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...

If any of the following situations are familiar to you, you probably have a family office embedded within your business.There is a department within the company referred to as “shareholder relations”Certain employees are dedicated solely to working with the family without other business-related responsibilitiesThere is a separate physical space, often at the company’s headquarters, that houses employees working on family mattersEmployees are interacting directly with the family’s outside financial advisors on personal financial matters Family members are billed directly for time spent by the...

In recent posts we’ve looked at what separates extraordinary wealth advice from the industry norm. Several industry leading advisors gathered with a select group of family office executives to tackle this issue at our most recent FOX Thought Leaders Council Summit. They concluded that state of the art wealth advisors all embody four common hallmarks. We previously covered the first three in this space. They were:Asking Why Before Answering HowCommunication With the Goal of UnderstandingIntegration: Understanding How All the Pieces Fit TogetherThe final hallmark of state of the art wealth...

Late last year several industry leading advisors gathered with a select group of family office executives for our annual FOX Thought Leaders Council Summit. They tackled an interesting question: What separates the best wealth advisors from the merely average? What they found was that high performance was more a matter of how services were delivered than service menu. In the process, they identified several hallmarks of state of the art wealth management.One such hallmark is an ability to integrate with other advisors and understand how all the pieces of the wealth management puzzle fit togethe...

The 2013 FOX Thought Leaders Council brought together representatives from sophisticated family offices and industry leading advisors with the goal of identifying the state of the art in private wealth management. They discovered that while on paper the services offered from one firm to the next are often similar, the greatest differentiators between industry norms and industry leaders are rooted in how advice is delivered.As Rockefeller & Co.’s Loraine Tsavaris put it, “Everyone says that strategic planning is critical, but on the other hand you have to execute – it’s all about the HOW. S...

Recently key figures from leading advisors in the private wealth management industry gathered with executives from several sophisticated family offices for our annual FOX Thought Leaders Council Summit. The attendees met to discuss what constituted state of the art wealth management. What they determined was that service offerings varied little from one advisor to another and what truly differentiated the state of the art from the state of the industry was service delivery.The attendees identified several hallmarks of state of the art service delivery. One such hallmark was that the best firms...

Assigning a business executive to manage or coordinate personal financial or administrative affairs can be problematic for several reasons: Lack of alignment of interests between the business and the family – The personal goals and appetite for risk-taking of some owners may not align with the interests of the business.Heavy reliance on the same resource for both business and personal matters – Using a trusted business executive as a personal financial advisor leaves both the business and the family vulnerable if that executive leaves the business or worse, is fired.Loyalty and allegiance of...

Employers in the wealth management industry face two distinct talent challenges, one long-term and the other immediate. According to a recent Accenture report titled “The ‘Greater’ Wealth Transfer: Capitalizing on the Intergenerational Shift in Wealth,” Baby Boomers stand to pass on an estimated $30 trillion in wealth to their Generation X and Millennial heirs. Looking ahead, wealth advisors are scrambling to find that next generation of talent to help preserve and provide service to this younger and potentially enormous client base.In the short-term, however, employers in the wealth managemen...

Business owning families face the simultaneous challenges of running a business while planning for the future of the family and the management of family capital. While successful businesses benefit from disciplined operations and strategic planning, the management of family wealth is often eclipsed by the needs of the business and delegated to trusted business executives. Knowing when to separate these functions and how to make a smooth transition can increase the chances of long-term financial success and reduce unnecessary exposure to legal and privacy risks.As the family business grows, most ...

Every family enterprise needs a framework for holding together the disparate parts of the family activities, and a process for managing the elements in the framework. An integrated model of the Family Enterprise encompasses the family’s capital goals (in green), family governance and leadership issues (in gold), and the coordination of financial alternatives and solutions (in blue). The goals are the backbone from which everything else takes direction. In successful multi-generational families, these goals are revisited with regular frequency to ensure that they continue to reflect the interests...

Successful multi-generational families often have difficulty making the transition from a business-centric family to a family-centric enterprise as the scope of their activities expand, and the family grows across generations. The diversity inherent in the growing group of shareholders brings the enterprise model to life. Some shareholders care most about the growth of the business capital; others care more about the growth of their social capital (and its impact on the community); and still others care more about the growth of the human capital and the development of each individual...

For most families, the natural evolution of wealth concerns eventually shifts from creating, preserving and transferring wealth to the realities of next generation education and preparation. With a growing body of research underscoring the importance of applying early and sustained attention to the preparation of heirs, many families have reprioritized to focus more intentionally on wealth education for next generation family members.Starting EarlyWith younger family members, education about the role of money and wealth starts with the introduction to basic financial concepts like saving, spen...

Carl Robinson has spent the last 25 years helping a wide range of businesses develop effective leadership strategies. Currently, as managing director of Vantage Leadership Consulting, he focuses on identifying and developing executive talent.Last October, we were fortunate to have him address our annual Fall Forum on the leadership challenges facing wealthy families. Robinson looked at the critical role developing future family leaders plays in preserving wealth across generations. In the following clip, he discusses the importance of establishing a collective point of view in developing effec...

The FOX Financial Executive Council was first established in 2004 and it offers family office financial executives (CFOs, controllers, tax managers, etc.) an opportunity to share best practices on operational, compliance, and technical issues.On January 30-31, 15 of our members joined us in Orlando, Florida, for a meeting focused on management issues. This included a discussion of the services family offices generally outsource and the services they provide in-house. The common trend among our attendees was that their family offices depended on a mix of in-house and outsourced services f...

On Monday, Feb. 10, 2014, the IRS announced it is delaying a portion of the employer mandate associated with the Affordable Care Act or Obamacare. The delay applies to employers with 50-99 workers. These employers will have until 2016 before facing a penalty for failing to cover employees. Businesses with fewer than 50 workers are exempt from the employer responsibility provisions.A few important considerations:Those claiming a 2015 exemption are required to certify under penalty of perjury that they did not reduce their workforce to fewer than 100 employees in order to qualify.Employers will ...

In spite of growing complexities, families around the world have managed to stay together for generations, and they reap significant benefits from the concentration of purchasing power and the preservation of family capital. The crisis of 2008 demonstrated clearly the advantages that families with private capital have - by not being forced to make short-sighted decisions at the behest of outside shareholders. Third and fourth generation families in the U.S. say they have greater impact as a family by staying together, and they feel good about being part of something that is bigger t...

How does a family know when they are evolving from a family business into a family enterprise? When the collective activities of the family grow beyond the boundaries of the original business, there is evidence of an emerging family enterprise. The evidence appears gradually over time - when a vacation property is shared with all of the children; a foundation board is formed to manage the philanthropic goals; or a pooled investment fund is created to manage the liquid assets distributed from the original business. There are a variety of elements that can create complexity as shown i...

Whether you already have wills, trusts and other estate planning documents in place or need to have them created, there are a number of priorities to consider as you move forward with the legacy planning process.Here are six steps that may be appropriate for you to complete as you consider the ongoing management and ultimate disposition of your wealth:1. Take time to carefully determine what exactly you want to have happen.Thinking about the future of your money, particularly about that period when you may no longer be in the picture, isn’t easy to do. But before you make specific decisions ab...

If you have you been invited to a family business conference recently or picked up an educational piece on family wealth, you will have noticed the focus placed on next generation development. In particular the 3 E’s of entrepreneurship, education, and engagement. These are important topics, around which there is still a lot of work to be done; however, there is an ever increasing stock of family members who must reposition themselves as the next generation of elders, alongside this younger generation being prepared to take on the mantel of leadership.Given the lack of discussion on the topic ...

Eighty percent of family office employees received a salary increase in 2013, according to our latest benchmarking study, "Family Office Compensation & Benefits." The median reported increase was 4%, up from the 3% consistently seen since the 2008 onset of the great recession. A majority of family offices placed a premium on workplace flexibility with 68% offering flexible hours and nearly half (49%) allowing employees the ability to work remotely. Respondents reported that paid time off generally ranged from three to four weeks depending on seniority, while cell phones wer...

If you’re familiar with Greycourt & Co. Founder Greg Curtis, you know that his blog is always a good read. His recent series on common mistakes families make investing after a liquidity event is especially compelling. Curtis notes that businesses tend to sell when the market is at its most overpriced. This means families who sell their business often find themselves investing just as the market is about trend downward. He sums the problem up nicely below:“Fourth generation family companies don’t get sold when markets are low and the economy is struggling. No one has any money then. No, if ...

While process was at the forefront of this year’s Forum, the most poignant moments of the event dealt with why families stick together — the beliefs and values behind all of the how-to discussions. Bestselling author and Founder of Empower Wealth LLC Lee Brower touched on this issue on the first day of the Forum, saying families should plan according to a set of guiding principles. He said that these principles will vary from family to family, but that operating according to principle gives a family much needed direction. Similarly, Carl Robinson talked about successful leadership transit...

We recently held our annual Fall Forum in Chicago. This year’s theme was “The Butterfly Effect,” which reflects the theory that a change as subtle as the flap of tiny wings can profoundly change the world. The same can be said about the family enterprise. Every choice you make (or don’t make) has the potential to ripple across your family, your investments, your philanthropy and your family businesses.This is why clear decision making processes play an important role in preserving wealth across generations. As speaker after speaker pointed out, successful multigenerational families...