ebook img

The Family Office: A Practical Guide to Strategically and Operationally Managing Family Wealth PDF

268 Pages·2018·3.48 MB·English
Save to my drive
Quick download
Download
Most books are stored in the elastic cloud where traffic is expensive. For this reason, we have a limit on daily download.

Preview The Family Office: A Practical Guide to Strategically and Operationally Managing Family Wealth

AA PPrraaccttiiccaall GGuuiiddee to Strategically and Operationally Managing Family Wealth BORIS CANESSA JENS ESCHER ALEXANDER KOEBERLE-SCHMID PETER PRELLER CHRISTOPH WEBER The Family Office Boris Canessa • Jens Escher Alexander Koeberle-Schmid Peter Preller • Christoph Weber The Family Office A Practical Guide to Strategically and Operationally Managing Family Wealth Boris Canessa Jens Escher Düsseldorf, Germany Duisburg, Germany Alexander Koeberle-Schmid Peter Preller Köln, Germany Bad Homburg, Germany Christoph Weber Essen, Germany ISBN 978-3-319-99084-2 ISBN 978-3-319-99085-9 (eBook) https://doi.org/10.1007/978-3-319-99085-9 Library of Congress Control Number: 2018955893 © Springer Nature Switzerland AG 2018 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Cover credit: Nednapa Chumjumpa / EyeEm This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland Translator’s Preface There is an old parable about the wise woman and a glass jar. She drops large stones into the jar until no more will fit, and then asks a child whether the container is full. “Yes, it is,” says the child. So the wise woman adds in smaller rocks which tumble into the remaining spaces. When the child opines that now the jar is full, the wise woman pours in pebbles, then sand, and finally water. Each new material, smaller and finer than the one before, closes the ever-shrinking gaps until truly the jar can hold no more. As I helped shepherd this book from a focus on the German-speaking world to a broader international outlook, I had that jar very much in mind. Each of the five authors is a specialist in a field crucial to the operation of a family office—law, family governance, leadership and succession and asset analysis and investment. Their chapters serve the same function as those big rocks, addressing the major weighty considerations that are involved with establishing and operating a family office. The numerous interviews in this book are the smaller rocks, helping to fill the gaps that naturally arise between theory and practice. They contain insights and considerations gleaned from real experience working or advising a family office, building one from scratch, or being an owner of an established family office. The new final chapter of this book delivers the pebbles. It reflects two spe- cific questions posed to each interview partner: Firstly, what are potential traps that people face when looking to found or sustain a family office? Secondly, what is the future of the family office? The answers sometimes con- tradict each other, and that is fine. Real life contradicts itself sometimes as well, especially as you move firmly into the realm of your own specific needs and solutions. v vi Translator’s Preface And the sand and water of our parable? That fine-grained knowledge is to be provided by you and the generations that follow. Königswinter, Germany Steven Sidore Preface The model of the family office dates back to medieval times. Its core function was embodied by the figure of the majordomo, the highest-ranking servant for a European house of nobility, entrusted to manage the house’s domestic affairs. The first family office in the modern sense, the Morgan House, was founded in 1838 by captain of industry J.P. Morgan to serve his family. The office later took on the Vanderbilts, Guggenheims and DuPonts as clients, evolving into the first multi family office. The real breakthrough for the family office came in the 1980s, a period of unprecedented wealth creation. Yet this had little to do with private jets, yachts, holiday villas and imposing oak-paneled offices. Disenchanted with the flaws inherent to commercial wealth management offerings, a growing number of ultra high net worth individuals and entrepreneurial families— first in the USA, then in Europe—simply began looking for alternatives. Many saw the wisdom in Morgan’s choice to establish a separate, highly com- petent “deputy” between the family and its financial service providers. These new single family offices worked exclusively for their respective families to preserve and expand the accumulated wealth for the generations to come. Financial service providers did not fail to grasp the potential of this trend as a potent business field for themselves. Wealth managers, larger auditing firms and tax accountancies began developing their own in-house family office-style service packages. Later, large financial institutions began offering packages of services divorced from their classic private banking or wealth management departments—the dawn of the commercial bank-bound multi family office. Over time some of those providers withdrew from the market, leading their former employees to found a wave of new, independent multi vii viii Preface family office companies. These then served a clientele ranging from a handful of families to a high two-digit number of families, all very individually and hopefully free of conflict of interest. The number of billionaires has grown sharply worldwide in recent years, with especially powerful growth observed in China. For the first time in documented history, 2017 counted more billionaires in Asia (637) than in the USA (563). Driven by this ongoing global creation of affluence, the ranks of single family offices have grown ceaselessly in recent years. At the same time, hundreds of multi family offices have also arisen around the world, especially in Latin America, the Middle East and Asia. With roughly $2.4 trillion expected to be passed on to the next generation in the coming two decades, many affluent families and wealthy individuals see real value in having a family office as a loyal partner and competent advisor. They rest easier knowing they have an organiza- tion working for them that can adapt to changing conditions and family dynam- ics and scale as the family and its wealth grow more complex. This book approaches the almost dizzying array of family office solutions as its challenge and its mission. It was conceived as a forthcoming, transparent and above all else practically minded introduction for affluent families in the early stages of considering a family office. We, the five authors, are active prac- titioners within the family office sphere, and some of us are also member- owners of a family office. We try to write clearly and frankly about the advantages and disadvantages of single family offices and multi family offices, as well as classic bank-based wealth management without a family office. Our goal at all times is to demystify the topic and lend courage for families to get organized and undertake their first steps in this field. The first edition of our book was written in German and aimed at the German-speaking family office market. While a few books had already been published on the topic, we felt collectively that those books were more aimed at decision-makers at existing family offices or family officers looking to deepen their technical knowledge. What was missing was an introductory book for those who had sensed the issue of ‘conflicts of interests’ in dealing with banks and other external consultants, yet lacked even the right questions to begin a serious exploration of setting up an institution of their own, or joining an existing one. The strong positive feedback we received showed that our approach was warranted. This second edition has been revised and updated to reflect the broader inter- national market. The material has been grouped into three informal sections: Part I: Family Office Fundamentals (Chaps. 1–3), Part II: Family Office Tasks and Strategies (Chaps. 4–9), Part III: Family Office Governance (Chaps. 10–14). Preface ix Some chapters have been rewritten entirely, others supplemented to appeal outside Germany. Facts and figures have been refreshed. New trends on the market have been incorporated. Many new interviews were conducted with partners serving families from the Middle East, Africa, the US, Canada, Mexico and Europe. We would like to thank all those family members and family officers who spoke frankly and openly about their individual family offices and their approach. We collected our observations together in this book because we believe that sharing knowledge benefits both the field and the families in it. We are grateful that our many interview partners chose to join in this mission. Special thanks go to Steven Sidore of In-Tense Translation for preparing this manuscript. Mr. Sidore did much more than simply translate the German ver- sion into English; he edited, restructured, re-wrote and drafted new chapters to break them out of their ‘German’ mindset and ensure that they would speak to a broad audience. He also supported and transcribed the book’s many inter- views. Without him, this book would not have been published in this format. Our thanks also go out to Palgrave Macmillan for agreeing to publish this second international edition, and to our editors Ms. Tula Weis and Mr. Joseph Johnson for their steady support. We also thank Ms. Stefanie Winter from Springer Gabler who published the first edition of this book. And of course our thanks go out to you, our readers, for putting your trust in our insights. We believe this work will educate without overloading—and open the door for you to start asking the right questions of your own advisors and planning a solid foundation for this and future generations. For this, we wish you all the best. Düsseldorf, Germany Boris Canessa Duisburg, Germany Jens Escher Köln, Germany Alexander Koeberle-Schmid Bad Homburg, Germany Peter Preller Essen, Germany Christoph Weber Contents 1 What is a Family Office? 1 Boris Canessa, Christoph Weber, and Alexander Koeberle-Schmid 1.1 W hy a Family Office Makes Sense 1 1.2 R easons for Founding a Family Office 4 1.3 E xpectations of the Family Office 7 2 How is a Family Office Structured? 11 Christoph Weber, Boris Canessa, and Alexander Koeberle-Schmid 2.1 Th e Development of the Family Office: From Part of a Firm to a Separate Entity 11 2.2 S tructures and Models of Family Office 15 From the United Kingdom: “I think, for me, if I had capital at that level, I’d find it empowering.” 23 Interview with Simon Foster 3 What are the Fundamental Success Factors for a Family Office? 31 Boris Canessa, Christoph Weber, and Alexander Koeberle-Schmid 3.1 F ounding a Single Family Office: How Much Money is Needed? 31 3.2 S uccess Factors for a Single Family Office 37 3.3 Founding a Closed Multi Family Office 39 3.4 Success Factors for a Multi Family Office 46 From Germany: “A family office will sink or swim based on the qualifications and aptitudes of its personnel.” 53 Interview with Klaus Kuder xi

Description:
The book offers crucial advice in helping entrepreneurs and their families find or found a family office that fits their goals. The authors survey the key considerations in this process, including: What are the different models for family offices, and what are their respective benefits? What costs c
See more

The list of books you might like

Most books are stored in the elastic cloud where traffic is expensive. For this reason, we have a limit on daily download.