Spectrum of Investment Decision Making

Aligning the advisory relationship with the family’s objectives is as much an art as a science. Many families don’t realize that a wide spectrum of advisory relationship structures exist, and that they have the ability to design and customize a relationship that best suits them. Where a family falls on the spectrum is most commonly driven by the family’s desired level of involvement and decision-making in various aspects of their investment program. While families on one end of the spectrum desire a fully outsourced advisory relationship, those on the other end will be fully engaged and involved in every decision. More families are finding that the most optimal approach is to fall somewhere in-between; i.e., outsourcing all due diligence and oversight on certain pieces of the investment portfolio (commonly traditional, liquid investment strategies) to their investment advisor, while actively participating in other areas (private equity, for example) in collaboration with their advisor. Dan Tarlas and Lori Mills explained how to execute a successful advisory relationship by setting appropriate expectations and establishing meaningful measuring sticks up front.