The Family Office (eBook)

Boris Canessa was instrumental in founding a single family office for his extended family and now serves as chairman of its advisory board. He is also an executive board member at the German Association of Independent Family Offices.Prof.  Jens Escher LL.M. is a lawyer and tax advisor for Taylor Wessing in Düsseldorf, Germany, focused on consulting for corporations, high net worth private clients and their family offices in the areas of succession/asset structuring/foundations. He is also an honorary professor at the University of Leipzig and a lecturer at the University of Munster.Dr. Alexander Koeberle-Schmid is an expert in family business and family office governance, succession planning, boards of directors, and family constitution. He has been advising families in Europe, Asia and the Middle East for many years. He is frequently asked to speak at events and has also published the book “Governance in Family Enterprises”. He is a lecturer for leading the family business at EBS Business School in Germany.Peter Preller, LL.M. has served since October 2011 as the senior client consultant at HQ Trust GmbH in Bad Homburg, the multi family office for the Harald Quandt family, offering comprehensive consulting for complex client assets. He is also an instructor in the Master's degree program in “Corporate Succession, Inheritance and Assets” at the University of Munster. Christoph Weber is managing partner and co-founder of the WSH Family Office, Düsseldorf. He has published numerous articles in journals on family offices and serves as the chairman of the board of the German Association of Independent Family Offices.

Translator’s Preface 5
Preface 7
Contents 10
About the Authors 14
List of Figures 17
List of Tables 19
1: What is a Family Office? 20
1.1 Why a Family Office Makes Sense 20
1.2 Reasons for Founding a Family Office 23
1.3 Expectations of the Family Office 26
1.3.1 Professional Wealth Management 26
1.3.2 Promoting Family Unity 27
1.3.3 Other Benefits 28
Bibliography 29
2: How is a Family Office Structured? 30
2.1 The Development of the Family Office: From Part of a Firm to a Separate Entity 30
2.2 Structures and Models of Family Office 34
2.2.1 What a Family Office Can Offer: Tasks and Structures 35
2.2.2 Models for a Single Family Office 37
2.2.3 Models for a Multi Family Office 38
2.2.4 Potential Conflicts of Interest at a Commercial, Dependent Multi Family Office 40
Interview with Simon Foster 42
3: What are the Fundamental Success Factors for a Family Office? 50
3.1 Founding a Single Family Office: How Much Money is Needed? 50
3.1.1 Analysis of Costs and Required Services 50
3.1.2 Motivation and Commitment by Employees in Relation to Size of Wealth 53
3.1.3 Successful Scenarios for Single Family Offices Managing Smaller Fortunes 55
3.2 Success Factors for a Single Family Office 56
3.3 Founding a Closed Multi Family Office 58
3.3.1 Fundamental Decisions When Founding a Closed Multi Family Office 59
3.3.2 Responsibilities of the Managing Director of a Closed Multi Family Office 61
3.3.3 Issues When Developing towards a Commercial Multi Family Office 62
3.3.4 Specific Issues Related to Commercial Multi Family Offices 63
3.3.5 Reporting: An Important Task for the Multi Family Office 64
3.4 Success Factors for a Multi Family Office 65
Interview with Klaus Kuder 72
Bibliography 77
4: Structures for Managing Wealth 78
4.1 Family Wealth Management 78
4.1.1 Vision and Mission of the Family Office 80
4.1.2 Yield Requirements and Targets 81
4.1.3 A Survey of Asset Classes 82
4.1.4 Asset Class: Real Estate 84
4.1.5 Asset Class: Gold 84
4.1.6 Home Currency 85
4.1.7 Yield and Risk 85
4.1.8 Movement of the Investment Classes 87
4.1.9 Liquidity and Illiquidity of the Overall Portfolio 90
4.1.10 Asset Allocation 91
4.1.11 Diversified Portfolio 93
4.1.12 Active and Passive Fund Management 97
4.1.13 Selection of a Manager 98
4.2 Wealth Management Through Asset Accounting and Reporting 99
4.2.1 Performance Calculations 102
4.2.2 Controlling and Performance Review 103
4.2.3 Relative Benchmark 104
4.2.4 Absolute Benchmark 105
4.2.5 Investment Policies and Cost Controlling 105
4.2.6 Efficiency in Bookkeeping 106
Interview with Christoph Zapp 108
5: Reliable Handling of Legal and Tax Issues 113
5.1 Internal or External Advisors 113
5.2 Legal and Tax-Related Tasks 115
Interview with Nicholas Warr 117
Bibliography 119
6: Succession Planning 120
6.1 Forward-Looking Succession Planning 120
6.2 Handover of Leadership Responsibility 125
6.2.1 Defining the Fundamentals of Leadership Transition 126
6.2.2 Evaluating a Suitable Successor 127
6.2.3 Professional Management of Leadership Transition 128
6.3 Transferring of Wealth 130
6.3.1 Wealth Succession Following a Death 131
6.3.2 Accelerated Wealth Succession 133
6.4 Mediation: Helpful for Succession, and More 135
Interview with Christian-Titus Klaiber 143
Bibliography 148
7: Organizing the Family: Family Governance 149
7.1 Family Constitution and Family Charter for Family Office 152
7.2 Family Activities to Reinforce Cohesion 158
7.3 Involving Succeeding Generations: Continuing Education within the Family 160
7.4 Achieving Personal Goals Through Coaching 165
Interview with Larry Donckers 170
Bibliography 176
8: Effective Structuring of Philanthropic Engagement 177
Interview with Nour Abou Adal & Maissa Abou Adal
9: Concierge Services by the Family Office 186
10: Organizational Framework for the Family Office 189
10.1 Selection of a Suitable Jurisdiction 189
10.2 Selection of a Suitable Legal Form 190
10.3 Taxation Aspects 191
10.3.1 Impact of the Legal Form on Taxation 191
10.3.2 Fee-Based Work for the Family? 192
10.3.3 Value Added Tax 193
10.4 Regulatory Requirements 194
10.5 Structure Suitable for the Situation 194
Interview with James Fleming 198
11: Client Structure and Communication 202
11.1 Defining the Clientele 202
11.2 Information and Communication with the Clients 205
11.3 Consulting Discussions and Meetings 206
11.4 Making and Documenting Decisions 207
12: Committees, Guidelines and Professional Management Systems 209
12.1 Investment Council to Consult on Financial Issues 210
12.2 Risk Management Through the Family Office 211
12.2.1 Insurance Management 213
12.2.2 Internal and Organizational Risks for the Family Office 214
12.3 Establishment of Compliance Guidelines 215
12.4 Transparent Fees System for Financing 218
12.4.1 Allocation Based on Fixed Percentages 218
12.4.2 Allocation in Relation to Share of Assets Under Management 219
12.4.3 Cost Allocation Based on Time and Expenditures 220
12.4.4 Remuneration of Special Services for  Individual Clients 221
12.5 Who Owns the Family Office? 223
12.5.1 Dependent Department of the Company 223
12.5.2 Family Office as a Subsidiary 223
12.5.3 Association, Foundation, Trust 226
12.5.4 Role of the Family Members 226
12.6 Controlling and Consultation by the Advisory Council 226
Interview with Tom McCullough 230
Bibliography 235
13: Leadership Structures in the Family Office 236
13.1 Management Befitting the Requirements Profile of the Family Office 237
13.2 Management Structure of a Family Office 238
Interview with Leslie Voth 242
14: Strengths, Weaknesses, Opportunities, Threats: Avoiding Traps, Preparing for the Future 247
14.1 Cohesiveness and Trust Within the Family: Contradictory Responses to the Same Trap 249
14.2 Looking Forward 252
14.2.1 The Future of the Family Office 252
14.2.2 Digitization 252
14.2.3 ESG and Impact Investment 254
14.3 Final Thoughts 256
Glossary 258
Bibliography 264
Index 266