There has been a paradigm shift in family office technology.A decade ago, family offices had to custom build systems to meet their specific needs. It was expensive, cumbersome, and could quickly prove obsolete as the family’s needs grew and evolved. Even when cloud-based solutions first joined the conversation, many offices expressed concern about how trustworthy the systems truly were—particularly when it came to privacy and data security.Today, the cloud has completely transformed wealth management and family office technological capabilities. Compared to build-from-scratch systems, the clou...

An impressive 79% of families say they have at least one family foundation. That's what we found in the 2014 FOX Family Office Benchmarking™ survey, our comprehensive biannual benchmarking study among single family offices. This 79% number is consistent with the 80% of families that reported having foundations back in 1996. First- and second-generation family offices (81%) are also just as likely later-generation family offices (77%) to have a foundation, as philanthropy is often the glue that binds generations of family members together for the long-term.Foundations are prevalent across ...

Recently, a close friend of mine told me about a financial analysis on investing that a private wealth firm had sent her. She read most of it, but it all seemed very technical and disjointed to her, and after spending over an hour sifting through the material she found herself wondering, “So what does all this mean to me?”This feeling seems to be especially true among Millennials, yet I believe their sentiment merely epitomizes a trend impacting us all: exponential change, interdependency, greater complexity, and globalization—it’s just becoming incredibly hard to keep up with everything.In li...

The SEC has expanded the definition of “family” in single-family offices.The January 2015 ruling, which was an update to a previous SEC ruling we covered in the FOX Insights blog last year, affirmed that single-family offices not only have the right to also service family members’ in-laws and their relatives, but also former in-laws and relatives even after a divorce. The case at hand was addressing whether the single-family office established by former Treasury Secretary William E. Simon could continue to serve a former in-law even after their relatives were divorced. Incidentally, that in-la...

The SEC has expanded the definition of “family” in single-family offices.The January 2015 ruling, which was an update to a previous SEC ruling we covered in the FOX Insights blog last year, affirmed that single-family offices not only have the right to also service family members’ in-laws and their relatives, but also former in-laws and relatives even after a divorce. The case at hand was addressing whether the single-family office established by former Treasury Secretary William E. Simon could continue to serve a former in-law even after their relatives were divorced. Incidentally, that in-la...

When you think of Millennials, one of the first images that likely comes to mind is a group of young adults, all standing around in a circle... looking down at their smartphones. Unfortunately, this widely accepted vision of Millennials gives a false impression of how young adults prefer to communicate.Here are three key communication takeaways from interviews FOX conducted while preparing our Engaging the Client of the Future white paper:1. Millennials value face-to-face communication and want more of it from their advisors. While many advisors think t...

Families change, grow and evolve from one generation to the next. So do family offices.While family offices are first formed to serve the needs of their founders, they eventually will shift in focus toward serving the founders' offspring and extended family—the next generation. A third-generation or fourth-generation family office, therefore, will look much different than a first- or second-generation family office. This is the true beauty of the family office: it is a flexible format that can change and adapt to best serve a family’s needs, as the family grows and shifts its focus. This ...

Every January, we launch our annual Global Investment Survey to find out how FOX members fared in the markets, and what changes they’re planning for the year ahead. Members anxiously await these results so they can provide their clients and governing boards with critical peer perspective that helps answer the perennial question, “So, how did we do last year?”Over the past few weeks, I have been speaking with FOX members about the Global Investment Survey, asking questions about why they participate, how they use the results, and gathering their input to inform the survey questionnaire. The inf...

A third shoe has fallen. Family offices have now cleared three hurdles in the regulatory actions considered as a result of the Dodd-Frank repeal of the SEC’s old system for exempting family offices from regulation. The first was the ruling that family offices, meeting certain conditions, do not have to register as investment advisors with the SEC. Previously, the policy had been that family offices serving 15 or fewer families would be exempt. The numerical exemption was replaced in 2011 by a set of three conditions, namely, that the family office must be a company that...

Forming a single-family office is a natural progression for many families of wealth. When a family is transitioning from operating a business to managing significant wealth, having one's own family office can offer significant benefits, including personalized attention, economies of scale and greater access to unique investments. When forming a family office, much attention is paid to benefits impacting the family's financial capital and issues of investment management, trust and estate services, tax and financial planning and strategic wealth management. Unfortunately, in many case...

In September, the FOX Wealth Advisor Council convened in New York to discuss the latest FOX research, benchmarking and best practices for advisors serving single family offices. Many issues – from talent acquisition to profitability – were raised by Council members as key industry challenges. Perhaps surprisingly though, client acquisition was not among them. In fact, many of the firms represented have been quite successful in obtaining additional, as well as increasingly larger, clients.Instead, the following issues were cited by the majority of members as being the most challenging to their ...

A frustration we often hear from families is that wealth management firms all sound the same. No firm can be all things to all families. The sooner in the process firms and families realize this, the better off everyone will be. For families seeking a wealth advisor, the question isn’t who is the "best" firm, but rather who is the right firm. A non-traditional approach to due diligence can help identify a firm that might be right for them. Employee Stewardship The primary asset of a wealth advisory firm is its employees. The stewardship provided by the firm to its employees can...

Our Family Office Exchange Senior Management Council met recently to discuss ways to engage the rising generation in the family office. The family foundation is an excellent vehicle for introducing the rising generation to family values, mission, philanthropy and investments. Ideally, the concept of philanthropy would be introduced to children at a young age, with the level of involvement increasing over time. Membership on the family foundation board would be the culmination of years of exposure to the family’s philanthropy. Working with Greg McCann from Stetson Un...

With toy catalogues in the mailbox and Thanksgiving right around the corner, I’ve been finding myself thinking a lot lately about the gifts we give to our children and which ones they end up being truly thankful for when they are older. I recently had the opportunity to hear a lot about this topic in discussions I had with real-life grounded and successful inheritors (for my book Raised Healthy, Wealthy & Wise.) What I learned from the inheritors I spoke with is that the gifts they appreciated the most in hindsight were not ones that they were thankful for (or even happy w...

From Kickstarter campaigns to Ice Bucket Challenges for charity, when it comes to raising funds in today’s hyper-digital world, online crowdfunding is generating attention from artists, media, non-profits and entrepreneurs alike. There’s no doubt it has proven successful for a variety of opportunities, but is it relevant to serious investors?Online crowdfunding platforms like Kickstarter and Indiegogo are changing the way we finance projects and services. In fact, the global market size for capital raised via crowdfunding was estimated at $5.1B in 2013 and is projected to grow to $9.6B in 2014...

As a proud Millennial, there are clear trends I’m seeing amongst my peers and the emerging generation of young people rising behind us. The most obvious of which, is that we all want to work on something we’re passionate about. We seek purpose. We crave a work environment appeals to our mission-driven sensibilities. Most of all, we require a “why” that aligns with our inner voice.We’re a generation that was consistently told by our optimistic Baby Boomer parents that, “You can be anything you want to be,” and we believed them. The problem though, is that without mastering a useful set of ...

It takes effort for a young adult leaving the family nest to become independent and self-reliant. However, the reward is the knowledge that you are self-sufficient, responsible, mature and self-aware. Here are some pointers to help you along your journey.1. Pursue Your DreamsYou’ll feel pressure from others to live your life a certain way. But the best gift you can give yourself (and your family) is to achieve your goals. When you put your effort into something you’re passionate about, you’ll experience success in its truest form.2. Live in Accordance with Your Valu...

Couples entering into matrimony often have to make difficult decisions associated with emotionally-charged issues such as a prenuptial (or “prenup”) agreement. If one is going to be implemented, knowing when and how to communicate the request to sign a prenup aids in its effectiveness. Approach the topic from the perspective of asset management and inheritance provisions rather than the perspective of trust. Trust should not be the driver for a prenup; if you didn’t trust one another, you wouldn’t be getting married. Instead, a prenup provides comfort or peace of mind in the event of a d...

In a very encouraging development, the SEC has indicated that they intend to grant exemptions from the strict definition of “family” in the Family Office Rule to allow family offices to serve relatives of spouses who are related through the marriage and not lineal descendents of the family’s founder. The Family Office Rule came out of the Dodd-Frank legislation. This means that family offices will be able to serve the parents and siblings of the individuals who marry into the family. For now, the exemptions need to be requested on an individual case basis as the rules have not been ...

A notable trend in recent years has been the increasing popularity of private family trust companies (PFTCs). This growth is rooted in multiple factors, but here are four of the biggest.IRS Notice 2008-63, a preliminary release outlining a structure to avoid adverse estate tax consequencesIn Notice 2008-63, the IRS provided two private family trust company scenarios to avoid adverse estate tax consequences in a regulated and an unregulated state. Both scenarios are meant to avoid family members interfering with decisions regarding discretionary trust distributions and to limit the a...

On May 8, 2014 the Treasury department released final regulations providing guidance regarding what deductions are subject to the trust and estate 2% floor on itemized deductions, including requiring the unbundling of trustee fees for tax years beginning on or after May 9, 2014. These regulations follow the U.S. Supreme Court’s decision in Knight v. Commissioner, 552 U.S. 181 (2008) in which the Court concluded that expenses incurred by a trust or estate which are not subject to the 2% floor limitation of §67 are those "which would not have been incurred if such property were not held in...

The Private Wealth Management Survey is conducted annually by FOX and The University of Chicago Booth School of Business and samples alumni of Chicago Booth’s Private Wealth Management course, a four-day program offered in downtown Chicago for high net worth individuals and families. This year’s study included a look at the staff wealthy families rely on to support their investment activities. The study found that the median advisor team size was four professionals with most families opting to manage their advisors themselves as opposed to employing an external party to provide integrated weal...

The private family trust company (PFTC) has become a popular and useful vehicle to provide trust administration to ultra high net worth families. There are many issues to consider when deciding whether to create a PFTC. These include:JurisdictionMany states have enacted laws specifically designed to apply to private trust companies. These laws vary by state, but each provides statutory guidance on such things as the application process, capital requirements, operational requirements, fees, taxes, and regulatory procedures.Some states provide "regulated" private trust companies, whi...

Sometimes the greatest challenge for a family is to agree on how they will measure the “success” of the enterprise in each generation. The metrics of success should be tied to the current goals and priorities of the family, since they must be viewed in tandem. We can’t expect strong family leaders to emerge without investing financially in their development, and we can’t expect them to appreciate the value of the family enterprise if no one has been telling them stories that instill pride in the family’s history. Enterprise families spend lots of time discussing how they will measure value...

As the family grows, both in number and wealth, it is critical to address the management of the family’s personal financial future with the same diligence that goes into managing the future of the business. So when should you separate and move your financial affairs away from the family business? In our research of business-owning families, we’ve found that there generally is a catalyst for change that prompts business owners to separate the family office from the family business. Liquidity Event – A sudden inflow of liquid wealth – from a partial or complete sale of the business – helps...