Details

<p>Foreword xix</p> <p>Preface xxi</p> <p>Acknowledgments xxv</p> <p><b>Chapter 1 Introduction to the Family Office 1</b></p> <p>Kirby Rosplock, PhD</p> <p>A Macro View of Global Wealth 2</p> <p>Billionaire Update 7</p> <p>How Much Do I Really Need to Fund a Family Office? 10</p> <p>Purpose and Definition of the Family Office 11</p> <p>Historical Background of the Family Office 12</p> <p>Family Office from the Industrial Age to Current 13</p> <p>Key Roles of the Family Office 16</p> <p>The Executor and Trusted Advisor 16</p> <p>The Guardian and Watchman 17</p> <p>The Librarian and Guru 19</p> <p>Family Office Orientation to Family, Strategy, and Operations 19</p> <p>Conclusion and Final Thoughts 24</p> <p>Notes 24</p> <p><b>Chapter 2 Family Office Evolution: Inceptions and Archetypes 27</b></p> <p>Kirby Rosplock, PhD</p> <p>Inception of a Family Office 27</p> <p>Scale: How Much Is Enough? 28</p> <p>Impact of the Family Business on the Family Office 30</p> <p>Attractions and Challenges with Embedded Family Offices 30</p> <p>Separating the Family Office from the Family Business 32</p> <p>Sudden Wealth 33</p> <p>The Investment-Focused Family Office 34</p> <p>Family Offices Through the Back Door 35</p> <p>Family Business Exit and Liquidity Event 36</p> <p>Family Office Archetypes 37</p> <p>The Founder’s Family Office 37</p> <p>The Virtual, Administrative, and Compliance Family Office 38</p> <p>The Philanthropic Family Office 39</p> <p>The Direct Investment and Investment Offices 39</p> <p>The Family Business–Focused Family Office 40</p> <p>The Multigenerational-Focused Family Office 41</p> <p>Mathile Case Study 42</p> <p>Background: Inception 42</p> <p>Evolution of the Family Office: Strategic Planning Cycles 43</p> <p>A Multigenerational Perspective 44</p> <p>Alignment, Urgency, and Action 45</p> <p>Discovery and Steps 47</p> <p>Involving Outside Experts 48</p> <p>Conclusion and Final Thoughts 49</p> <p>Notes 50</p> <p><b>Chapter 3 Comparing Family Office Solutions: Multi- and Single-Family Offices 53</b></p> <p>Kirby Rosplock, PhD</p> <p>Trends in the Family Office Landscape 54</p> <p>Determining Family Wealth Management Needs 58</p> <p>Why the Single-Family Office Solution? 59</p> <p>Why the Multi-Family Office Solution? 65</p> <p>Questions to Ask During the Evaluation Process 68</p> <p>Pathways to Selecting a Multi-Family Office 74</p> <p>Godspeed Case Study 75</p> <p>Introduction 75</p> <p>Background of the Family and Family Office 75</p> <p>A Trigger and Decision for a New Direction 76</p> <p>Journey to Find What Is Next 76</p> <p>Decision-Making Process 77</p> <p>Final Cut 78</p> <p>Key Insights and Outcomes 80</p> <p>Conclusion and Final Thoughts 81</p> <p>Notes 82</p> <p><b>Chapter 4 Family Values, Mission, and Vision and the Family Office 83</b></p> <p>Kirby Rosplock, PhD</p> <p>Introduction to Values 83</p> <p>The Process of Exploring Values 85</p> <p>Values Statement 86</p> <p>Mission Statement 87</p> <p>Values, Mission, and the Family Office 88</p> <p>The Importance of Vision 89</p> <p>Elements for Successful Family Office Visioning 92</p> <p>Building Your Family Office Vision 94</p> <p>Pitcairn Family Case Study 95</p> <p>Five Steps to Creating a Family Vision 98</p> <p>Step 1: Clarifying the Process and Expectations 99</p> <p>Step 2: Vision Retreat Pre-Planning 99</p> <p>Step 3: Staging a Vision Retreat 100</p> <p>Step 4: Timing for a Vision Retreat 100</p> <p>Step 5: Aligning Vision and the Strategic Plan 100</p> <p>Conclusion and Final Thoughts 101</p> <p>Notes 102</p> <p><b>Chapter 5 Establishing and Structuring of Family Offices 103</b></p> <p>Ivan A. Sacks, Esq., Partner, Withers Bergman LLP</p> <p>William J. Kambas, Esq., Partner, Withers Bergman LLP</p> <p>Question 1: What Legal Form Should the Family Office Take? 105</p> <p>Choice of Entity 107</p> <p>Deciding Between an LLC and a C Corporation 107</p> <p>Case in Point 113</p> <p>Question 2: Who Should Pay for Establishing and Operating the Family Office? 114</p> <p>Question 3: Who Should Own the Family Office and How? 116</p> <p>Legal Ownership 117</p> <p>Beneficial Ownership 117</p> <p>Models of Ownership 117</p> <p>Question 4: Who Should Manage the Family Office and How? 119</p> <p>Structuring the Legal Formalities 120</p> <p>Structuring the Scope of Services 122</p> <p>Family Philanthropy, Legacy, and Social Capital 125</p> <p>Managing Regulatory and Estate Planning Concerns 125</p> <p>Question 5: How Are Family Offices Structured to Optimize Tax Efficiency? 126</p> <p>Tax Deductibility of Services Provided by the Family Office 129</p> <p>State and Local Tax 131</p> <p>Question 6: Can a Family Office Be Structured to Manage Risk? 132</p> <p>Case in Point 132</p> <p>Risk Management Through Architecture 133</p> <p>People-Oriented Risk Management 133</p> <p>Balance Sheet, Cash Flow, and Economic Risk Management 133</p> <p>Question 7: What Is the Process of Establishing and Structuring a Family Office? 134</p> <p>Conclusion and Final Thoughts 136</p> <p>Notes 137</p> <p><b>Chapter 6 Strategic Planning for the Family Office 139</b></p> <p>Kirby Rosplock, PhD</p> <p>Creating a Family Office Strategic Plan 140</p> <p>Discovery 141</p> <p>The Family Capital Review 142</p> <p>The Family Background 143</p> <p>The Advisor Network Review 145</p> <p>The Estate Plan Review 145</p> <p>Mapping and Summarizing Legal Entities 146</p> <p>Family Office Stress Tests 147</p> <p>Risk and Insurance Management Considerations 150</p> <p>Family Office Risk Assessment and Insurance Planning 151</p> <p>Family Member Risk and Insurance Planning 154</p> <p>Overview of Capital Sufficiency Analysis 155</p> <p>Simple vs. Sophisticated Approach 156</p> <p>Using Capital Sufficiency in the Family Office 156</p> <p>Case in Point: Doryman Family 157</p> <p>Key Takeaways 164</p> <p>Conclusion and Final Thoughts 165</p> <p>Notes 166</p> <p><b>Chapter 7 Legal and Compliance Standards and Practices for Family Offices 167</b></p> <p>David S. Guin, Esq., Partner and US Commercial Practice Group Leader, Withers Bergman LLP</p> <p>Regulations Affecting Family Offices: Dodd-Frank Act 167</p> <p>Case in Point 169</p> <p>The Single-Family Office Exemption 170</p> <p>Case in Point 174</p> <p>Clients of the Family Office May Need to Report Beneficial Ownership of Securities of Publicly Reporting Companies 175</p> <p>How to Report Beneficial Ownership 176</p> <p>Ownership of Securities in the Ordinary Course of Business 176</p> <p>Passive Ownership of Less than 20 Percent of a Class of Securities 176</p> <p>Other Acquisitions 177</p> <p>Clients of the Family Office May Need to Report Beneficial Ownership as Insiders of Publicly Reporting Companies 177</p> <p>Reporting Insider Status on Form 3, Form 4, or Form 5 178</p> <p>How Do I Determine Beneficial Ownership in a Multi-Tiered Family Holding Structure? 179</p> <p>Are You an Institutional Investment Manager? (The Answer May Surprise You.) 180</p> <p>What Is an Institutional Investment Manager? 181</p> <p>Reporting on Form 13F 181</p> <p>Determining If the $100 Million Threshold Has Been Met 183</p> <p>Confidential Treatment 184</p> <p>Are You a Large Trader? 184</p> <p>The SEC Gets Personal About Insider Trading 186</p> <p>Compliance Policies 188</p> <p>What Are the Components of a Good Compliance Policy? 189</p> <p>Document Retention Policies 190</p> <p>What Are the Components of a Good Document Retention Policy? 192</p> <p>The Compliance Function: In-House Versus Outsourced 192</p> <p>Special Issues for Family Offices When Considering Regulatory Requirements 193</p> <p>Conclusion and Final Thoughts 194</p> <p>Notes 194</p> <p><b>Chapter 8 Investment Management and the Family Office 197</b></p> <p>Kirby Rosplock, PhD</p> <p>Family Office Investment Management 198</p> <p>Concentration 199</p> <p>Measuring Success 200</p> <p>Lifestyle and Legacy 201</p> <p>Time Horizon 203</p> <p>Hurdles to Growing Wealth 205</p> <p>Family Office Investing: Paradigm Shift 206</p> <p>Passive Versus Active Asset Management 208</p> <p>A Practical Approach to Asset Allocation 209</p> <p>The Investment Process in a Family Office 210</p> <p>Investment Review 210</p> <p>Investment Governance 211</p> <p>Investment Objectives 214</p> <p>The Investment Policy Statement 214</p> <p>Investment Committee 217</p> <p>Why Would a Family Establish an Investment Committee (IC)? 218</p> <p>How Does a Family Establish an Investment Committee? 218</p> <p>How Does an Investment Committee Usually Operate? 218</p> <p>Strategic and Tactical Asset Allocation, Manager Selection, and Investment Monitoring 221</p> <p>CIO Function: In-House Versus Outsourced 223</p> <p>Conclusion and Final Thoughts 227</p> <p>Notes 228</p> <p><b>Chapter 9 Family Office Operations and Information Technology 231</b></p> <p>John Rosplock, COO and CFO, Tamarind Partners, Inc.</p> <p>Robert Kaufold, President and Chief Risk Officer, Cauldera LLC</p> <p>Family Needs Drive Family Office Systems 232</p> <p>Family Office Operations 233</p> <p>Accounting 233</p> <p>Reporting 233</p> <p>Financial Reporting 235</p> <p>Data and Decision Archiving 236</p> <p>Family Office Management 238</p> <p>Security 239</p> <p>Other Technology 239</p> <p>Assessing Operational Complexity 240</p> <p>Simple to Complex Systems 242</p> <p>Complex System Technology 244</p> <p>Operations Lens to Insourcing Versus Outsourcing 247</p> <p>Technology Considerations: Buy or Build 249</p> <p>New Technology Due Diligence and Onboarding 250</p> <p>Keys to Success 254</p> <p>Conclusion and Final Thoughts 255</p> <p>Notes 256</p> <p><b>Chapter 10 Family Office Talent, Compensation, and Recruitment 257</b></p> <p>Kirby Rosplock, PhD</p> <p>Introduction 258</p> <p>Family Office Staffing 259</p> <p>Single-Family Office Organizational Chart 261</p> <p>Gender and Family Office Executives 267</p> <p>Recruiting Family Office Talent 268</p> <p>Finding a Good Chemistry and Culture Fit 269</p> <p>Background Checks 271</p> <p>Compensation 272</p> <p>Methods for Determining Annual Incentives 274</p> <p>Managing Family Office Talent 276</p> <p>Role Clarity and Job Description 276</p> <p>Reporting Hierarchy and Authority 276</p> <p>Performance Management 277</p> <p>Communication and Trust 278</p> <p>Recruiting Internationally 278</p> <p>Case Study: Setting Up the Office 279</p> <p>Family or Non-Family at the Helm 280</p> <p>Family Member Compensation 281</p> <p>Conclusion and Final Thoughts 282</p> <p>Notes 282</p> <p><b>Chapter 11 Governance Issues for the Family Office 285</b></p> <p>Barbara Hauser, JD, Independent Family Advisor</p> <p>Kirby Rosplock, PhD</p> <p>Governance Issues for the Family Office Itself 286</p> <p>Benefits of a Good Board 286</p> <p>Importance of Independent Directors 288</p> <p>Interim Stage of Advisory Board 289</p> <p>Accountability to the Family 289</p> <p>Participation in Long-Term Strategy 289</p> <p>Next Generation Issues to Address 290</p> <p>Succession Planning for the Family Office and Its Executives 290</p> <p>Governance for the Family Itself 293</p> <p>Analysis of Existing Decision-Making Process 295</p> <p>Hallmarks of Good Governance: Transparency, Accountability, and Participation 296</p> <p>Benefits of the Family Creating Its Own Governance Process and Structure 297</p> <p>How to Create the Family Governance 298</p> <p>Family Councils 299</p> <p>Family Constitutions 300</p> <p>Kettering Family Governance Case Study 302</p> <p>Conclusion and Final Thoughts 308</p> <p>Notes 309</p> <p><b>Chapter 12 Family Education and the Family Office 311</b></p> <p>Kirby Rosplock, PhD</p> <p>Stewardship of Wealth 313</p> <p>Psychology of Wealth and Child Development 314</p> <p>Elsa’s Story 316</p> <p>Overcoming Communication Challenges 317</p> <p>Case Study: Waithram Family 319</p> <p>Clear Expectations and the Power of Inherited Wealth 322</p> <p>Inspiring Entrepreneurship and the Next Generation 325</p> <p>Case Study: Jennifer’s Story 326</p> <p>The Power, Influence, and Inspiration of Mentors 327</p> <p>Creating a Family Education Plan 329</p> <p>Conclusion and Final Thoughts 332</p> <p>Notes 333</p> <p><b>Chapter 13 Family Entrepreneurship and the Family Bank 335</b></p> <p>Warner King Babcock</p> <p>Kirby Rosplock, PhD</p> <p>What Is a Family Bank? 335</p> <p>Two Mindsets to Your Family Bank 338</p> <p>Establishing and Funding a Family Bank? 339</p> <p>Five Principles for Family Banks 340</p> <p>Democratize 340</p> <p>Harmonize 340</p> <p>Customize 341</p> <p>Flexibilize 342</p> <p>Professionalize 342</p> <p>Mini-Case Study: Intra-Family Financing of New Family Businesses 343</p> <p>Organizing a Family Bank 344</p> <p>Entity Choice 345</p> <p>Evolution of Family Banks: From Simple to Complex 346</p> <p>Mini-Case Study: A Family Bank Designed to Develop the Next Generation 349</p> <p>Good Governance: Family Bank Boards, Committees, and Trustees 350</p> <p>Mini-Case Study: Family Bank Without Good Governance 351</p> <p>Limitations of Trusts 352</p> <p>The Role of the Family Office 353</p> <p>The Role of Outside Experts 354</p> <p>Tax and Legal Considerations of Family Banks 355</p> <p>The Anderson Family Case Study 355</p> <p>Conclusion and Final Thoughts 358</p> <p>Notes 359</p> <p><b>Chapter 14 Legacy, Philanthropy, and Impact Investing 361</b></p> <p>Kirby Rosplock, PhD</p> <p>Introduction to Legacy 362</p> <p>A Generational Lens to Legacy 362</p> <p>Defining Legacy 364</p> <p>Financial Legacy 365</p> <p>Social Legacy 366</p> <p>Philanthropic Legacy 367</p> <p>Philanthropy, Impact, and Sustainable Investing 368</p> <p>Opportunities and Challenges of Philanthropy, Impact, and Sustainable Investing 371</p> <p>Family Philanthropy and Foundations 373</p> <p>The Root Family Legacy and Evolving Their Philanthropy 374</p> <p>The Family Office Supporting Family Philanthropy 377</p> <p>Cordes Family Case Study 378</p> <p>Conclusion and Final Thoughts 385</p> <p>Notes 386</p> <p><b>Chapter 15 Private Trust Companies: Creating the Ideal Trustee 389</b></p> <p>Miles Padgett, Partner, Kozusko Harris Duncan</p> <p>Don Kozusko, Partner, Kozusko Harris Duncan</p> <p>The Broader View 389</p> <p>What Is a Private Trust Company? 389</p> <p>What Are the Differences Between a Private Trust Company and a Commercial Trust Company? 390</p> <p>Why Do Families Consider Creating a PTC? 392</p> <p>What Are the Key Considerations to Be Addressed Prior to Pursuing a PTC? 392</p> <p>Steps to Creating a PTC 398</p> <p>Choice of Regulatory Regime 398</p> <p>Geographical Convenience 400</p> <p>Substantive Trust Laws 401</p> <p>Trust Company Laws 402</p> <p>Public Policy Environment 404</p> <p>Trust and Trust Company Taxes 405</p> <p>Achieving Success in a PTC: Setting Priorities 405</p> <p>Fostering Beneficiary Development Should Be the Primary Objective of the PTC 406</p> <p>Principles and Practices for a Successful Private Trust Company 408</p> <p>The Parable Family 409</p> <p>Conclusion and Final Thoughts 415</p> <p>Notes 416</p> <p>Appendix A: Family Office Complexity Assessment 419</p> <p>Appendix B: Family Office Technology Segments 423</p> <p>About the Author 425</p> <p>About the Contributors 427</p> <p>Index 431</p>

<p><b>KIRBY ROSPLOCK, P<small>H</small>D,</b> is the founder of Tamarind Partners, Inc., a world-class family office consultancy and founder and Chief Learning Officer of Tamarind Learning, a comprehensive, virtual learning platform for family offices, advisors, and the families they serve. Visit our websites at TamarindPartners.com and TamarindLearning.com to learn more.

<p><b>PRAISE FOR THE COMPLETE FAMILY OFFICE HANDBOOK</b> <p>"The <i>Second Edition</i> of <i>The Complete Family Office Handbook</i> is packed with new and updated information. However, the book is much more than just an update. Rather, it offers a fresh perspective on the current and evolving state of family offices. There are lots of valuable insights and practical tips to help families, family offices, and their advisors understand and anticipate the issues and opportunities that they face today. The new case studies in particular bring the family office world to life in a meaningful and instructive way. Congratulations to Kirby and her collaborators for a job well done."<br/> <b>—Kathryn M. McCarthy,</b> independent advisor to families and family offices; Director, The Rockefeller Trust Company, N.A. <p>"As a trusted advisor to a family owned and operated business, Kirby's <i>Second Edition</i> of <i>The Complete Family Office Handbook</i> will be an invaluable resource. Focused on the needs of enterprising families and their professional advisors, Kirby has updated and improved the guide to the <i>Family Office</i>, providing information and advice that is timely and sophisticated yet practical and clear. Kirby's use of family stories and case studies brings the topics to life and makes this book a pleasure to read."<br> <b> —Justin M. Zamparelli,</b> General Counsel, Vineyard Vines <p>"The <i>Second Edition</i> of <i>The Complete Family Office Handbook</i> brings together the latest developments in family office management, coupled with hands-on practitioner insights. Families, advisors, and executives will find actionable strategies and new ideas in the evolving world of family offices."<br> <b> —Stephen Campbell,</b> Managing Director and Chairman, Citi Private Capital Group <p>"Once again, Kirby blends the strategic with the tactical and emphasizes the practical. This <i>Second Edition</i> provides a breadth of up to the moment research, new case examples, and best practices. Much more time is dedicated to investment governance. Even if you have the <i>First Edition</i>, you will find this work to be a meaningful update."<br> <b> —John Benevides,</b> Regional Executive, Private Wealth Management, U.S. Bank; former Chair, YPO Global Family Business Network <p>"Kirby Rosplock's <i>The Complete Family Office Handbook</i> was an invaluable resource when it was first published. This <i>Second Edition</i> is a must-read that offers new and extremely relevant content and case studies, resources, best practices, and industry trends that provides families and family offices with the insights and tools they need to move forward with confidence. I highly recommend this comprehensive guide to anyone that is operating or contemplating the formation of a family office!"<br> <b> —Steve Prostano,</b> Partner, PKF O'Connor Davies LLP; Founder, The UHNW Institute <p>"This <i>Second Edition</i> is essential reading. The book is a timeless guide that provides families and their advisors comprehensive and practical knowledge to help navigate the landscape of complexity of today's family office."<br> <b> —Linda Bourn,</b> National Director, Family Enterprise Risk Practice, Alliant Private Client

US