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From the Robb Report: Wealth Management: The Family Business by Harvey Laney What to do when managing your assets becomes a full-time occupation. The more hands-off you are, the more essential it becomes for you to exercise due diligence when determining who is best suited to manage your family office. That means checking credentials and thoroughly researching the backgrounds and experiences of potential advisers and family office managers. “If somebody tells you, ‘I can handle this because I know everything,’ that’s a person to run from,” says Peterson. “The one thing we tell our clients is if you don’t know your jewels, know your jeweler.” Often, a family realizes after the fact that a longtime trusted adviser who adequately fulfilled their needs is ill-equipped to handle them within an office—particularly if the amount of wealth has risen greatly. Regardless of how your family office is staffed, it is vital to keep in mind that its assets belong to you and your family. “Trouble begins to happen, whether it’s a really wealthy athlete or movie star or family, when they absent themselves,” says Peterson. “There are a lot of examples of people being ripped off because they were too trusting. The fact is that there has to be some mechanism where somebody [in the family] is looking after the family jewels. The family has to be interested.” Failing to do so puts family members in a tenuous position. According to psychiatrist Carol Kaufman of Family Legacy Services in Boston, it is important to deal with your money from a position of authority. “Being aware of your money and psychologically owning it, despite who is actually managing it, is key,” she says. “It’s not so much the actual delegation, but your attitude. The pitfall is if you lose your own sense of empowerment. It’s very important when you’re delegating this authority to be doing so from a position of inner strength.” Where To Turn If you decide to establish a family office, the best places to look, at least initially, are organizations that offer objective advice. The Family Office Exchange was founded in 1989 with the goal of helping families evaluate whether an office makes financial sense—and if so, how best to structure that office. FOX does not offer for-fee family office services, so its counsel is truly unbiased. “We believe that having an independent resource as a sounding board, whoever it may be, is probably a good idea,” says Mary Jane Fredrickson, senior vicepresident of FOX. “That’s one of the reasons [the organization] was founded—so that there is a private community of peers that can share information among themselves and learn from one another.” |
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