Family Continuity and Governance

Talking to Your Children about Wealth
The financial crisis has caused many individuals to re-evaluate the role that money plays in their lives and has given families the perfect incentive to have realistic conversations about money. Noting that family advisors and mental health professionals long have advocated “financial parenting,” this paper from First Foundation Advisors offers guidance for raising financially responsible children.
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Industry Trends and Issues

Conflicts of Interest in Private Banking
The crisis of confidence in private banking has some obvious causes. It also has one not so obvious remedy: change the ownership structure. This remedy, however, requires a high level of involvement in all aspects of the business. For those families willing to make the commitment, Mutual Private Bank says, the only confidence that matters may be in their own choices. full article »

Integrated Planning

Protecting Wealth via Canadian Citizenship
Wealthy global families are becoming increasingly aware of their need for a well thought out citizenship and residency strategy to protect their wealth and to safeguard their freedom of movement. This paper from Northwood Family Office makes the case for Canada as a safe and surprisingly tax-efficient alternative to many of the more well known citizenships the wealthy can consider acquiring.
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Investment Planning

Achieving Private Equity Allocation Targets
Researchers for AIG Investments explore the challenges of estimating future private equity exposure and address central questions commonly faced by new and experienced private equity investors alike. They conclude that private equity investors need to give as much consideration to a strategic commitment plan to achieve allocation targets as they do to setting the targets themselves.
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The Case for Private Equity Fund of Funds
In this paper, RCP Advisors points out the benefits of using private equity fund of funds managers. The authors note that fund of funds managers can help smaller and first-time private investors gain access to the asset class, while also helping larger investors to diversify their private equity portfolios. full article »

Exploring Selection Behavior in Private Equity
The private equity industry belief in the persistence of returns is a fallacy, according to a research report from AARM Corp. Analytical selection of new managers, the authors say, overwhelmingly trumps the advantages of relationship access to existing managers in good private equity fund management. full article »

Managing Risk of Direct Investment in Private Companies
Direct investment in private companies can deliver returns far exceeding those of private equity and other asset classes while also providing attractive diversification and increased control. The potential for outsize returns, however, comes with increased risk. A new paper from JD Ford & Company points out the financial, organizational and managerial risks that investors are wise to assess carefully.
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Tactical Asset Allocation: Investing or Speculating?
Portfolios can evaporate by being too concentrated, overly leveraged or simply having inferior investment management that does not focus on the long term or loses it on poorly timed speculation. A brief paper from The Beringer Group recommends that great wealth be invested utilizing a solid set of investment principles designed to preserve and grow assets over multiple market cycles.
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Investment Strategy Considerations for Family Offices
Family offices may have to come to grips with the fact that greater diversification may not be the answer to improving rates of return, says a new paper from Advocate Asset Management LLC. The most prudent actions may be those that preserve capital, waiting patiently for the underlying climate to change fundamentally to one more conducive to the growth of capital. full article »

Embedded Capital Losses: Opportunities for Taxable Investors?
Contrary to what some investors think, embedded capital losses in stock mutual funds may not be tax advantageous, according to Hammond Associates. If capital gains rates remain at current levels, those capital loss carry-forwards add value for shareholders, albeit modest. If capital gains tax rates increase after 2010, loss carry-forwards may impose additional costs on shareholders who invest before 2011. full article »

Are You Losing Money in Bonds?
Many taxable investors are literally losing money by purchasing government bonds trading at a premium to their par value. A short article by Northwood Family Office notes that to understand the true rate of return, individuals must consider the impact of taxes on their bond investments. full article »

Bonds That Heal: Why Russia’s Deficits Are Good for Investors
Russia ’s unprecedented swing from considerable budget surpluses to nagging deficits will not pose a threat to the country’s fiscal sustainability but instead will mark a sea change for international investors, says a new report from UFG Asset Management. The Kremlin will be forced to become far more investor-friendly in order to court the massive amounts of foreign capital sorely needed to finance the economy. full article »

Commodities and Inflation
A new research paper from Gresham Investment Management makes the case that portfolio diversification remains the single best method for generating consistent, long-term returns above the risk-free rate, and that commodities are currently an attractive investment from both a strategic and tactical asset allocation perspective. full article »

Roll Yield as Component of Commodity Return
The role of commodities in a strategic portfolio has not changed much during the past 40 years and, indeed, not in the 22 years of the Tangible Asset Program portfolio. In this paper, Gresham Investment Management explains why it believes commodities will continue to provide diversification benefits to a portfolio regardless of the roll yield regime. full article »

Lifestyle Management

Health Advocacy: Saving Time, Money and Worry
A brief paper from Health Advocate Inc. provides an overview of health advocacy, explaining not only the concept but also how this new specialty service can help individuals deftly navigate the healthcare system in order to get the right services and to make sound medical decisions. full article »

Risk Management

How to Prevent Fraud and Minimize Risk
Family offices develop complex and highly individual business models that can make fraud prevention programs difficult to implement. At the same time, family offices are exposed to various types of risk that can hamper their ability to protect family assets. In these two papers, Rothstein Kass explains practical methods for preventing fraud and minimizing the family office’s exposure to risk. full article »

Strategic Risk Management in Tough Times
Tough financial times demand strong risk management systems while limiting the resources available for those systems. In their sixth annual risk management survey, Marsh and the Risk and Insurance Management Society examine strategic risk management in practice and offer recommendations for building strong risk management programs. full article »

Collections Security: Protecting Unique and Valuable Objects
Effective collections security is the application of general security practices centering on concentricity, redundancy and reliability, according to Insite Security. Ultra-wealthy collectors are wise to examine the relevant work experience of prospective vendors to determine both their credentials and their ability to protect valuable items. full article »

Identity Theft Protection Checklist
Identity theft is a risk that grows and changes daily. Keeping up to date with the latest prevention methods is the surest way to protect oneself from the many forms that identity theft can take, including medical, credit and financial theft. This helpful checklist from HUB International Personal Insurance offers suggestions for minimizing the risk of identity theft as well as steps to take if such theft should occur. full article »

The Need to Conduct Due Diligence
Whether investing in a hedge fund, buying out a company or hiring a key employee, it is more important than ever for individuals to perform the proper due diligence. A new paper from First Advantage points out the need to verify credentials, search court records, read the news, review corporate and regulatory records and conduct interviews. full article »

Strategic Philanthropy

Philanthropic Funding in an Economic Downturn
This report from Credit Suisse examines historical trends for philanthropy during economic downturns and explores the effects of the current recession on funders and non-profits. It also provides a series of recommendations for philanthropists and their advisors on grantmaking during the downturn. While based on U.S. data, many of these recommendations are relevant to individuals and organizations globally. full article »

Foundations and New Philanthropists
New philanthropists – ultra-wealthy individuals interested in being informed, strategic givers – have been growing in profile, and donations have been increasing. This paper from New Philanthropy Capital explores the opportunities for new philanthropists and established foundations to collaborate, the benefits of such collaborations, and the ways in which they might work. full article »

Technology Issues

The Right Software Means an Efficient Family Office
The family office integrates many diverse components – taxes, philanthropic giving, trusts, personal services, property management and legal matters. This paper from ColumbiaSoft shows how a carefully chosen document management system can streamline these many pieces and reduce the overall cost of doing business.
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