One of the primary tasks of a family or multifamily office is to ensure good planning, largely through the coordination of external professionals serving the family, but perhaps the most important thing is to resolve any problems of governance in order to lay the foundations for a successful future in the preservation of capital and a smoother path in family wealth management.
Here are some of the issues brought to the table as part of the presentation "Family Office as a Client”, which was held last Tuesday as part of the FIBA Wealth Management Forum in Miami. The conference, chaired by Allison P. Shipley, principal of Tax- Personal Financial Services Practice at PwC, included the participation of Santiago Ulloa, managing partner of WE Family Office, Annette V.Franqui, managing director of ForrestalCapital and Drake Jackman, managing director and head of LatAm for Northern Trust.
For Ulloa, when the time comes to get to work with a family, what that family wants to do, and where they want to go, outweighs the size of their wealth, which means that their purpose of organization takes precedence. Hence, he stressed that the first thing to do is to solve any problems of governance and legal structure. Often, members of the same family live in different jurisdictions, and on many other occasions face a serious lack of organization which leads the family aimlessly. Also, but not less important, is the task of coordinating and managing the various external suppliers who serve the family. “The trend in this regard is to hire the top of the class. We have internal resources and we coordinate with outside professionals.”
In this respect, Franqui pointed out that a family office must work together with family office service providers and also ensure that the established plan is followed.
With regard as to which trends currently move the industry, attendees agreed that many of the families they work with have members of the same family in different jurisdictions; hence the need for structuring, and for working towards complying with the various tax jurisdictions. Another trend which is found among family offices is the increase in joint ventures with other families, as well as that, increasingly, the family is seeking control and further training.
Franqui underlined that those cases of families wanting to do things together are becoming more and more common; and explained that in Southern Florida’s case, anetwork is emerging, and that this networking will eventually give significant results between now and 10-15 years. This is due to families who have been settling in the area in recent years, who already know, or are getting to know each other, and are laying business opportunities on the table.
For Ulloa, families are looking for direct investments because not everyone is willing to take the risk of investing in private equity. In this regard, Franqui agreed that closeness and knowledge take precedence over risk. “Thetendency to invest close, in those things that are familiar, still prevails,” hesaid.
Another important task of the family office is to “sit in on it” in order to gain a complete picture of the problems and needs of the family. “We manage any investments, from real assets such as the property management of real estate, to the most sophisticated, such as structuring a private equity,” Franqui said.
Meanwhile, Jackman, from Northern Trust, noted the importance of establishing regular meetings between family members, in order to, amongst other things, educate them on the risks they take, and to take the opportunity to also start educating the next generation, “which must be encouraged to work and to find out which is the area in which they can add the most value.”
The second edition of FIBA Wealth Management Forum 2014 was held last week in Miami with the participation of over 200 professionals, who during the sessions were able to hear, first hand, the issues and problems concerning industry.