The ability to integrate wealth management advice and services is central to the role of a family office and improves the likelihood of sustaining wealth across generations, according to GenSpring, the New York-listed wealth management firm for ultra high net worth families.
The firm told Family Wealth Report that over the past few years it has outlined more explicitly what it believes are the key elements of a family office. If advice – even the best of its kind – is given in a “siloed” manner, without considering the implications across some of the other key elements, it can be less effective, says Michael Woocher, head of client development. “We really try to take a broad-based view, not only with respect to each element, but how they interplay with the others,” he said.
The elements, outlined below, “put a stake in the ground” in terms of what Florida-based GenSpring thinks it means to be a family office; it's about being able to provide advice and guidance across each of the areas, within the firm, and to then integrate that advice, Woocher says. The ten core elements are defined as follows:
Lifestyle: This includes goals-based financial planning; liquidity management and reporting; risk assessment; assistance with and acquisition of lifestyle assets; and customized reporting.
Expense management: Receive/post outstanding payables and track vendor payments; establish internal controls; categorize and code expense transactions; maintain/manage cash balances; and facilitate detailed financial reporting.
Taxes: Federal, state and local income tax planning; charitable tax planning and structuring; tax planning for trusts and estates; closely-held business tax and co-ordination of planning; and co-ordinate documentation for tax compliance.
Document management: Maintain document inventory; maintain summary of major assets, ownership and key contacts; and maintain investment documents, statements, financial reports and correspondence.
Fiduciary: Trust administration and management, either as trustee or as support for third-party trustee; fiduciary accounting and beneficiary communications; provide a complete infrastructure to meet the complex obligations of the trustee; and provide liability support and advice for all trustees.
Investments: Investment policy statement for all accounts and/or legal entities; strategic asset allocation and investment strategy; investment due diligence, selection and monitoring; and consolidated investment reporting.
Education: Development of individual and family education plans; delivery of educational programs focused on all aspects of family wealth; next generation education; trustee and beneficiary mentoring; and learning events.
Estate: Review and illustration of estate plan; creation and communication of wealth transfer and objectives; and annual estate plan review, recommendations and monitoring.
Philanthropy: Education on philanthropy; next generation involvement; shared values and giving interests identification; philanthropic mission statement development; foundation governance; charitable structure evaluation; and strategic tax planning.
Governance: Family meeting facilitation; family mission statement development and implementation; family governance system development, including development of a family constitution; and succession planning.