The Family Office Approach to Managing Wealth
Many investment advisors and managers focus their efforts on outperforming a particular benchmark. While this works well in a rising market environment, it can be catastrophic to a portfolio during large market corrections such as what transpired during the 2008 financial crisis.
Many institutional investment firms including family offices, foundations and endowments have avoided this pitfall by deploying a goals-based benchmarking approach when it comes to managing their wealth. This includes a thorough review of a family’s estate, wills, household assets, operating entities and budgeting including current & future income/spending requirements.
All of this is then used to derive a cash flow and corresponding capital asset forecast reflected within a formalized wealth plan. The final step is to use this working document to custom design an investment portfolio to meet the family’s goals and objectives while taking as little risk as possible.
The end result is we are able to add a level of predictability and some certainty around the client's financial future and what they hope to achieve. This can include tax minimized wealth transfers or as simple as ensuring enough is saved to preserve a certain lifestyle during retirement.
For clients with over $25 million in investable assets the firm also provides an Outsourced Chief Investment Officer (OCIO) service including fiduciary oversight, governance and compliance in the design of a formalized investment policy statement and the review and oversight of investments (both public and private). The same planning-lead approach is undertaken before any investment decisions are made albeit the process can be a lot more comprehensive given the more specific needs of the client.
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