FOX Series

Many FOX members have asked about what considerations should go into developing a family wealth strategy after an operating company is sold. To them, I’ll often tell the story of Thorndale Farm CEO Oakleigh Thorne and his 20 year plan.After Oakleigh completed his MBA in 1986, he went to work at Commerce Clearing House, Inc.—a company his family started in 1892. Oakleigh helped refocus the company’s energies, transforming it from a publishing company into a modern information technology company. He was promoted to CEO in 1993, and in 1996 led the sale of CCH for $1.9 billion to Wolters Kluwer, ...

In the not too distant past, if you were in IT and had virtualization skills, you probably thought your future as an IT admin was secure.Today, that is no longer the case.In "The Big Switch" by Nicholas Carr, the author explains how the use of electricity in larger businesses shifted from on-premises systems (companies had electricity departments, complete with electrical architects and managers) to third-party electrical grids that businesses simply tapped into. Electricity went from an item on which businesses focused a lot of their time, attention and labor to a simple utility they plugged ...

Recently, more than 60 FOX members took part in a survey of family offices by the Private Investor Coalition (PIC). PIC is an authority on legislative and regulatory issues affecting single family offices, and serves as a resource for disseminating information on legislative, regulatory and compliance issues impacting single family offices.PIC was interested in understanding how the current Family Office Rule—which excludes in-laws of a lineal descendant from the definition of family member—affects single family offices. Recently, the SEC has granted four exemptions for the in-law issue, but s...

There seems to be at least one new concept that lingers in the memory and creates a buzz among the attendees at each FOX event. At this year’s FOX Wealth Advisor Forum, it was the observation by Glen W. Johnson, Managing Director of Mirador Family Wealth Advisors, on the significant impact that increasing life expectancy is going to have on the dynamics of family wealth management.One hundred fifty years ago, life expectancy in the US was 40. Fifty years ago, it rose to 60. Today it is nearly 80. How soon will it reach 100? When it does, it will have resounding repercussions on family wealth m...

When I attended a recent FOX Executive Council meeting, one common theme I kept hearing from members was how difficult it is, in this or any business environment, to keep the right talent on staff and not face flight risks. The most obvious answer is “cash compensation,” but sadly there’s not an infinite salary budget, so what else can we do to keep our best employees?As managers, we should be asking ourselves, “What makes people tick? And what keeps them truly invested and engaged?” After all, anybody can put in a mini-fridge and call that a “fun” environment, but in the long-run, small “fun”...

For many family offices—especially the smaller ones—the thought of spending tens of thousands of dollars on one key element of cybersecurity, penetration testing, is a daunting prospect.Though certainly helpful, penetration testing is often overkill for many offices. A better approach may be to start with a vulnerability scan.The terms “vulnerability scan” and “penetration testing” are frequently confused or incorrectly used interchangeably. While a vulnerability scan identifies and reports potential vulnerabilities, a penetration test also attempts to exploit both the technical vulnerabilitie...

Multi-family offices and wealth advisors are enjoying growing profitability—and revenue.That’s what we learned while conducting the 2014 FOX Multi-Family Office and Wealth Advisor Benchmarking Study Report, FOX’s best and most current thinking on the direction of the Ultra High Net Worth (UHNW) advisory business.Overall, profit margins are growing at multi-family offices and wealth advisor firms, with median profit margins up by 5 percentage points (from 19% in 2012 to 24% in 2013). However, at the same time, we have noticed increasing divergence in profit margins and revenue growth. A fe...

There’s a strong correlation between family offices’ investment performance and reliance on a CIO and investment committee.In analyzing the results of the 2015 FOX Global Investment Survey, our annual survey of investor attitudes and behaviors, we found that one group had significantly outperformed the rest. We looked into what accounted for the difference, and found that they had an internal CIO and/or investment committee directing the investment strategy and often had a committee structure for setting policy. Among these top performers, 93% said they have an investment committee and 87% rep...

Leadership is an integral part of a wealth advisor’s everyday responsibilities as someone responsible for providing holistic and integrated family wealth services.Sarah Biggerstaff, noted coach and lecturer in the practice of leadership at Yale School of Management, will walk participants through a process to unlock their potential and explore their personal identity as a leader at the 2015 FOX Wealth Advisor Forum. In preparation for this year’s Forum, we asked Sarah five questions about leadership and the family office. Here’s what she had to say:FOX: In a collaborative environment...

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 ...

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...

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...

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...

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...

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...