian Fathers and Brothers work in what making, but they are increasingly also seeking it in
he describes as forgotten places the lost villages of their investments. This is a radical departure for a
the Global South. Data gathering, reliable monitoring, foundation sector in Europe that has, for years, focused
long-term impact evaluation are all very hard to achieve only on the financial, and not on the social returns from
when there is no electrical power, no or few literate its investments. That requirement was laid down in
adults and the constant threat of natural or human regulations until 2011, for example, the UK Charity
disaster. Commission guidance to trustees was to maximise
financial returns. In that year, the Commission issued
That view is seconded by Marie-Stphane Maradeix, new guidelines on investments that help the charity
CEO (Dlgue gnrale) of the Fondation Daniel et to achieve its mission where this has no significant
Nina Carasso, a philanthropic foundation based in Paris financial detriment (mission related investment). This
and Madrid which derives from the family that owned new guidance allowed foundations in the UK to make
Danone, the dairy foods company. She illustrates the impact investments. As is often the case, the US had

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been there before; in his 2016 book on the impact consultancy on philanthropy and non-profits. He is a
economy, Dr Maximilian Martin (Martin, 2016) reminds researcher, consultant, and trainer in philanthropy. His
us that the Ford Foundation pioneered PRI [Programme book, Uncovering Philanthropy in Europe: A practical
Related Investment] in 1968. guide will be published by Policy Press http://www.
Philanthropic foundations can provide the first finance policypress.co.uk/ in January 2017.
that leads to a social enterprise being created; the www.factary.com
grant that funds research, or the zero-cost loan that
buys a first vehicle or building for a project. Because Wolfgang Hafenmayer oversees the Societal impact
foundations are not beholden to shareholders, they solutions for Business Owning Families at Trusted
can aord to take on projects that oer no return, or a Family.
loss. This is the idea of de-risking, where a foundation
accepts the highest risk tranche of a loan or investment Before this, Wolfgang built LGT Venture Philanthropy
in order to reduce the risks for other investors, and thus from scratch to a recognized global leader in impact
to encourage them to join the loan or investment. investing. Having started with the support of the
Princely Family of Liechtenstein, Wolfgangs global
BACK TO PHILANTHROPY team of investment managers and impact investing
In no basic definition of philanthropy does it say that you advisors took care of a significant number of families
cannot get anything back, says. Wolfgang Hafenmayer. spread over five continents. Before starting LGT
Sometimes doing good means being tough and saying Venture Philanthropy (2007), Wolfgang gained rich
I want something back. experience in the industry as an investment manager
with BonVenture. He also helped set up Forma Futura,
REFERENCES a sustainable asset management company. Previously,
Martin, M., 2016. Building the Impact Economy, Cham: he was the executive director of Consileon and also
Springer International Publishing. Available at: http:// worked for Bain & Company.
link.springer.com/10.1007/978-3-319-25604-7
[Accessed December 4, 2015]. Wolfgang is a well sought-after speaker in his domain
Saltuk, Y. et al., 2015. Eyes on the Horizon: The Impact of expertise. For his book The Future Makers, he
Investor Survey, London: J P Morgan. Available at: www. interviewed 230 social entrepreneurs, politicians and
thegiin.org [Accessed February 15, 2016]. scientists in 26 countries.

ABOUT THE AUTHORS: www.trustedfamily.net


Chris Carnie is founder of www.factary.com, a

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BNY MELLON
The Softer Side of the Evolving Canadian Family Oce

Trevor Hunt Anthony J. Messina

The concept of a single family oce or multi-family are fundamentally, but not always, dependent on size.
oce is fairly new to Canada compared with Europe Substantially larger family oces (over $500 million in
and the United States. However, particularly since assets) can attract talent which can make it economically
2008, there have been an increasing number of family advantageous to carry out a full-spectrum service whilst
oces that have been created upon liquidity events. others may benefit from leveraging resources and
This is typically a result of family assets having grown intellectual capital collectively. The latter describes a
considerably and required specialised expertise or due multi-family oce approach.
to first generation family members facing progressively
more complexities and embracing sustainable wealth Putting the investment related activities aside, we are
transfer to the next generation and beyond. Significant noticing an escalating demand for what some refer to as
Canadian families have accumulated wealth through the softer issues within the family oce environment.
various industries, although, predictably, these have
often been concentrated within commodities, real These responsibilities may include:
estate and infrastructure, and to a lesser extent, 1. Family governance Most of us have heard of the
technology. Given that our firms approach here in shirtsleeves to shirtsleeves phenomenon whereby the
tsleeves phenomen
Canada is most similar to that off the investm
investment arm wealth that has
as been
en created by the first generation
generatio
of a multi-family oce, we fully appreciate
ppreciate that no two is signifi
sig cantly
ntly diminished
di nished if not decimated by the
families and no two family oces are alike. On a case- third generation.
neration. Family
mily governance formalises the
by-case basis there should be su cient flexibility in process
pro ess for preparing
prepari the family to receive the wealth,
erviced in-house by
deciding which functions are best serviced ther than merely getting
rather etting the money ready for the
the family oces versus those servicesvices which should family. The first step
ste in this process is establishing
be out sourced, to ultimately maximise imise eciencies
cienc s open communications
communicatio and trust within and across
and quality of services for the family. decisions
y. These dec ions generations. A family ocece can play a key role here, in

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convening family get togethers. These may start by in Canada has given rise to peer group networking
being purely social gatherings and gradually progress amongst auent families who share with each other
to include more formal discussions and exercises. the challenges and the successes of operating a family
This could encompass collaboratively establishing a oce in order to establish the optimal practices that
family mission statement, deciding on a family vision may be followed. For instance, earlier this month, one
based on shared core values, and designing a code of of the senior members of our team attended a private
conduct for future meetings. As the family grows in family oce conference in the remote location of Ban
numbers and wealth, this often also includes defining in Alberta. The audience included family members
roles and responsibilities, possibly codified in a family and their advisors from around the country with
constitution. representatives from Vancouver, Edmonton, Calgary,
Toronto and Montreal. The agenda, for the most part,
2. Education A key early step in preparing addressed these softer issues with an emphasis on
families for their inheritance is educating the people within the family oce, family dynamics,
beneficiaries so they become better stewards of their governance and education. By coming together
future wealth. This can start with basic instruction on in a forum such as this, families and their advisors
dierent types of investments and does not stop at can learn from each other to a. mitigate potential
asset allocation and investment policy knowledge. It pitfalls and b. uncover any hidden opportunities, to
should however include: how to select an investment eectively execute best practices. Said Trevor Hunt,
manager, that is, both quantitative and qualitative Wealth Director at BNY Mellon Wealth Management in
criteria with arguably a greater emphasis on the latter. Toronto.
One facet to be stressed is a deeper understanding
of the motivations driving an investment managers Although the financial assets of the family oce
decisions. This can be achieved through asking the may seem paramount, successful multi-generational
right questions e.g. how is the investment manager families have demonstrated the value of developing
compensated? Does he/she have any of their own human and intellectual capital as well. The softer
wealth invested in the underlying strategy? If so, what issues cannot be ignored and are increasingly a focal
percentage of their own wealth is invested alongside point for family oces across the country. This is an
their investors? area where leadership from a single or multi-family
oce can be a major plus.
3. Philanthropy Many financially successful
Canadian families are generous and philanthropy is Anthony J. Messina is the President of BNY Mellon
one area that is relatively easy for the entire family Wealth Management based in Toronto. The Canadian
to be able to participate in. While its nice to give business advises on nearly $5bn in assets primarily
family members the chance to allocate some of their through third party investment managers and
charitable gifts to their own favourite causes, we have predominantly for significant Canadian families in
observed that families benefit on many levels when addition to institutions.
they dedicate at least a portion of their donations www.bnymellonwealthadvisory.ca
to family philanthropy. By making a collective
decision to contribute to a specific cause or causes
that reflect the familys values, multiple generations
participate in joint decision making in a feel good,
nonthreatening way. If used correctly, philanthropy
can be an eective tool for evaluating diering
family members communication styles and assist in
nurturing decision making capabilities within families
and across generations.
Like other regions, the evolution of family oces

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Alternative Risk Management
for Family Oces by Dennis M Govan

Whether its a Single or Multi- commentary. Therefore, in this classes and several policies. Even
Family Oce, the challenges and article, I will concentrate on the if the family/FO has worked with
demands in meeting your clients wider subject of risk management trusted brokers for many years,
needs, objectives and expectations and especially the use of insurance the lack of transparency in the
are huge. Each family has its own to cover other asset classes and level of brokerage commission can
priorities depending upon the risks. be an issue. Do you know if you are
evolutionary stage of the family paying 5 percent or 40 percent?
oce, family culture, values, As families evolve and invest more
demographics, size, age, education, into custom and multiple homes, Families with substantial assets
ambitions and other factors. fine art, collectables, jewellery, who insure their homes, yachts
yachts, aircraft, and car collections, and valuable collections through
Since the financial crisis of 2008- whether this is for purely personal these traditional brokers or agents
09, it has become obvious that enjoyment or investment and with some of the better-
robust risk management is a crucial diversification, there is nevertheless known market carriers, frequently
service that Family Oces (FOs) an increased need to consider how overpay for protection that still
must provide for their clients. With to protect the real value of these leaves them exposed to significant
this said, from discussions with FOs, assets. The heightened threat financial loss.
Trustees, and other professionals of Cyber-attack and Kidnap and
together with various surveys on Ransom must also be given serious Furthermore, the diversity
this subject, it would seem that consideration. of the risk exposures for the
many FOs unfortunately still fall extended family often tends to
short in this regard. Recently introduced and proposed be overlooked with the insurance
UK tax changes in respect of program focused only on the
While most FOs do of course have domicile and UK residential needs of the patriarch/matriarch.
specialist investment portfolio property, including potential IHT, It is not uncommon for families
risk analysis, measurement create additional challenges and to view the cost of insurance
and reporting capabilities and insurance considerations. It is, prohibitive and rather run the risk
tools; they typically do not have therefore, imperative that the proper of loss, believing that this is self-
comprehensive risk management attention is given to the assessment insurance, which it is certainly not!
processes and policies in place that of current insurance requirements, There are, however, alternatives
cover many of the other inherent adequacy of existing policies, that can achieve significant cost
risks experienced by families and security options, contingencies and savings and flexibility in cover.
their businesses. of course what happens if you have The Alternatives
to make a claim.
The recent investment market Stand Alone Captive Insurer
volatility continues to highlight the Traditional Insurance A captive insurance company is
importance of appropriate portfolio Insurance coverage for a FO is not eectively an in-house insurance
strategies, tactical allocations, a simple single product. In many provider formed primarily to
and regular reassessment and has cases, the FOs have multiple brokers insure its owner and can be viewed
already had extensive industry or agents covering dierent asset as a form of self-insurance.

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The use of a captive insurance company can result requirements. The same Cell can be used for several
in a meaningful reduction in overall insurance costs, categories of insurance. This bundling of risks into
improved risk management, ecient administration, a single policy can significantly ease the burden of
and potential tax benefits in some cases. administration and benefit from the PCC Cores overall
reinsurance market pricing and reduced brokerage.
However, the high operating costs and regulatory However, if preferred or volume and value justify the
challenges of running youre own stand-alone captive business case, individual Cells can be used for dierent
insurer have meant that captives have typically been categories of insurance.
the reserve of major corporations only.
A Cell must meet specific solvency requirements
An alternative structure used by many SMEs, providing based on the risks underwritten and any risk retained
very similar benefits but at a substantially lower cost is within the Cell. The owner, therefore, has the ability
a rent-a-captive oered by an insurance protected cell to fund any smaller losses from the capital of the Cell,
company (PCC) or Segregated Account Company (SAC) which can accumulate over time from the savings
or Segregated Portfolio Company (SPC), depending due to the lower costs of re-insurance. Typically, the
upon jurisdiction and relevant legal framework. owner will continue to pay premiums at the same
level as previously, especially if this is tax deductible,
There are some subtle dierences between PCCs, but as the costs of the re-insurance is lower than the
SACs, SPCs, but in essence, all have accounts (cells) current premiums, this creates the surplus within the
containing assets and liabilities that are legally Cell. The greater the amount of the smaller claims the
separated from the assets and liabilities of the owner is prepared to self-fund, the greater the savings
companys ordinary account. For the purpose of this as insurance companies penalise clients that make
article, and my preference, I will concentrate on the smaller claims.
Guernsey Insurance PCC.
The Cell owner can decide to reinsure all the risks
A PCC Cell rather than self-funding the smaller claims. The Cell
Guernsey pioneered the introduction of the PCC is thus used for re-insurance arbitrage to benefit from
for insurance companies in 1997 and is Europes the lower insurance premiums available from the re-
leading captive insurance domicile with more than insurance market. If no risk is retained in the Cell,
800 international insurance entities, of which 444 there is no minimum capital requirement at Cell level.
are PCC cells. Approximately 40 percent of FTSE 100
companies have captives in Guernsey.

The structure consists of a Core, which has an


insurance license granted by the Guernsey Financial
Services Commission GFSC. The Core can issue
an indefinite number of Cells which are separately
approved and licensed by the GFSC to provide captive
insurance to the owners of the individual Cells. As
each cell is legally segregated, it has its own assets and
liabilities and the balance sheet of one cell cannot be
co-mingled or used to meet the liabilities of another.
The physical assets are not held in the Cell. Each Cell is
independently audited with no consolidated reporting
at Core level.

Each Cell has its own captive insurance programme


that is tailored to meet the owners individual

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Flymenow

Fine Dining Soaring at 30,000ft


Enhancing the Charter Catering Experience is on the Menu
Plane food doesnt have a great change at 30,000ft, suggesting
reputation in fact; its so bad the food is unappetising and
many people simply refuse to bland. While this may be of
eat the meals that are served on little comfort to commercial
flights by the cabin crew. passengers, for those in the
private charter industry, there
Recent findings have tried to continues to be an increase in
oer answers as to why plane scrutiny of what culinary delights
food is viewed so negatively and are available on board.
propose that perhaps its not the
airlines fault. Cornell University Andrew Whitney, commercial
indicated the noisy atmosphere director at private jet and
in the cabin can actually change helicopter charter company,
the taste of food while scientists FlyMeNow, reports that a stark
at Oxford University believe our trend is emerging among clients. Andrew Whitney
taste buds and sense of smell More and more, consumers are FlyMeNow Founder

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FAMILY OFFICE ELITE MAGAZINE
demanding the very best for their money from flights that can incorporate up to two or three
aircraft to sta to destinations everything is stops in a day.
under the microscope, especially the food that is We also provide fine dining for larger charter jets
being served on-board. carrying passengers on long-haul trips.
He said: Research into plane food always sparks
interesting debate and the topic is always on our Passengers can enjoy options including Kopi
minds at FlyMeNow. We provide clients with the Luwak Coee - renowned as the worlds
option of a private jet charter around the globe, most expensive coee - unique cocktails and
so our client base is extremely diverse, with a mix personalised tasting menus. Chefs can also be
of nationalities and backgrounds frequently flying provided on board wide body jets. They also
with us. recently introduced an exclusive, free training
service for flight attendants, teaching techniques
This is why its important that tha every flight is and skills required to deliver fine food at altitude.
kills requi
personal and is tailored requirements
ored to their exact requi
we regularly receive
ive requests for food and d drink But what
hat about the research into
int the taste of food,
which means its imperative
mperative that our oeringer g is 30,000ft
30,0 0ft up in the sky? Daniel said: We cant do
of the highest standard.
dard. In its eort to enhance
nhance anything
any ng about the changes to peoples taste buds
bud
the service, FlyMeNows
eNows catering companyompany of while
whi they are travelling. But what we can do is
choice is On Air Dining, pioneers in the private
ining, pionee ensure
ensu the food we are oering is of the highe
highest
charter catering industry
dustry for a number of years. standard,
stan rd, and that is our constant challenge.
challenge
With Daniel Hulme, CEO, a at the helm, it constantly
revolutionises its menu to meet all the current He continued:
ntinued: We live in the worldw where
demands of the client, while keeping an eye on everything
every ing is instant. Technolog
Technology has developed
upcoming trends and d client eexpectations.
ectations. to the
th point that anything we w want or need is at
the click
c k of a button. We want things now which
Andrew added: On Air Dining is very focused on is why
wh we are seeing a growing demand from our
providing the best client
ent experience, and we share
shar clients to
o oer on
only the best because they know
that vision. What Daniel
niel and his team are doing
do they cann shop around. The end to end service
is the best in in-flight
ht dining and that exexpertise has to be on point and to ensure every aspect of
complements our service. launched and
rvice. Daniel lau the flight is the best it can be. We want to make
revamped On Air Dining ning in early 2014 and is the experience as pleasant and memorable as
regarded in the industry
stry as aan in-flight cuisine possible for our passengers.
expert. He said: At On A Air Dining we believe
the catering service can make or break a flight Andrew agrees, adding: The private aviation
experience, so we have gone to great lengths industry is growing at a rapid rate and continues
to deliver a food service that incorporates food to increase in strength as we move through
trends, associated with elite restaurants, and take 2015. If operators want to stay at the top of their
them into the air. game, they need to be looking at their onboard
experience and seeing what they can improve.
The in-flight dining experience we can provide
varies according to the mission type. For example, Consumers demands are changing, they want
we have specially devised menu boxes that are more and its our job not only to meet that
specifically for the short haul, or for round robin expectation but also give them value for money.

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HOW PRIVATE BANKS
CAN HELP FAMILY OFFICES
There is a growing recognition that sometimes not. Family oces are
for wealth to be sustained over typically dedicated to providing
several generations, collaboration professional and personal duties
and good communication is for the family. They centralize the
required between family members. execution of investment strategy,
This lessens the potential tax services, insurance planning,
impact of family disputes, poor philanthropic advice and personal
decision-making, unprepared services.
heirs and feelings of entitlement.
This is especially the case with Given the breadth of the
multi-branch families that are institutional level of access and
geographically disbursed. This service needed by UHNW and
article explores how private banks family oces, some of the needs technology solutions to support
can be integrated into this process, are outsourced to the larger private consolidated reporting and risk
and why is can be advantageous to banks. The demand for outsourcing management. In outsourcing, some
do so. is growing rapidly, particularly or all of these areas have a higher
amongst a handful of bigger global probability of better transitions
A family oce architecture has private banks. In particular, the of wealth from generation to
three elements: private banks that are succeeding generation a key advantage, as
1. Size: This is the number of in partnering with UHNW and research has shown that, in 90
family members, the number of family oces are those that can percent of cases, family wealth
sta and the amount of assets oer a mix of positive investment dissipates by the third generation
under management. results, deep intellectual capital, (source: The Williams Group,
2. Complexity: This includes quality research, unique products Raymond James).
investment types, number of and dedicated advisory teams
generations in the family and legal that can deliver exceptional client A large Private Bank can assist in
entity structures. experience and have corporate four main areas:
3. Autonomy: The degree to reputations for ethics and 1. Family mission statement.
which professional functions innovation. 2. Investment Strategy.
are outsourced, what the typical 3. Governance Structure.
professional services are and what While the decision to outsource is 4. Wealth education curriculums.
the advantages of outsourcing are firstly driven by considerations of
if done with private banks. cost, flexibility and confidentiality, The family mission statements
family oces typically look to purpose is to assist the family
The burdens that come with outsource functions where there in developing and establishing
significant wealth can be complex are diseconomies of scale (i.e. too fundamentals for the extended
and challenging. This is why much volume), specialized skill family to follow and learn from. The
ultra-high net worth (UHNW) needs (e.g. aircraft maintenance, objective of the mission statement
individuals and wealthy families estate law), low-cost access to is to define the core purpose of the
are creating family oces. alternatives like external fixed family, and in so doing establish a
Sometimes, a family oce can be income managers and new guiding force for relevance of the
separate from the family business; current and future generations. In

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considering the mission statement in order to achieve strong long- products, and independent advice
purpose and objectives, some key term returns. The private bank (i.e. private banks that do not own
questions need to be addressed, partner can assist in all areas of a hedge fund manager, do not run
such as what the meaning of the process: a private equity business, and
the family wealth is and why the 1. Investment policy statement do not own a fund management
family business exists. Ultimately, defining objectives, benchmarks, company). In addition, private
the family mission statement roles and responsibilities. banks that can oer the family
should help to align family core 2. Asset allocation considering oce access to their institutional
values and ideals and facilitate potential risks and potential trading platforms should be
leadership. These core values rewards across all asset classes preferred. In particular, access
should be regularly reviewed and and regions, also taking into to a capital markets platform
periodically re-confirmed. account liquidity and behavioural can oer speedy and eciently
biases of the family. priced execution with smooth
In formulating an investment 3. Portfolio construction using settlement. Some larger private
strategy, the first step is to establish the banks research and analytics banks are also able to oer access
an investment committee. This capability, establishing minimum to their institutional teams, so
involves selecting experienced and maximum exposures by enabling family oces to create
investment professionals both asset class and region, as well as uniquely structured hybrids and
generalists with broad experience rebalancing rules. Performance customized structured products
as well as specialists in key areas reporting - regular in-depth based on objective risk profiling
and a strong well-respected reporting of performance against and desired outcomes.
Chairperson. benchmark and objectives.
The investment policy can be
The investment committee should If the family oce does not need framed by the private bank
have no conflicts of interest. Its to outsource all of these elements and needs to consider firstly
aims should be to formalize the of the investment process, then the investment objectives;
investment process, enhance the private bank could undertake for example, how much loss is
portfolio strategies, educate a competency risk analysis to acceptable? What is the financial
family members, provide a help identify specific areas of goal? What is the potential
forum for discussion for internal weakness within the family oce annual cost of achieving that
professionals and formalize the resourcing. With the portfolio goal? Secondly, the investment
review process. Its responsibilities construction, in the critical areas philosophy should be considered;
include agreeing procedures and a of fund and security selection, the for example, does the family feel
decision-making process, writing best partners for family oces strongly in favour of an aggressive
an investment policy, monitoring are those private banks with trading approach? How much
strategic allocation and asset open architecture. In practise, diversification is wanted? How
classes, actively reviewing the this means having agnostic many core positions are preferred
performance of managers and product selection with objective versus non-core positions? Thirdly,
investigating new investment selection based on independent specific investment selection
alternatives. investment and operational due criteria for funds, stocks and
diligence, pricing transparency bonds should be decided. Finally,
Of the above, the investment with only one level of fees and monitoring procedures need to be
process and investment policy no retrocessions on discretionary established.
are critical, and are areas where or advisory mandates, having the
the private bank partner can be right incentives with selections These include assessments of how
actively involved. based on performance and to monitor, how often to monitor
The investment process should be no additional incentives for and how to assess if the portfolio
rigorous and consistently applied the salesforce to sell in-house guidelines are being met. Private

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banks can have significant roles to family board, where three to six can encourage information sharing
play in helping to develop the right family members with a Chair make within families, using philanthropic
governance standards for the family the decision formerly, at least, accounts and foundations for
oce. There are four components quarterly; outside directors, with exploring investment strategies
within a governance system: whom the family board make all and encouraging collaboration, and
1. Constitution - the preservation of the major decisions. Private banks can also provide opportunities for
family vision and values. can assist with wealth education. the senior generation to guide the
2. Assembly recurring meetings This involves implementing family and to share philosophies.
and leadership training for the next strategies that provide age/skill/
generation of wealth. interest-appropriate opportunities In summary, the private banks can
3. Council enhancing strategic to lead, learn, influence or grow. help enhance the structure and
eectiveness by using the expertise This builds family cohesion and governance of a family oce, raise
of advisory professionals. communication. At the individual the rigour of investment decision-
4. Process ecient decision- level, developments can be making and monitoring, help to
making and conflict resolution made in financial independence, build cohesion around the family
process. internships, understanding how philosophy and develop the younger
credit works and appropriate uses, generation. The larger private
There are three key decision encouraging saving and budgeting banks are especially well-placed
methods: principal directed, where and understanding the power of to do this, with their institutional
one or two key family members compounding. In terms of continuing trading platforms, quality research
make all the major decisions; the family legacy, wealth education and capital markets expertise.

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DOMOS

FINE ART
CONSULTANTS
SPECIALISTS IN OFF-MARKET FINE ART

SKYPE: domosfineart | info@domos.co.uk | www.domos.co.uk