Family Office Spring 17 PRINT PDF
Family Office Spring 17 PRINT PDF
Family Office Spring 17 PRINT PDF
FAMILY OFFICE
MAGAZINE SPRING 17 ISSUE
MONACO
FAMILY OFFICES
Sometimes 3 letters
make all the difference
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FAMILY OFFICE MAGAZINE
DIVERSIFICATION MATCHMAKING
SLOWLY DYING OR STILL ALIVE? BENTLEY EXP FOR THE WEALTHY
LUXURY ELECTRIC VEHICLE
03 25
The EXP IS A 12 SPEED
CONCEPT CAR BY BENTLEY
MANULIFE
BEATING THE BODN MARKET
13 KOH SAMUI
A LEADING INVESTMENT?
05 29
THE KEY OF USA INVESTING
THE CRAFT BIOTECHNOLOGY COMPANIES
LUXURY SAFES
07 39
CITI BANK WEALTH
CYBERCRIME IN THE ASSURANCE
FAMILY OFFICE SPACE
09 FAMILY OFFICE 41
PHILANTHROPIC A NEW TREND IN ISRAEL BUILD TO SUIT
PROPERTY INVESTMENTS
FAMILIES
17
5 FAMILY DYNAMICS 45
11
SUPERYACHT
VALUATION
47
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FAMILY OFFICE MAGAZINE
FAMILY OFFICE
CHANGING WORLD OF
49
MONACO
PRIVATE EQUITY
AN INSIGHT INTO THE MONACO
VIRTUAL 51 ECOSYSTEM FOR FAMILY OFFICES
MULTI FAMILY OFFICES
OPEN SOURCE
RISK INTELLIGENCE 55
FAMILY OFFICE
TRENDS IN INDIA
61
ANGOLA 65
BY PRIME MINISTERS
TRADE ENVOY
REAL ESTATE 67
SUSTAINABLE INVESTING
FAMILY OFFICE
71
81
HOUSEHOLD EMPLOYEES
SFO! 107
LICENSED IN SINGAPORE?
DONT GET
HACKED 111
CANNABIS
INVESTING
85
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DIVERSIFICATION: SLOWLY DYING OR STILL ALIVE?
by Sloan Smith, Vice President and Steve Karsh, Principal Innovest Portfolio Solutions
Given the positive equity markets in 2016, coupled with with disciplined rebalancing allows investors to
the seven-year bull market in the S&P 500 and very maintain the same level of return but at a lower level
strong performance of investment grade bonds, some of risk.
investors are challenging the value of diversification in
their portfolios. With the S&P 500 up over 11% for the Equity Returns versus a Diversified Portfolio
first nine months of the year and having generated a Large cap stocks have recorded positive returns every
15% annualized return since 2009, it has been difficult calendar year from 2009 to 2016. However, in all eight
for diversified portfolios to outperform traditional of these calendar years, large cap stocks were never the
benchmarks. Some may be tempted to move away from top overall performer. Large caps lost to either REITs,
a diversified portfolio of equities, bonds and alternative commodities, fixed income, international developed
investments, and invest solely in a passive equity fund. stocks, or small-cap stocks.
However, there are three key components to In 2008, large caps were one of the worst performing
diversification that some investors have ignored. The asset classes with losses of 37%. Even in that horrific
first is whether an equity-only portfolio satisfies the year for risk assets, small caps and commodities,
level of risk investors are willing to take based on which have exhibited greater long-term volatility than
their goals, time horizon, and tolerance for volatility. the S&P 500 Index, had less severe losses than large
The second is that recent past performance in equity caps. Also, looking further back in time from January
markets or any other asset class cannot be extrapolated 2000 until December 2009, the S&P 500 generated a
into the future. -9.10% cumulative return. Many market observers
refer to this time period as the lost decade for large
The third is that diversification is the only free lunch cap stocks. A portfolio composed only of large caps has
in investing, because relative to holding a single exhibited a much greater risk than is likely suitable for
investment, diversifying across asset classes coupled many investors goals, time horizon, and tolerance for
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volatility. Modern Portfolio Theory defines the concept reaction to the Brexit referendum, when international
of diversification as an attempt to optimize a portfolio markets where down 10% over two days, it can be
of assets maximizing the returns and minimizing the challenging for investors to stay focused on their long-
risks of the portfolio. This concept becomes very term strategic plan and asset allocation. Over the
apparent when reviewing asset class annualized returns short-term (one to three years), correlations between
since 2006 as compared to a diversified portfolio. In asset classes may increase, losses may be significant,
this case, a diversified and rebalanced portfolio consists and patience and discipline may be severely tested.
of 25% in large cap stocks, 10% in small cap stocks, But to better understand the benefits of diversification
12% in international stocks, 25% in fixed income, 3% on longer-term portfolio returns it is best to focus on
in REITs, 20% in hedge funds, and 5% in commodities. the period surrounding the financial crisis from 2008
to 2009. Investors who remained in a diversified and
Though the performance of a diversified portfolio from rebalanced portfolio through the market bottom of
2006 through 2015 finished behind REITs, large cap 2009 would have recovered all of their losses in 3 years
stocks, and small cap stocks, it finished only behind and would have more than doubled their investment by
fixed income and hedge funds when it came to volatility. 2015. By contrast, investors who held an equity-only
On a risk-adjusted basis, where the annualized return portfolio would have had to wait four and a half years to
of the asset class is divided by the annualized volatility, reach their previous peak. Turbulence in the market can
a diversified portfolio had better risk-adjusted come at any time, but having a diversified portfolio with
performance than all four equity sub-asset classes: clearly defined risk/reward objectives can be essential
large cap, small cap, international, and REITs. to long-term investment success.
Proper diversification involves owning assets that have Diversification Going Forward
differing risk/reward characteristics and do not move The main question that investors should be focused
in tandem. Some assets will generate strong returns on is what does the future hold for the financial
while others generate weak returns, but the overall markets? It can be argued that quantitative easing
effect should lead to a smoother ride. If you include by the Federal Reserve has lowered overall market
the method of rebalancing in the diversification process volatility and driven strong performance in bonds and
where you sell some of your winners and buy some of large-cap equities. Over time the Federal Reserve is
your losers to maintain your long-term asset allocation, expected to move away from its accommodative policy,
then you avoid portfolio drift and further minimize risk. which would likely have a negative effect on bonds
David Swensen, Chief Investment Officer of the Yale and force investors to look at alternative asset classes
Endowment, also found that diversification coupled (i.e. hedge fund or real estate) for protection. With
with proper rebalancing can add 0.4% of return each the eventual increase in interest rates and removal of
year. quantitative easing from the financial system, volatility
in the financial markets should also be expected to pick
Though large caps have been strong performers since up substantially. Ultimately, investors who maintain
the lows of 2008, they remain subject to severe losses diversified portfolios should be better suited to capture
over market cycles. Diversification is the best solution future market opportunities. They are also more likely
to help dampen the severe ebbs and flows that are to be to have a less volatile experience along the way.
expected in single asset class investing.
Innovest Portfolio Solutions, LLC
Short-Term versus Long-Term Effects of a Diversified For more than 20 years, Innovest has provided excellent
Portfolio client service as well as forward-looking, innovative
Financial markets wasted no time kicking off 2016 with investment solutions for endowments and foundations,
a new stretch of volatility. The S&P 500 got off to its retirement plans, and families. We are an independent
worst two-week start in any calendar year in history provider of investment-related consulting services and
by falling 8%. If you couple this drubbing with the work on a fee-only basis.
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BEATING THE BOND MARKET
BY Chris Chapman, senior analyst, Strategic Fixed Income manulife asset management
Anyone invested in global bonds may have had a nasty high levels of interest rate risk. Whats more, there is
shock back in November. the real possibility of an uptick in inflation across the
globe as well as changes to easing policies by central
Emboldened by Donald Trumps election victory, banks this year. At this point, it is fair to assume the
investors sold bonds and other safer assets in favour of Federal Reserve will continue to hike rates. That
riskier shares they hoped would benefit from his plans for makes interest rate sensitivity the key risk to the
economic growth. Headlines around the world screamed bond market.
of trillion dollar losses in bonds. Some three months on,
does global fixed income represent a good investment? Rate card - In fixed income, it can take a surprisingly
small move in interest rates to have a large and
As always, the assets you invest in and what you do lasting effect on a bond portfolio. Our analysis,
with them depend wholly on the outcome youre trying below, shows that if interest rates rise by just 1%
to achieve. In fixed income, many professional fund then the total returns delivered by the global bond
selectors are looking for capital preservation with a market in this case, represented by a popular bond
level of income healthily above that generated by cash index would be expected to fall by 4.5%. The chart
or government bonds. At the end of a long bull run and below illustrates the 12-month horizon return for the
at the start of a period of rising interest rates this is no Bloomberg Barclays Global Aggregate Bond Index
easy job. However, a portfolio of well-chosen global over the last two and a half decades for a 1% rise in
bonds that may be positioned differently than traditional interest rates. It shows growing sensitivity to changes
global fixed income indices, coupled with sensible calls in interest rates, commonly known as duration, and
on currencies and interest rates, can still deliver an a plummeting yield. Is this a worst-of-both-worlds
attractive level of income and capital preservation. scenario?
An unconstrained global fixed income approach has Certainly, a market at risk of falling if interest rates
the flexibility to dynamically allocate across countries, go up that also offers declining compensation for that
sectors and securities and take currency positions not risk is not an ideal scenario in our view.
only to reduce risk but also to generate precious alpha.
Done well, the idea is that you could gain better returns The chart facing - Bloomberg Barclays Global Aggregate
than the market, or rather an index, but with no additional Index 12 Month Horizon Return for a 100 bps Increase
levels of risk. In other words, you aim to take a smoother
road to a higher summit than a rockier and possibly lower How to manage this very real risk in such a difficult
path. environment? - In our view, a number of things help:
decades of experience of actively managing fixed
Heres how it works. income portfolios in challenging markets; making
Benchmarks what are they good for? decisions that carefully balance the need for yield
The first thing is to be aware of is how the index is with duration risk for example in the careful
positioned but avoid using it as the primary foundation selection of longer dated credits; and a willingness
for investment decisions. These days, the sort of indices to look at the full range of markets, sectors and
used by many global bond funds have big concentrations securities available to a global fixed income portfolio
in high quality, global government debt. Given the manager given that some markets are at greater risk
current low yield environment, these securities bring of rising rates than others.
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Liquidity, liquidity all around, but not a drop to drink?
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THE KEY OF
THE CRAFT
LUXURY SAFES BY DTTLING
by Nicholas Thompson
In the picturesque southern own elaborate security devices. of art in its own right. We are
German town of Sindelfingen, For each step of the production very proud of the work we do.
just a short drive from Stuttgart, process, Dttling employs skilled
fine artisanal craftsmanship is artisans, ranging from restorers Innovation is at the cornerstone
still thriving. Here, veritable and smiths to leather workers, of the Dttling brand, with an
treasure chests are made painters and security specialists, impressive product list in tow,
using age-old tradition who meticulously build their such as the limited Narcissus
and elaborate practices for impressive safes by hand, each a model, the result of a unique
discerning clients ranging from bespoke masterpiece designed collaboration with none other
royalty to celebrities looking with the clients specifications than the fashion tycoon Karl
not just to store their most and requirements in mind. From Lagerfeld. In 2013, Dttling
valuable possessions, but to fully integrated watch winders released its Guardian line a
display their power and status. to keep timepieces ticking to unique portable vault enabling
humidors providing the ideal easy mobility. This compact
Dttlings story is steeped in storage conditions for cigars, cylinder-like piece of luggage
history. With humble beginnings there are few limits to what can proves looks can be deceiving:
as nothing more than a locksmith be done to one of Dttlings behind the calf leather exterior
shop in 1919, the company has safes. Our clients are used to is a nigh-impenetrable fortress
stood the test of time, passed driving the most luxurious cars, of metal and military-grade
down through four generations. living in lavish homes and yet polycarbonate. Safety is
Today, the brand is helmed each time they get to unveil paramount to every safe, with
by Andreas K. Schlittenhardt, their safe, its like watching state-of-the-art security features
who has transformed the a small child on Christmas like fingerprint recognition and
business into the leading global morning, boasts Andreas. Each GPS tracking available. The
manufacturer of luxury safes. safe goes through an arduous Fortress safe, billed the safest
We were filling a gap in the production process utilising the luxury safe on the market,
market, explains Andreas. teams knowledge of traditional provides certified insurance
We started out restoring crafting techniques. Some are coverage of up to USD 1,000,000.
antique safes until many of our upholstered in supple leathers, The price range is vast, largely
clients began asking us if we such as the Liberty Barcelona, dependent on the individual
could make products that met inspired by Ludwig Mies van specifications of the client.
modern security standards. der Rohes iconic Barcelona
chair. Others are gilded with To meet a growing demand
No luxury has been spared in 24-karat gold leaf fittings or for larger safety facilities in
the process of creating their plated in chrome. Each is a work private residences, Dttling has
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BEST PRACTICES FOR COMBATING
CYBERCRIME IN THE FAMILY OFFICE SPACE
By: Edward V. Marshall, Family Office Specialist, Citi Private Bank
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Family Offices are asking: What should we focus on? Is Security (https://www.dhs.gov/how-do-i/protect-
protection against the threats worth the expenditure? myself-cyber-attacks) or the FBI (https://www.fbi.gov/
Who can we trust in the cybersecurity market? Are investigate/cyber). There is also a cottage industry
there benchmarks from other sectors we can emulate? of security professionals and organizations that are
Regardless of what stage of cybersecurity preparedness springing up to cater to Family Office security and
Family Offices find themselves in, they should start specifically cybersecurity issues.
developing a comprehensive information security
program that is flexible and can incorporate lessons Family Offices should contact their attorneys,
learned and adapt to new threats. We recommend that accountants, corporate Chief Information Security
Family Offices consider a framework on 1) technology, Officers (CISOs), and other professionals to identify
2) people, and 3) process when implementing and suitable cybersecurity partners.
improving their cybersecurity programs. Too often
families will sacrifice training over a new hot technology Family Offices should also consider working with
service or ignore simple improvements like annually internal or external partners to test staff awareness
checking their staffs software and devices to make of these policies. For example, a family could work
sure they are updated and conducting routine training with internal teams or hire an outside vendor to
on cybersecurity protocols. Furthermore, Family Offices perform white hat simulated cyber-attack tests
need to identify what and where critical digital assets against staff to determine weak points and increase
are. Family Offices have to understand what the crown general understanding of threats. These tests are
jewels are and determine if they are safe even if their usually pretend malicious attachments, Tweets, and
network has been breached. Facebook messages with pretend malicious shortened
URLs. If a Family Office staff member clicks on the link,
People are often the weakest link in the information they typically will get a gotcha surprise. Regardless
security system for a Family Office. The level of of the type of training, Family Offices should consider
awareness of information security threats and the proper refreshing and educating no less than on a quarterly
ways to combat them has great variability. Therefore, basis.
cybersecurity education should be a key part of family
planning and business operations meetings. A simple In conclusion, Family Offices face a challenging world as
way to help shore up cyber defences is the through the cyber criminals look to exploit their very nature. Threats
creation of Family Office cybersecurity policies. These continue to evolve in cyberspace because new defence
policies can be derivations of parent companies that mechanisms lead to innovative new attack methods and
created the wealth that are customized to the unique vectors. Building a resilient, cognizant, and learning
nature of the Family Office. Policies should include culture around information security is important for
recommendations on how to prevent cyber-attacks Family Offices of all sizes and jurisdictions.
and what to do in case a breach is detected. Policies
should be updated regularly, and Family Office teams
should regularly certify that all members (including the
Principal) understand the policies and procedures.
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TOP 5 FAMILY DYNAMICS IN PHILANTHROPIC
FAMILIES AND WHAT YOU CAN DO ABOUT THEM
PHILANTHROPY ARTICLE
Even in the most successful families, misunderstandings,
disagreements and power struggles can occurand
that might be on a good day. Add wealth to the mix,
and family dynamics become a tricky business that can
hinder good decision making. This is especially true
when family members must make decisions together
about moneywhether thats making money, keeping
money, or giving it away.
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Some family leaders arent willing to let go and are as a family grows and more people become involved in
bent on maintaining controleven from the grave. the philanthropy, the level of tension and competing
They worked hard to build what they have, and want interests can mount. Family members from different
their wishes to be known and followed. They perhaps branches may have little in common, or carry personal
are in denial of their own mortality and want to ensure problems or resentments that get in the way of the
that their legacy lives on. work.
What can families do? Encourage the family leader to What can families do? Start with what everyone has in
create a donor intent letter or ethical will that outlines commonwhich is the desire to giveand add some
his or her wishes for the family philanthropy. Talk structure to it. Determine what is normal, healthy
about ways to honor the family leader and legacy, disagreement, and what is simply inappropriate. If the
while remaining flexible to future needs and family undercurrent of conflict overruns the philanthropy
interests. Engage in succession planning for the family discussions, hire an outside facilitator who is skilled in
enterprise and philanthropy as early as possible to family dynamics. Make sure every family member has
introduce these discussions in a non-threatening way. an equal voice. Create agreements for how the family
will navigate conflicts as they arise. Hire a skilled
3. Family members have different beliefs, facilitator to help.
communication or individual styles, which hinders
their ability to work well together. 5. Family members draw nonfamily members or staff
into side conversations, choosing loyalties, and other
Families can make each other crazy with stylistic and unproductive family dynamics.
ideological differences. Imagine a boardroom full of
family members who fall across the political or religious In some cases, having a family office executive or staff
spectrum. One adult sibling who wont stop talking, in the room can keep family members on their best
and another sibling who can hardly get a word in. A behavior. However, thats not always the case. If not
millennial who will only a respond to text messages careful, family staff can get sucked unaware into the
and takes notes on a laptop. A traditionalist who has undertow of family woes.
no time or patience to learn technology. Sound like an
interesting meeting? What can family staff do? Expect family conflict to come
up. Know that its not your job to fix it (nor can you fix
What can families do? It helps to create a common it if you tried), however, you can help the family find
framework for communicating that can help the right resources to navigate it. Maintain a neutral,
philanthropic families focus on the good they are there objective position where everyone is heard, there is no
to do. Practice good governance set ground rules for right or wrong, and everyone saves face.
meetings, and remind family members why they are
there in the first place. Ask family members to bring
with them certain details about the organizations Suzanne Hammer of Hammer & Associates gives family
they are interested in supporting, and share that with offices the tools they need to engage in and connect
the group. Create agreements for how the family will with their philanthropyhelping philanthropic
communicate about the philanthropy outside the individuals and families pair their passion with proven
meetings as well. strategies.
4. Family members are in active conflict with one To learn more, look for her forthcoming
another, and they bring their personal beefs into the EngagedPhilanthropy toolkit Family Dynamics:
boardroom. A Family Office Guide to Meaningful Giving at
SuzanneHammer.com or contact 303-319-3029.
Conflict is a natural part of all human relationships, and Follow @philanthrpysolut.
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13
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ap oto th P 1 LUX EX
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u ri ria in en ee LEC 2 S
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Luxury customer demands The Luxury of Electric: Effortless, Exclusive and Exhilarating
met by Bentley levels
An all-electric Bentley will not compromise the quality, refinement
of craftsmanship and
and high-performance levels expected of the luxury brand. These
refinement, with electric renowned Bentley characteristics such as immediate, effortless surge
performance and grand of torque and grand touring range will be combined with new high-
touring capabilities performance technology such as rapid inductive charging and state-of-
the-art onboard concierge-style services for an effortless ownership
Bentleys vision includes experience.
rapid inductive charging
Bentleys vision is for customers to benefit from high-speed inductive
and connected on-board
charging and provide a range sufficient for grand touring requirements.
concierge services An electric Bentley would, for example, be able to drive between
London and Paris or Milan and Monaco on a single charge and the
EXP 12 Speed 6e concept onboard experience will be enhanced for both driver and passenger
to gauge public and thanks to the integration of state-of-the-art technology.
customer feedback to
shape Bentleys future A fusion of cutting-edge technology and beautiful materials is evident
right throughout EXP 12 Speed 6es luxuriously appointed cabin,
luxury strategy
ensuring that the brands use of technology is not cold or emotionless.
The entire central console, for example, is hewn from a solid piece of
Concept showcases future elegantly curved glass encompassing a high-definition OLED screen.
Bentley exterior and All of the cars principle onboard controls are accessible from here,
including navigation, entertainment and climate control.
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FAMILY OFFICE MAGAZINE
controls for media, communications, navigation and car set-
up. There are also two buttons featured at the top of the cut-
away steering wheel, one offering an instant performance
boost and the other the ability to limit speed, in urban areas
for example.
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FAMILY OFFICE
A NEW TREND IN ISRAEL
Israel is a small country, about the same size as Belgium
in Europe or New Jersey in North America. It is located
on the eastern shore of the Mediterranean Sea and has
excellent access by air and sea to Europe, Africa, Asia,
and North America.
According to the report of Berkshire Hathaway Company: went on to serve as chairman and later president. Iscar
1. There were 79,186 HNWIs in Israel in 2015, which is headquartered in the northern Israeli community
collectively held US$447 billion in wealth. of Tefen and is now formally known as International
2. The Israeli HNWI population rose by 2.9% in 2015, Metalworking, or IMC. In 2006 Berkshire Hathaway
following a 3.0% increase in 2014. bought an 80% stake in Iscar for $4 billion. At a later
3. The Israeli HNWI population is forecast to grow by stage, the son Eitan, sold to Berkshire Hathaway his 20%
17.7% to reach 96,790 in 2020, while HNWI wealth is share
projected to grow by 24.3% to reach US$579.7 billion.
for USD 2 billion. The deal gave Iscar a total value of
1. Family Business in Israel about $ 10 billion, about double its valuation when
How do Family Businesses cope with their present and Berkshire Hathaway bought its initial stake for $4 billion.
future ownership and management of the business? In an interview to the Israel economist newspaper Eitan
The following stories of family businesses in Israel will was quoted: it was important for us to sell the business
demonstrate this: before family problems arise. We see what is happening
in other family businesses and there is no need to wait
Iscar family business - Stef and Eitan Wertheimer. for problems. It is preferable that each generation will
Iscar was founded in 1952 by Stef Wertheimer in the start his new own business.
Western Galilee town of Nahariya and moved in 1982
to the Tefen Industrial Zone, about 20 kilometers away. 1.2. Keter Plastic company, another happy end.
In 1984 Stef, the father, handed over the reins to his Sami Sagol developed the Keter Plastic company founded
son Eitan. In 1995 Eitan Wertheimer passed the CEOs by his father in 1948 .The company is the worlds leading
seat to Jacob Harpaz (a non -family executive) and manufacturer of plastic consumer products.
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Keter Plastic develops, manufactures, and distributes There is no gift tax in Israel between members of the
throughout the world a broad range of plastic consumer family.
products. The group has over 25,000 sales points
around the world, 18 manufacturing plants, and two The law of gift 1965 governs this procedure. The
distribution centers. The company has 4, 000 workers, founders of the family business may transfer ownership
including nearly 2, 000 in Israel, and its products are of the business at the time they choose to do so.
sold in 100 countries.
2.2. Succession
Keter Plastic signed an agreement for the purchase of The Succession Law 1965, governs individuals who
80% of the company by a London based investment were residents of Israel or owned assets in Israel at the
fund, BC Partners. The Sagol family would continue to time of their death. The fundamental principle guiding
own 20% of the company. Israeli media estimate the this legislation is that of testamentary freedom based
acquisition to be at a company value of $1.3 billion. on a last will and testament, made under the Succession
Keter Plastics 2015 sales totaled 800 million. Law. The freedom of succession enables the founder of
the family business to name in his testament who will
According to Forbes magazine Sagol decided to sell the be the leaders continuing the business and what would
business since the third and fourth generation of the be the share of the other members of the family.
family, four daughters and grandchildren developed
other careers and did not intend to continue the family Succession procedure has its perils. The heirs, members
business. of the family, may challenge the testament and a court
battle may arise. This happened in the famous case of
1.3. Strauss family business -The successful story of the Offer family:
Strauss family.
The Strauss family business was established 70 years The late Y. Offer had owned a company which controlled
ago by Richard and Hilda Strauss new immigrants substantial holdings in a bank and a real estate company
from Germany. A small yard with two cows started a with ownership of some of the largest shopping centres
business which today is a national and public company in Israel. The late Y. Offer bequeathed most of his assets
working with international business partners PepsiCo, to his daughter ( 51.7% of shares in Offer investment
San Miguel, DANONE, Unilever and others. It is the company) and 15%shares to his son. The son contested
4th company in the world for coffee production and the validity of the will, and after a long trial the will
trade employing 14,000 people worldwide with an was declared valid, and a probate order confirmed the
annual turnover of USA $ 2 Billion. 39 years after the wishes of the late Y. Offers will.
establishment of the business the founders transferred
the ownership and management to their son. 2.3. Transfer of the family business to future generations
by creating a trust.
In the year 2000 the family business was passed on to
the third generation who is running the business today The Trust Law
together with professional executives who are members A trust structure is recognized in many countries as a
of the board of directors and not members of the family. good way to hold assets under a central management
According to Ofra Strauss the granddaughter and and regulate its activities according to the wishes of the
president of the business today This was implemented head of the family business who would be the settlor of
pursuant to a well prepared organizational program the trust.
which included members of the family committed to
the original business vision of the family founders. In Israel, the trust has been in part of the society for
many years even before the establishment of the state
2. Transfer of family business to future generations. in 1948.The Israel trust law 1979 defines a trust as the
There are 3 possible ways to transfer family business to duty imposed on a trustee to hold or to otherwise deal
future generations: with assets under its control for the benefit of another
or for some other purpose.
2.1. A lifetime gift.
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Creation of a trust people. However, numerous studies suggest that,
A trust may be created either by contract or by deed: despite their economic importance, family business
1. A trust created by contract requires an agreement intergenerational longevity can be very limited, with as
between the settlor and the trustee with no specific few as 10 percent remaining in family ownership by the
procedure necessary for its validity. third generation(Step Journal February 2017).
2. A Trust created by deed must be in writing and It remains to be seen if Israel will follow the UK trend.
signed in the presence of a notary
3. This Trust is named: Hekdesh and becomes Dr. Alon Kaplan, Advocate and Notary
operative during the lifetime of the settlor upon transfer
of the assets of the trust to the control of the trustee.
Dr. Alon Kaplan, LLM (Jerusalem), PhD (Zurich),
4. A valid testamentary trust must comply with the TEP practices law in Tel Aviv specializing in
formal requirements under the Succession Law for
Trusts and Estates. He is General Editor of Trusts
executing a will. These include signing the will in the
presence of 2 witnesses or a notary. in Prime Jurisdictions (4th edition, April 2016),
the Israel Country Correspondent for Oxford
A Testamentary Trust will become valid after probate of
Journals Trusts and Trustees , author of Trusts
the will which contains the instructions to create a trust.
in Israel: Development and current practice
Conclusion (2015 Helbing Lichtenhahn Verlag) and Trusts
Family business in Israel is an interesting arena for and Estate planning in Israel (Oct. 2016, Juris
family offices, asset managers and trust and estate
Publishing) . Alon may be contacted at: alon@
practitioners According to a recent report by the
Institute for Family Business, the family business alonkaplan-law.com.
sector in the UK accounts for a quarter of the nations
gross domestic product , employing nearly 12 million
One of
the family.
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DOMOS FINE ART
DOMOS CONSULTANTS
FINE ART
DOMOS FINE ART has a portfolio of very Fine
Art on sale (Off Market) on behalf of our clients
which include works by Caravaggio, Renoir,
Monet, Van Gogh, Matisse, Rembrandt, Picasso,
Rouault, Bonnard, Raphael and more.
DOMOS FINE ART
is experienced in dealing We offer the following services
with rare off-market Valuation and Sale of Fine Art
collections of fine art. Locate specific pieces of Fine Art
Assist in verifying provenance of Art
Auction representation
A TIMELESS TRADITION
A brand new service of sparkling Hand-Forging a Piece of Silver silver since 1544, in the reign of
hand-forged silver flatware. Flatware King Henry VIII. Finally the curve
Sounds interesting. But what is Each spoon or fork starts as a flat of the handle is gently hammered
it? And why is it so special? Quite ingot of silver, which is heated into shape and the piece is
simply, its the finest newly- and hammered into shape entirely polished. Clients immediately
made sterling silver flatware in by hand by one of the companys notice that the bowls are deeper,
the world, each piece lovingly skilled craftsmen. Next, it is placed the shells and scrolls of various
raised by hand by a small group of in an enormous Victorian press patterns are more defined and the
English craftsmen who are keen to where the pattern is stamped pieces feel much heavier in the
preserve the quality and traditions on both sides using special lead hand than contemporary machine-
of their illustrious past. M.P. dies, some of which are up to two made equivalents. The silver knife
Levene, one of Londons leading hundred years old. handles are also produced to the
retailers of the finest English silver, highest standards with stainless
specialises in the production The piece is then trimmed and the steel blades.
of new hand-forged services of edges are smoothed. Each piece is
silver flatware. This is how all then tested for its 925 silver purity A Wealth of Patterns
solid silver flatware was made in at an independent institution - the M. P. Levene offers a range of
England before around 1900 and London Assay Office. If it passes, sixteen patterns, all traditional
the advent of mechanisation. Its it is stamped with a special set of English designs. Rat Tail is one
a much longer process because marks to confirm its authenticity - a of the plainest, originating from
it takes a lot more work, but the legal requirement. This office has the early Hanoverian silver
quality shines through. been testing and marking English flatware from around 1710. With
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FAMILY OFFICE MAGAZINE
a customary long ridge running by hand in the form of interwoven pattern by M.P. Levenes standards,
down the front of the handle. The grapes and vines. It is known as the dating from the 1930s. It is based
fork is shown here with three tines King of Patterns. on the plain, straight features of
- also available with four. They can Hanoverian Engraved pattern was Ancient Greek architecture, with a
also make traditional pistol-handle first made in the 1780s, when a sunken border and cut corners in
knives. special style of engraving called classic Art Deco style.
brightcutting was invented. Facets,
Fiddle, Thread and Shell was rather than lines, are cut by hand Your Own Special Pattern
first produced in England around into the surface of the silver, Sometimes a client comes to
1810, as a variant of the plain making it sparkle when held up to M.P. Levene with sketches for a
Fiddle pattern that had come over the light. It is one of Levenes most bespoke silver flatware pattern for
from France. It features a thread elegant designs. their home, or even their yacht. A
around the border with a shell complete new set of lead dies is
at the end of the handle and is Elizabethan is a High Victorian then created before production
a very popular design. Perhaps pattern, first made around 1850. of the silver flatware can begin.
the most extraordinary pattern in Each piece is heavily decorated This unique design remains the
M.P. Levenes range is Chased and in Romanesque style, with shells copyright of the client who has
Pierced Vine. and scrolls above trails of husks. sole use of it in the future.
It is a gloriously decorative design
It is illustrated here in silver-gilt that feels particularly heavy in To discuss commissioning your
(gold-washed) -- each piece is the hand. Bright Vine also dates own hand-forged silver flatware
solid silver, but plated with gold. from around 1850, and features a service, contact Mr. Martin Levene
The effect is stunning. It was lovely combination of grapes and of M.P. Levene of London.
first produced for Londons Great vines with shell and leaf ends.
Exhibition of 1851, and each piece An attractive pattern. Art Deco Email: silver@mplevene.co.uk
www.mplevene.co.uk
is carefully pierced and then chased Grecian is a relatively modern Tel: 00 44 + (0)7710 240 515
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CORPORATE SERVICE PROVIDERS AND
FAMILY OFFICES, FAMILY BUSINESSES
AND SUCCESSION PLANNING
business? The family offices
governance and management
structure can deal with the
complexities of the familys wealth
transparently, helping the family
to avoid future conflicts, at the
same time as confidentiality is
ensured under the family office
structure, as wealth management
and other advisory services for
the family members are under a
single entity owned by the family.
The next generation can grow into
the role of wealth owner, which
is key when an entrepreneurial
by Geralda Buckley & lvaro Becerra
family is converted into a financial
Before launching into a discussion up family offices. This has been family post sale of their business.
about family offices and corporate driven mainly by concerns about Last but not least, there should
service providers, a few facts are wealth preservation and succession be a better alignment of interest
worth considering about families planning within family businesses, between financial advisers and the
and what is probably their number and family offices have arguably family, and with the centralization
one asset, their business. Only a become the fastest-growing and professionalization of asset
little more than 30 percent of family investment vehicles in the world management activities, family
businesses survive into the second today. There are at least 3,000 single offices may be more likely to
generation, even though 80 percent family offices in existence globally achieve higher returns, or lower
would like to keep the business in with at least half of these being risk, for their investment decisions.
the family. By the third generation, established in the last 15 years. In addition, we find that families
only 12 percent will still be viable, Growth will continue as a means to are looking to centralize other
shrinking to 3 percent at the facilitate inter-generational wealth services such as philanthropy,
fourth generation and beyond. The transfer and reduce intra-family tax and estate planning, family
disconnect between what 80 percent disputes, in an environment of governance, communications, and
of families intend and the far bleaker ever increasing global regulations education to meet the familys
reality can in part be attributed and compliance. Growth is also mission and goals. A number
to a failure to plan for the family ensured due to the continuance of of corporate service providers,
dynamics issues involved in family wealth concentration, the lack of including Amicorp Group, are
business succession. (These facts trust by families in large financial servicing both family businesses
were derived from The Role of the institutions, as well as the desire to and family offices in a much more
Family Office in Business Succession control the flow of information and coherent way. The services which
by David Thayne Leibell). Today we performance of the overall wealth. should be offered under one roof
see increasing numbers of families How can establishing a family office include financial planning and
understanding the benefits in setting assist with the ongoing family
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FAMILY OFFICE MAGAZINE
investment management services, such as financial sized families cannot absorb the increasing cost of AML
situation review, investment objectives, risk profile and administration and are consolidating with others or
and overall philosophy of the family, leading to closing down. Today the family first needs to consider
the appropriate asset allocation. Apart from liquid the type of family office it will create or participate
assets, real assets such as holding properties, private in, whether it is a Single Family Office, a Multi Family
jets, and yachts also have to be managed, and Office, or a Virtual/Coordinating Family Office, and
budgets managed, with wealth reviews and liquidity which services they can comfortably outsource.
requirements addressed. With this in place, succession
planning must be addressed. Wealth protection has Enough has been written about the first two, but we
to be looked at as soon as possible, followed by an will take the opportunity to elaborate a bit further on
analysis of any transfer of assets, specifically regarding the virtual/coordinating family office. Here, most or
the professional guidance regarding wealth transfer to all activities are outsourced, such as gaining access to
succeeding generations. Furthermore, administrative people, products and services when needed. A much
services, or back-off services, are essential to the lower headcount is, therefore, possible, who handle
smooth running of a family office, whether in the form day-to-day operations and coordinate outside advisors
of general legal issues, payment of invoices and taxes, and outsourced services. Often they are a senior family
and arranging tax compliance, invoice payment and member, the family business chief financial officer or an
review of expenses for authorization, opening of bank external trusted professional, such as a CPA or attorney.
accounts, bank statement reconciliation, etc. Many private banks and private wealth divisions
of large brokerage firms have set up specialized
More importantly, succession planning and continuity departments to provide these entities with full service
planning in relation to any unanticipated disruptions around investing, along with external specialty advice
in family leadership must be put in place, and the in wealth transfer, succession planning, philanthropy,
development and possible implementation of family education and family governance. However, even
intergenerational estate transfer plans must also be with this model, a number of key services are usually
in place. Corporate service providers servicing the kept in-house, ensuring a higher level of confidentiality
family office market are also heavily involved in the and privacy, the consolidated management of family
family offices (online) reporting systems and record wealth, greater and more direct family control over its
keeping, consolidated wealth reporting, benchmark wealth, assurance of optimal goal agreement, along
analysis, etc., and with ensuring strict compliance with the avoidance of conflicts of interest with external
with regulations pertaining to investments, assets providers. Given these considerations, it is crucial to
and business operations, as well as assessment and obtain the right balance and to identify those services
acquisition of appropriate insurance coverage and best suited for management in-house.
ongoing maintenance of the same. How do families
ensure that all the services which have already been Amicorp Group, a global corporate service provider,
mentioned in this article are available to them? has been serving families and their businesses for
They set up a family office which best represents the decades, but last year we created a dedicated unit,
needs of their family, including helping with family Global Family Office Services, to deliver all the required
business succession. Numerous companies are around services under one roof with one global coordinator
to assist with this, including private banks, private per family. We have always provided a broad range
wealth divisions of large brokerage firms, registered of estate and succession planning solutions allowing
investment advisors, accounting firms, private client families to transition their wealth from one generation
law firms and consultants. However, with the increase to the next. We have also benefitted in that corporate
in AML regulations, servicing complex structures has service providers and trustees are seen as objective
become more difficult, and law firms and banks, amongst by families, in contrast to wealth managers. Trustees
others, are refraining from providing these services as are also important in the selection and de-selection of
it is not their core business. Setting up a fully-fledged asset managers.
single family office is expensive, and smaller to mid- www.amicorp.com
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INSIDE THE WORLD OF HIGH-END MATCHMAKING
BERKELEY INTERNATIONAL
The phrase money cant buy happiness is one which expect a service that reflects this but theyre all from
most of us are familiar with and would most likely different walks of life, cultures, professional industries,
agree with, to a certain extent. Sure it can provide social circles. If I really had to break it down into a
the glamorous holidays and seats at the best tables type, Id say theyre focused and certain about what
in town, but matters of the heart are usually in need they want. You have to take your dating and love life
of a more delicate hand. This issue we delve into quite seriously to invest in it to this extent. Love is as
the exclusive world of high-end matchmaking with important as business to these people.
Berkeley International and talk to its founder Mairead
Molloy. We want to know what happens when you FO Magazine: Are people wary of using a matchmaker?
stop swiping through online profiles and instead send Ironically its a much older medium than online dating,
someone else out on the mission to find you love. but it still seems to have a certain stigma and mystery
to it.
FO Magazine: If you could sum up the type of clients Mairead Molloy: No, not really. Once you reach a certain
you have, how would you describe them? level of financial success, you quickly get used to real,
Mairead Molloy: One of the biggest misconceptions as opposed to online, people doing things for you. Its
with high-end matchmaking is that theres a type of no different to hiring a business coach, chauffeur or
client. Just like other dating services, theres a wide home chef.
range of people who come through our doors. Yes,
off course our clients tend to have large disposable FO Magazine: So how is this type of dating different to
incomes, with very high standards and they absolutely just meeting someone in a bar and seeing how it goes?
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FAMILY OFFICE MAGAZINE
Mairead Molloy: Time and also discretion. In a lot of Mairead Molloy: Theyre demanding yes, but thats not a
cases, our clients just dont have the time to meet bad thing. Like I said, we all expect a standard of service
multiple people in bars and wait until date five to wherever we go, and theres nothing wrong with that.
work out if theyre truly compatible. Theyve often People who are looking for perfection usually have
been through this and want to hit the ground running, other challenges that we need to work through first,
and with matchmaking, you know more about the and we have a team of people in place to help with this.
intentions of your match from the start. Also, when you Any good matchmaking service will come with coaches,
have a team of people working across the globe to help therapists, stylists and grooming experts. While all
you find something youre struggling with, it does feel of this can be provided, we never forget, or let clients
really supportive. forget, that finding love is far more important than
finding perfection.
FO Magazine: What about work-love balance, were
assuming these are people with busy lives? FO Magazine: Whats the biggest success youve had?
Mairead Molloy: So it depends, there are some Mairead Molloy: There are the obvious ones like
extremely busy people with multiple commitments, marriages, everyone involved gets very excited when
sometimes in multiple cities or countries, but you this happens. Personally, though, it has to be a client I
have to get into the right mindset about the love your worked with a couple of years ago. His first words to my
looking for. This is a highly personal service, so if we team were something like I just need a woman to love,
see that dates are always being cancelled, rearranged she doesnt have to love me back, Im just tired of being
or even scheduled months apart, we can sit down with a alone. Hed such bad previous experiences that he
client remind them about the importance of this area of didnt honestly think a proper relationship was possible.
their life. Good matchmaking is also about promoting He ended up meeting a woman who absolutely adores
good communication between people, and we ask that, him, who actually has a higher net worth and is worlds
where possible, dating be placed on an equal footing away from all the previous people hes dated. Finding
with whatever else is happening in their life. love for wealthy people that transcends questions such
as what do you do? or what do you have? is really
FOE Magazine: What does this mean? rewarding.
Mairead Molloy: It means that if you have a date, you
schedule it in and stick to it like you would any other
meeting. Its not a luxury or an option, its your life, and
it shouldnt continuously play second fiddle.
FO The people who seek out this kind of matchmaking Berkeley International founder Mairead Molloy
must be more demanding than most, are they looking www.berkeley-international.com
for perfection?
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LAMBORGHINI EGOISTA
THIS FUTURISTIC SINGLE-SEATER IS THE ONLY ONE OF ITS KIND
The prestigious collection in the only one of its kind in the world. stylized silhouette of a bull about
Lamborghini Museum is now the Powered by a 5.2-liter V10 engine to charge - the iconic hallmark of
home of another automotive gem that churns out 600 horsepower, the Lamborghini logo. The cars
- the Lamborghini Egoista, the it takes the attributes that are in aeronautical flair can clearly be
supercar developed by Walter De the DNA of every Lamborghini seen in the headlight system,
Silva, Head of Volkswagen Group to the next, extreme level. The The aeronautical inspiration is
Design, as a tribute to the House of look is sharply distinguished also evident in the body made
The Raging Bulls 50th anniversary, by a muscular structure with of lightweight materials (carbon
which was celebrated last year. alternating open and solid areas, fiber and aluminum) with stealth
This futuristic single-seater is the and the profile suggests the capabilities, in the anti-glare
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FAMILY OFFICE ELITE
windows with an orange hue, by actuating an electronic control the 50th Anniversary Grand Tour
in the cockpit conceived as a and climb out of the cockpit with to a close. Exactly one year after it
removable appendage which a specific series of movements, was introduced, the Lamborghini
allows the driver to be insulated as required in fighter jet aircrafts. Egoista has returned to its home
and protected from external Described by Walter De Silva as in SantAgata Bolognese. It will
elements, and in the head-up the embodiment of pure emotion now be permanently displayed
display. Because of this latter and extreme hedonism, the at Lamborghini headquarters - at
feature, in order to leave the Egoista was unveiled on May 11, first in the showroom, and then in
vehicle, the driver must remove 2013 before an audience of more the Museum.
the steering wheel and leave it than one thousand invited guests
on the dashboard, open the dome at the Gala Dinner that brought
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ONCE A SLEEPY BACKPACKER ISLAND - KOH SAMUI IS HEATING
UP AS ONE OF SOUTHEAST ASIAS LEADING INVESTMENTS
Koh Samui is the third largest high-end villa resort on the island a secret hideaway, Samujana is
island in Thailand after Phuket in 2007 that changed everything. conveniently located near Koh
and Koh Chang. Gorgeous pearl The Four Seasons Resort was the Samui International Airport (USM),
white sandy beaches, lush tropical first property on the island with offering direct flights from Hong
rainforests and magnificent access to a private beach, and each Kong, Singapore, Kuala Lumpur, as
waterfalls can be found at some of its hillside villas had its own well as Bangkok, Phuket & Chiang
of the islands famed attractions. infinity pool. Following its launch, a Mai. Samujana stands proudly
With so many breathtaking sights, swathe of high-end hotels opened on a hillside overlooking a coral
its no wonder Koh Samui is fast too, including Le Mridien, Banyan cove with private beach access
becoming one of Thailands most Tree, the W Retreat and Conrad and surrounded by acres of lush
popular destinations. Koh Samui Koh Samui which have changed landscape. Out of the 27 villas,
has continued to show strong the face of the island. Samui now ten are now for sale, and all are
growth in travel and tourism, and attracts the top-end brands but available for exclusive holiday
the market has demonstrated great because you cant fly long haul rental
resilience over the past few years direct, it has a small island feel.
despite a relatively flat global With the steady increase in tourist Why invest in Koh Samui?
market. arrivals, demand for rentals of Statistics show that investors who
villas and apartments, too, have have purchased a condominium
Thirty years ago, the island only been increasing, which in turn or villa in Koh Samui have been
had dirt roads, with very little has made Koh Samui very popular enjoying good returns on their
infrastructure. It wasnt until the among investors, especially those investment between eight to
late 1980s that things began to who seek yields and also a holiday 10 percent per year. For example,
change. Today, the island boasts home, such as Samujana. the Samujana rental business
a slew of modern developments, has grown year-on-year, and are
including an international airport, Samujana forecasting continued growth in
several high-quality hospitals, a Located on the north east the coming years. The values of
top golf course, a wide variety of coastline, Samujana is a multiple properties have been increasing
restaurants and hotels, and a new award-winning luxury lifestyle between 15 & 20% per annum.
luxury shopping mall. villa, comprising 27 individually And with the governments
owned residences ranging from 3 plans to further improve the
Aside from being known for its bedrooms to 8 bedrooms. All villas islands infrastructure, the value
abundant unspoilt nature, the were designed by Gary Fell of GFAB of properties is set to rise in
island is also famous for its ultra- Architects and were developed by the near future. Samui is just a
luxurious accommodation options. each individual villa owner. The 45-minute flight from Bangkok
Just over a decade ago, Koh Samui villas and estate are managed and and Phuket, two hours direct from
was better known for its cheap operated by Samujana Co. Ltd. both Singapore and Kuala Lumpur,
beach-shack lodgings - hugely which is owned by the villa owners, and three hours from Hong Kong.
popular with backpackers. It was with the main focus on protecting There are five airlines that operate
only after Four Seasons unveiled a the owners investments. Although direct flights. In addition, Samui is
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FAMILY OFFICE MAGAZINE
now accessible by private jet and certificates, and foreign individuals the-art cinemas, pool tables, games
helicopter, with additional private or juristic persons remitting foreign rooms, table tennis and private
airport facilities currently under currency into Thailand for payment spas. Samujana has been designed
construction. for the condominium units. For to cater for multi generational
foreigners who do not hold a living, including families with
Buying Guide permanent resident certificate, they young children. Set within secure
As with most Asian countries, its are required to transfer 100 percent well-tended landscaped gardens
very difficult for a foreigner to own of the amount of the purchase and walkways, is an all-weather
a freehold property in Thailand. A price from an overseas source into floodlit tennis court including
leasehold agreement is, therefore, Thailand. complimentary rackets and balls,
the most common and is effectively direct beach access and uniformed
a fixed term lease of the villa from Property hotspot 24-hour security. Home owners also
the Thai company which owns the Samujana is perfectly positioned benefit from high-speed wireless
land. Leaseholds in Thailand are in Choengmon overlooking the Internet access and state-of-the-art
for a period of 30 years but can be platinum mile on the north-east backup generators.
renewed for a maximum of two coast of Samui. The Chaweng/
additional lease periods. Choengmon area is also where The design concept behind the
all the islands best shopping, villas at Samujana is based on
A foreigner, however, is entitled restaurants and nightlife can be connecting the natural landscape
to purchase a freehold unit in his/ found. The large, lavish villas range to highlight the sleek architectural
her own name in a condominium from three to eight bedrooms design. Every villa incorporates
project. This is made possible and inside all provide well laid natural elements such as rocky
under the Condominium Act. Only out accommodation, including outcrops and mature trees into
developers who have obtained a air-conditioned bedrooms, en- the contemporary luxury lifestyle.
Condominium License are allowed suite bathrooms, fully equipped Living areas are open, naturally
to sell freehold units to foreigners. kitchens, reception rooms with ventilated (covered) terraces have
Eligible foreigners include those multi-media and international been carefully oriented to maximise
with residence permits, those who satellite channels, sound systems, views and lead directly to infinity
were granted permission to enter gas BBQ grills, infinity edge private edge swimming pools. Villas roofs
Thailand under the Investment pools, sun loungers and allocated feature garden planters, reflecting
Promotion Act, foreign juristic parking. Many villas also include pools and natural rocks.
persons with investment promotion Jacuzzis, private gyms, state-of- www.samujana.com
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CAN ECONOMICS
TRUMP POLITICS
By: Nancy Curtin, Chief Investment Officer
After years of sluggish growth, recent detrimental to his growth ambitions, and for global
economic data shows a decisive improvement, growth overall.
with the promise of expansionary fiscal policy
Brexit - While Theresa May has announced her
providing a further spur to growth. However,
intention to trigger Article 50 in March, businesses
political risk remains close to fever pitch. Can still have little information on which to base their
stronger economic data withstand political strategic decisions on spending and investment.
risk?
Economics are looking up European elections
Moribund no more - The outlook for global growth has While European politics have remained relatively
improved recently, with inflation also firming. Data sedate until now; key European elections will
have improved in Europe, Japan, the US and the main prove to be a litmus test for EU stability. We are
emerging markets. Better growth and higher inflation most worried about The Netherlands and France
are supportive of equity investments. where challenger candidates are clearly anti-EU.
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FAMILY OFFICE MAGAZINE
THE MEANDERING
OF AN ALCHEMIST
JOURNEY
Change and all its ramifications, an inevitable feature
of life yet indeed for the wealthiest of families it can
prove to be a challenge, sometimes causing downfall
and losses; financial, emotional and otherwise, few
would dare admit. Loss has sadly featured quite
heavily in my personal family life beginning with the
tragic death of my father in my late teens, thus life
has determined that I must become an expert on the
alchemists journey.
We are all capable of so much more than we realise, ready to take a parachute jump with my University
evolution is showing us that the resilience of the mates.
human spirit is infinite and boundless. Multiple
opportunities exist nowadays for adventure and test I have pursued various physical achievement
on a global scale. (see Atlantic Rowing) A personal goals along the way however they all tend to have
challenge is useful if it addresses a childhood fear a common theme in that they occur outdoors in
and/or supports a lifetime dream, as mine did. nature and often amongst some of the most wild
Comparison with others is not advised as we each and beautiful natural landscapes which can be found
have our own barometer of fear and personal limits. on Planet Earth, e.g. Himalayas, Atlantic Ocean,
At different times in our lives, we may choose Indian Ocean, Alps. The feelings experienced of
differing challenges to suit our situation. My first awe, self-love and an interconnectedness are almost
instilled memory of feeling deep fear along with indescribable when one immerses oneself in these
an awareness of my own immortality began as I was surroundings. I shall never forget the luminosity of
dangling my legs out of a plane door at 3500 feet the stars on route up to Everest Base Camp and mid-
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FAMILY OFFICE MAGAZINE
Atlantic Ocean or the gorgeous deep blue colour of the sea
as it stretched for miles beneath us. Having had the privilege
of experiencing these majestic surroundings only serves to
demonstrate to me just how small and insignificant some of
our daily problems and worries can be and alters perspective
entirely. It also enables me to reach inside myself to discover
the inner strength and courage which lies dormant waiting
to be unleashed so that my goal can be attained. Where does
money sit within all this? Well, I believe it is the means by
which one can attain these goals, and for me, this is its rightful
place. Our souls journey dictates our bank balance with self-
worth being the ultimate prize.
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ROLLS-ROYCE
A MODEL OF ANY SIGNIFICANCE?
PHANTOM VII
Written by Jeff Firmin. Global Sourcing of Rolls-Royce,
Bentley and other Motor Cars of Distinction.
On January 1, 2003, the first example of the seventh goods; Phantom Drophead Coup and Phantom
generation Rolls-Royce Phantom Saloon was Coup. Phantom Zenith Collection motor cars speak
presented to its privileged new owner. The renaissance of the marques unrelenting commitment to setting
had begun. After a number of years in somewhat of and advancing the standard by which all other luxury
an automotive wilderness, new ownership and a new goods are judged.
model had reinvigorated the marque and quickly
established Rolls-Royce Motor Cars as the maker of A stunning Bespoke Collection, the Phantom Zenith
the Best Car in the World once again. Following, Collection, focussed on the divine Coup and
four and five years later respectively, two gloriously Drophead models, served to celebrate these two
exquisite variants were introduced, in Drophead and extraordinary motor cars with a suite of exquisitely
Coup guises. Both immediately gaining recognition executed bespoke pieces, designed to amplify the
as ultimate choices for Continental Grand Touring. beauty and luxury of two of the rarest and best-loved
luxury goods in the world. This limited run of just 50
Additional models, Ghost, Wraith and Dawn, were examples was soon sold out.
launched in subsequent years, perfectly delivering
traditional marque values in a thoroughly modern So now we have now settled into 2017, and the last
way. But, from its launch, Phantom was and has Phantom VII has rolled off the production line at
remained the figurehead model. It became the car Goodwood, it is time to reflect on what is one of the
of choice for those having achieved at the highest most significant models in the marques history. How
level, with the Coup and Drophead variants proving will Phantom VII be remembered? Indeed, will it be
exceptionally exclusive. However, as the fictional remembered? As with anything of genuine substance,
character, Lazurus Long stated; Great is the art of time proves true value. In 20, 30, 40 years time will
beginning, but greater is the art of ending. anyone sentimentalise over Phantom VII in the same
way that many of its predecessors are so cherished
By 2016 Phantom had served for over 13 years, today? The worlds greatest luxury motoring brand,
dominating its market so convincingly that when or maybe just simply the worlds greatest luxury
asked, it is difficult to conjure up a serious competitor. brand, has brought us many fabulous models over the
But it was time for Phantom VII to lay down the reigns. years, several becoming truly iconic. Can Phantom VII
A befitting finale was in order and so Torsten Mller- compare?
tvs, Chief Executive Officer, Rolls-Royce Motor Cars,
announced; As we begin to write a bold new chapter To begin with, there was, of course, the Silver Ghost,
in Rolls-Royce history, I am delighted to present a one of the most recognisable cars in the world, the car
Bespoke Collection that so elegantly celebrates two that became the foundation stone of the legend when
of the worlds rarest and most celebrated luxury it was named the Best Car in the World by Autocar
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FAMILY OFFICE MAGAZINE
magazine in 1907. The early generations Phantoms, of There was, and still is, nothing like it.
the mid-1920s and 30s, oozed high society Gatsby- Secondly, there is its significance in the history of
like grandeur more than any other motor car on the the marque. Phantom will be remembered for swiftly
road at the time. Nothing else looked more classically returning Rolls-Royce to the throne. The Best Car in the
beautiful. Other models of significance include the World, a title it had held since 1904, hadnt been truly
Silver Cloud, quite possibly the most definitive Rolls- deserved for at least the two decades prior to BMWs
Royce design with its beautifully regal, flowing lines takeover. Many would argue it had been considerably
proving a resounding success from the mid-1950s longer.
through to the late 1960s. More recently, from the
mid-1970s, the Corniche Convertible carried grace Thirdly, its design returned us to a sense of the
and panache from every angle, even if, on occasion, its Hollywood era when Rolls-Royce motor cars were
custodians didnt quite exhibit such levels; a reflection grand, and so unapologetically so. Phantom has
of the times, when the exhibition of your wealth was immense, undeniable road presence and styling that
all the rage. delivers the required statement. But it does so in a way
that is classy, relatively understated and traditionally
Given models of such significance, one has to ponder British.
what destiny awaits the seventh generation Phantom.
Will it join the few, glorious, swooned-over creations These three points, whichever path is taken by the
that even today, draw the spotlight wherever they automotive sector over the coming decades, will
appear? Or will Phantom VII join the also-rans, those surely establish Phantom as one of those Rolls-Royce
models that while having provided the owners with motor cars that is looked back upon with considerable
the exemplary levels of service expected of a Rolls- admiration and respect. Although an incredibly rare
Royce, havent quite managed to ingrain themselves sight on our roads, particularly in Coupe form which
in the memories and hearts of any but the truest of will likely become the Bentley Continental Fastback
enthusiasts. Such models include the Twenty, Silver of its generation, it will always be recognisable as a
Dawn, Silver Spirit and the Silver Seraph. All are Rolls-Royce and maybe thats the ultimate test. One it
fabulous Rolls-Royce Motor Cars in their own right passes with flying colours!
but just not quite special enough to reach out much
beyond their own life cycle.
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COLLEZIONE AUTOMOBILI
LAMBORGHINI PRESENTS
THE FALL WINTER 2017/18
Visionary, cutting-edge and pure, the codes of the design to the light and medium blue slim-fit striped
most wanted super sports cars in the world in the cotton shirts. From the polo shirts in geometric micro
Classic, Casual, Casual Vintage, Pilota Ufficiale and in jacquard fabric to the denim effect wool tie.
the brand new Event Suit lines. These different lines
are conceived for a man who makes an impression in Casual Line. Upper Sportswear. Original pairings
every situation, showing off a bold outfit, defined by with a refined taste and a casual DNA. The windproof
the cuts, the materials and the refined and innovative jacket with geometric cuts is made of water-repellent
details. technical fabric. The prints which reproduce technical
drawings from the archive on a series of indigo-
Event Suit. Menswear Evolution. This line aims to coloured denim effect pieces, such as sweatshirts,
satisfy masculine needs for the dress codes at social T-shirts and scarves, are dedicated to the Huracn
events. From the two-button black blazer with a model. The new colour of the special model Huracn
tailored cut and a comfortable fit in tricot to the total Avio, blu grifo (matte blue), dyes the sweatshirts with
black jeans with gold stitching details, a contrast with taped zips in metal grey and the cotton piquet polo
an eccentric and impeccable touch. The T-shirts and shirts. The graphics paired with tire prints and with
jersey sweatshirts with inserts that pick up the motif the 3D effect relief prints for T-shirts and seamless
of the Y, the design of the cars headlights. sweatshirts pay tribute to the Aventador.
Classic Line. Exclusive Voyager. Formal and functional Casual Vintage Line The New Heritage. Vintage effect
for travelling, the collection is characterized by very for the polo shirts and sweatshirts with a flock print
high quality materials for pieces and accessories inspired by the historical Miura and Countach models.
made with fine and exclusive yarns, fabrics and The jersey t-shirt is reversible in the colours dark
leathers. From the breathable and waterproof rock- navy-amber gold and rock-white. Double technical
coloured parka in stretch fabric with visible taping, fabric for the scuba fabric bomber: externally it has
to the leather jacket with laser-cut inserts. From the a woollen touch, internally it is in double-knit fabric
sartorially-inspired wool blazer with a micro kilim with a contrasting tire print.
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Milan Mens Fashion Week Collaboration with Riva
Collection for Fall Winter 2017/18 Private label on show
Automobili Lamborghini presents the A preview of the special editions
RTW collection for Fall Winter at the with Hettabretz and Enzo Bonaf.
Mandarin Oriental Milan
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USA INVESTING
IN BIOTECHNOLOGY COMPANIES
by Gianni Mattioli
Investing in Biotechnology companies can be a great PHASE 2
opportunity. Here are some considerations and rules It consists of testing the drug on a limited number of
for making a wise investment. patients, from 100 to 300, suffering from the disease
to be cured. In this stage, the effectiveness of the drug,
A) THE UNIVERSE OF THE BIOTECHNOLOGY COMPA- the tolerability, the optimal dosage and the possible
NIES IS LARGE. side effects are tested.
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FAMILY OFFICE MAGAZINE
29, 2016, l the FDA declared insufficient the results
showed in Phase 2 related to its antidepressant ALKS
5461 and required further documentation.The stock
lost 50% of its value and only recovered later, dou-
bling the value in the course of 2016.
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IS WEALTH ASSURANCE
an alternative planning structure for Russian HNWIs?
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FAMILY OFFICE MAGAZINE
offer the strongest protection available against both as the policyholder and as the beneficiary of
creditors claims and actions, against foreign public the wealth assurance. In some cases, the client is the
bodies claims and actions and against bankruptcy of policyholder, but the trust has been given limited or
the insurance company and/or the custodian bank. It general powers of attorney to represent the client in
is the insurance company that is the only legal and case of his temporary incapacity or after his death.
beneficial owner of the underlying assets. In other cases, the trust is appointed as beneficiary
When the counter party can prove that there was no from the beginning. Bottom line, there are many
proper segregation of the assets in the trust and that options to consider once the clients advisor is
the client continued to exercise control over these also familiar with wealth assurance as a planning
assets, the trust can be challenged successfully and structure. Independent intermediary, There are
the assets be seized. three ways to mediate a wealth assurance. One; the
clients advisor approaches an insurance company
Reporting directly. He is probably not qualified to do that, and it
Russian residents are permitted to subscribe to a is not obvious that he will identify the most suitable
wealth assurance of a foreign provider abroad. When provider in the appropriate jurisdiction and work out
that wealth assurance meets the criteria to qualify the best possible deal for the client. Two; the clients
as an insurance contract pursuant to Russian law and advisor relies on an in-house broker of a banking
requirements, there are no self-reporting obligations group. There might be a conflict of interest since
for the client/policyholder in his tax declaration. In the in-house brokers allegiance is with the banking
contrast, the income in the investment portfolio held group and not with the client. Three; the clients
indirectly by the trust needs to be reported on the advisor calls upon an independent intermediary,
clients annual income tax return. well introduced and highly experienced in the
matter. Such an intermediary is not married
Costs with one insurance company in one jurisdiction.
No wealth assurance is identical to a trust; it is, Instead, it offers the client a choice out of several
therefore, difficult to compare costs. At first glance, companies in several jurisdictions depending on the
wealth assurances may look more expensive than characteristics and needs of each individual case.
trusts. But the income generated by the investment Furthermore, this intermediary should have a proven
portfolio under the trust is to be taxed every year at track record of conducting periodic sustainability
13 percent while that same income is accumulated and appropriateness reviews to keep the wealth
without income tax in the wealth assurance. Swiss assurance compliant and effective.
stamp duty (0.15% or 0.30%) is due on every
transaction in an investment portfolio under the trust Conclusion
while these transactions are exempt of Swiss stamp Wealth assurance is neither the only alternative
duty in a wealth assurance. In the end, it will be the planning solution nor always the best for Russian
clients advisor that will decide which structure is HNWIs. Sometimes, the optimal result might
the most suitable in a particular case. be achieved by combining a trust and a wealth
assurance, and sometimes only by the one or the
Best of both worlds other. However, ensuring that the best planning
Wealth assurance is clearly a superior asset result will be achieved, wealth assurance should be
protection structure with a lot of flexibility, but considered.
the trust remains a far better management vehicle. Toon Meyer
When the stakes are high, i.e. when physical Director Business Development
integrity, asset protection, peace of mind, estate Gatsby & White SA
planning are extremely important, the trust can act www.gatsbyandwhite.com,
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BRITISH COUTURIER CELEBRATES
40 YEARS WITH LANDMARK SPRING
SUMMER 2017 COLLECTION
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FAMILY OFFICE MAGAZINE
women lovingly hand make pieces of individual luxury
for each individual client, where the client is the star,
not the dress, says Cyrus. Nothing is made outside
these Chelsea studios.
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DUBAIS MARKET FOR
BUILD-TO-SUIT PROPERTY
PROPERTY INVESTMENTS
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FAMILY OFFICE MAGAZINE
Critical Factors less risk than it might appear at first, owing to the fact
As with any other property, the land plot`s location that housing requirements typically do not contrast
and accessibility are major influencing factors, thereby starkly between corporate tenants of a similar size and
greatly relevant in determining the attractiveness of the industry. This, in turn, implies that the property will
Build-to-Suit object and thus pricing of rents and future be lettable and/or liquidable at the end of the contract
valuation. Getting all necessary building blocks in place term with little or no alterations. Furthermore, typical
at the right time is of paramount importance for the amortisation periods of seven years or less grant ample
successful outcome of the venture. Quite obviously, a financial leeway at this point in time for disinvestment
suitably located building plot to be matched to a trusted or subsequent letting.
and financially sound tenant (to be complemented by
appropriate collateral) are the most important elements Without a doubt, the beginning of an economic (rather
of this strategy. Equally reputable partners should than property-) cycle marks the sweet spot in timing
be chosen for construction and its oversight in order for such an investment as construction and land prices
to ensure a handover according to schedule and low are still favourable. Meanwhile, a premium on rent is
running costs thereafter. achievable owing to the custom-constructed property
as well as the contractually granted shield from future
Conclusion market-rent hikes. While the presented strategy offers
Despite some present economical headwinds caused by considerable attainable returns, the related risks can
low oil prices and a sluggish world economy, the UAE be effectively contained if the undertaking is well
is forecast to pick up the pace considerably, reaching a implemented - potentially offering the best of both
predicted GDP growth of 4.3 percent in 2020 (Trading worlds.
Economics). In light of this, there remains little doubt author@property-blog-dubai.com
that Dubai`s successful strategy to further strengthen www.property-blog-dubai.com
and diversify its economy will fuel ample future demand
for staff accommodation in carefully chosen locations.
In such a context, the Build-to-Suit element entails
INTE RNATIONAL
DE LIVE RY
S E L F P L AY I N G
S Y S T E M S AVA I L A B L E
PLEASE CONTACT US FOR FURTHER DETAILS ON THESE EXCEPTIONAL INSTRUMENTS FROM THE 1066 PIANO COLLECTION
CECIL WRIGHT & PARTNERS
PHILOSOPHY ON SUPERYACHT VALUATION
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FAMILY OFFICE MAGAZINE
budget and competition drive of technology and craftsmanship. in favour of GT. Then age,
innovation that trickles down from All bear totally unique interiors and specification, condition and build
cars like the Mercedes S-Class to exteriors while being exquisitely pedigree all factored in. Naturally,
an average family saloon, so do the finished throughout. we look at all comparables from
leading shipyards drive innovation But let us drag ourselves away from the same shipyard, but we also take
in the yacht sector. One of the pondering the magic possible for into account how that shipyard
many areas we could look at to those lucky enough to build at one prices and approaches its contracts
highlight this is the recent use of of the worlds finest shipyards, and and what was additional to that
glass. The Feadship VENUS, for take a cooler, more commercial contract price (design fees, for
example, features an entire deck view. Which price point is the example). Were significant changes
surrounded by toughened glass smarter investment? Our broad made to the design during the build
(the three 10x3 metre panels each view is that buying at a higher cost process resulting in change order
side). The award-winning Feadship per GT is a better investment, and penalties? Most buyers would not
SAVANNAH, with its stunning semi- here are two reasons why: wish to pay for additional costs
submerged Nemo Lounge or associated with an owners change
HAMPSHIRE II, again by Feadship, Resale. The highest quality brands of heart in respect of the original
which entices its guests to float sell themselves. Not only do design or specification while in
through its engine room via a they retain better value, but they build as they do not normally add
spectacular glass conduit. generally attract and retain the tangible value.
best crew, enhancing the overall
Asked about the inclusion of desirability and condition of We remain adamant that a logical,
a breathtaking underwater the yacht. Bas Nederpelt from measurable understanding of
observation lounge into a recent Feadship has said: Resale values value by all parties at the outset is
launch, Pataq Fadi of Nobiskrug of our recent yachts are historically essential to efficiently achieve our
Shipyard explained to me the higher than any other brand. There clients objectives. This is borne out
staggering amount of structural is always demand for a pre-owned by looking at CWPs recent sales
analysis and calculation required Feadship. Having sold two of the successes which reveal a pattern
to satisfy the safety authorities, three largest Feadships last year, of faster turnaround from listing
before they were able to even we agree with Bas! to sale while achieving closer to
commence the groundbreaking asking prices than many larger
lamination and fabrication process The flight to quality. Looking at the competitors.
of the glass structure and integrate Russian 80m+ market alone from
it into the build. Regulatory bodies 2011 to 2015, the 2016 Superyacht Superyacht broker
are slow at implementing changes Intelligence Annual Report tells us Matt Ruane
because their regulations are based that 35% chose to build at Lrssen,
on traditional and well-proven 15% at both Feadship and Blohm +
methods and experience. These Voss and 10% at both Oceanco and
are the guidance for standardized Fincantieri. Those that can afford to
platforms. Innovative shipyards build in the upper echelons, do. its
push the boundaries further! All also worth considering the pricing
these examples exceed previously of those builds further downstream
conceived limits of technology and when they come to the brokerage
application, above and below the market. At CWP we deem it essential
waterline as well as interior spaces. not to overvalue: its detrimental to
Stepping aboard any of the yachts owners objectives and the market
built on Lurssens 85m platform as a whole. We believe value should
in recent years (Kismet, Solandge, never be based on a finger in the
Phoenix II, to name but 3) provides a air or gut feel judgement. Pricing
perfect illustration of this marriage by length must be disregarded
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FAMILY OFFICES
THE CHANGING WORLD OF PRIVATE EQUITY
Wealthy families have been investing in businesses
since the dawn of commerce. Initially, their role was as
founders, managers and owners, and as success brought
surplus liquidity, many developed private structures, with
a strategic allocation across all core asset classes: family
offices were born.
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FAMILY OFFICE MAGAZINE
able to bring tier one investors to family office clients issues: commitment to the asset class, and governance.
precisely because the source of capital is different. So Cashflows in private equity are negative for many years,
much mainstream private equity is now commoditised not least because the lemons ripen before the plums,
in 10-year limited partnership structures; pricing and as the old saying goes, and one truly needs to invest
processes are largely generic, exit pressure remains across vintages for diversification so this pre-supposes
significant, and in truth, many of the personalities a certain depth of pocket and a willingness to stay the
merge into one another. course to reap the benefits. Similarly, in a competitive
market, prices are high, and investment decisions need
But these newer family offices vehicles look and feel to be backed up by process rigour: scenario analysis,
differentiated. Fundraising is a more transparent proper due diligence, negotiation and relationship
exercise and many families actually prefer their capital building, and documentation. If an overbearing family
to remain productively deployed rather than seeking principal can bypass these on a whim, this becomes
an arbitrary liquidity event to trigger carried interest a dangerous career move. The caricature would be
payments, so they can contemplate much longer for a hired professional to be greeted at his desk by
hold-and-build horizons. Possibly more importantly, a beaming owner with the news that weve bought a
an effective family office can deploy their industrial football team. But get these two issues right, and you
heritage as a relationship winner in the origination have a real edge in the market and for the individual,
stages, for example, Were not just another faceless the chance to build something distinctive. Private
fund, we represent a multi-generational industrial equity has become a mature asset class, but right now
owner with a proven record of building value some of the most innovative moves are being made by
themselves, investors who look and think the same way the oldest investors of all.
you do, but can bring fresh capital and ideas to drive
your business even further in a partnership of equals. Rupert Bell is a Principal Consultant for PER, the leading
search firm for private equity, based in Munich. He
This is not just fine words this approach really works has over 20 years experience in private equity, as an
and brings priority access or even exclusive, incremental investor and adviser, including a long period helping to
deal flow, the lifeblood of a successful PE firm. Working establish a direct investment business for SandAire, a
with these tactical advantages excites proven deal- multi-family office in London.
doers. Our advice to candidates considering joining www.perecruit.com
family office private equity teams is to focus on two
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FAMILY OFFICE MAGAZINE
An Example of the Current MFO ing staff for positions you absolute- es they need and does so with no
Model - Recently an MFO contact- ly need to support your core com- mark-up. Also, if the professional
ed me and wanted to meet. They petency and leveraging technology partner is not providing world class
seemed to be a very sophisticated to increase service levels and de- service, they can be replaced with
company and had beautiful offices. crease costs. Except for employ- other professionals waiting in the
But, as we sat talking in their posh ees who are absolutely critical to queue. Using variable cost part-
boardroom three aspects of their the business, all other work should ners allows our senior level peo-
business model became concerning be done by outside experts. Using ple to spend up to 200 hours/year
to me: this philosophy allows Handwerk meeting with the family, delegating
Multi Family Office and other virtual lower priority tasks but implement-
1. They were more interested in MFOs to provide services as needed ing the higher-level strategies with
volume and increasing the number by clients and allows constant ac- niche-specific professionals.
of clients than they were in the cli- cess to the best and brightest minds
ents having a quality experience in each advisory role. (see Image What does working with a Virtual
with a customized array of service 1) Having access to specialized ex- Multi Family Office mean to you?
offerings. perts and thought leaders is critical
2. Their investments were all in when it comes to advanced plan- As a client with less than $10-$20
public securities which are traded ning topics such as succession plan- million to invest, being able to part-
on the various exchanges. This ning, family governance or transi- ner with an MFO with low overhead
fact made scalability easy for them tioning multi-generational assets. and senior level people who can
though their clients were not as di- spend 50-200 hours in the first year
versified as they could have been. When choosing an organization meeting with you, performing infor-
3. With smaller clients, those with to partner with, it is important to mation analysis and setting/imple-
$10 million or less in investible as- understand what services they of- menting the strategies is like find-
sets, the MFO had the junior rela- fer as part of the portfolio fee and ing a pot of gold.
tionship manager relay information what other services the MFO offers
from the client meeting to junior- and the charges for those services. From my research, it seems clear
level people. The resulting suggest- Aside from portfolio management, that the margin pressure on fam-
ed strategies and understanding of our organization focuses on: ily offices and multi-family offices
the clients needs was predictably Asset protection is significant and increasing. As a
pedestrian. Tax mitigation traditional MFO who has a large of-
Charitable gifting fice with corresponding overhead,
Enter the Virtual MFO - Cloud com- Estate planning it will become more difficult over
puting, the internet, AI, robotics, time to compete in the marketplace
and vendors offering outsourcing Working with a Professional Net- for those smaller accounts and
of every type of service on an as work - We can work with our clients to maintain current margin levels
needed basis, are all combining to accountants, lawyers and consult- with traditional clients versus those
disrupt many industries. However, I ants to try and understand the fam- companies who are adopting the
have not seen much disintermedia- ilys total picture or we can use our virtual MFO model.
tion of the traditional multi-family own experts each with specialized Derrick Handwerk
office space. Cameron Herold, who knowledge. When we outsource, it Managing Partner
engineered 1-800-GOT-JUNK?s is to a vetted group of professionals Handwerk Multi Family Office LLC
spectacular growth from $2 million that we believe to be best-in-class.
to $106 million, espouses only hir- The client pays only for the servic-
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THE ART OF RELATIONSHIP BROKERING AND
THE IMPLEMENTATION OF BUSINESS PLASTICITY
WHAT BRAIN SCIENCE AND GOOD BUSINESS HAVE IN COMMON
By Amana Manori,CLO of Introduction Capital Inc.
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FAMILY OFFICE MAGAZINE
exercise, including better executive function and faster learn new tricks; that is, the brain is not static. In the
processing speed. grand scheme, this theoretically means that knowledge
has no limits. Specifically, it means that altering the
In mental reprogramming, repetition and reinforcement physical brain can result in a change in our abilities and
will cause the brain to remember the new activity. enhancement of our performance.
Essentially, practice and discipline determine the
skill level of the new ability. It should come as no Apply this to the world of finance, and it not only
surprise that the same methodology works in business. highlights that legacy businesses can evolve but more
Immersion and commitment will go a long way towards importantly, that novice businesses can be designed
mastering your professional domain. with the capacity for continuous alteration. If plasticity
is built into the DNA of a business, then adaptation
Plasticity requires a focus on upward mobility whether and evolution will be integrated features towards
it is a brain that is learning or a business that is leading. manifesting an optimal model the unconstrained
In order to learn, rigidity has to be abandoned and model.
flexibility adopted. This nimbleness will allow the savvy
business to manoeuvre and pivot in light of shifting An unconstrained model is open to both minor and major
economic factors and industry changes. Stagnating adjustments as required by its clients, environment and
businesses are akin to deteriorating brains that are not industry, as there are no impediments to the potential
exercised and are falling behind the pack. that can be achieved. It is also a responsive model
whereby adverse impacts, however big or small, are not
Stay Relevant debilitating to business. Optimality is further enforced
Neuroplasticity does not suggest that the brain is by the efficiency that the flexible business structure
malleable without any restrictions or limits the offers. Quite simply, business plasticity is good business.
fact remains that some parts of the brain are simply
unable to take on new roles. It would also be an The ever-changing brain is designed to deal with
oversimplification to say that age, extent of damage physical, emotional and other influences of life;
and the level of treatment have no effect on the brains however, it also allows us to transcend the responsive
ability to recover, develop and excel. The truth is that level into the creative level. If we adopt this concept,
these factors play a large role and some brains will not it means that we not only have the ability to build
recover to full function or adapt to new functions. It is receptive businesses within our professional disciplines,
also true that younger brains react better to inputs and but more importantly that we can step outside of what
stimuli. currently exists and forge new paths.
For a business to succeed in the long term, inherent Introduction Capital Inc. (IC) is an avant-garde
limitations must be identified. Outdated processes and business that precisely matches sophisticated family
viewpoints must be compensated for by the introduction office and institutional-grade capital with alternative
of fresh and youthful outlooks. Hiring individuals to opportunities globally. With a number of high pedigree
accommodate for deficits can complement the existing global manager clients, the firm offers local dealer
skillsets of the firm. While perhaps a difficult exercise services to clients seeking Canadian institutional
to conduct, recognizing limitations will foster an open capital. With a demonstrated track record of over
professional environment that is focused on ongoing 13 years, ICs unconstrained business model allows
improvement. Attention to relevance will ensure that the firm to prioritize the interests of its investor and
you are attracting the right talent, clients and company. manager clients. IC hosts the leading annual Canadian
Alternative Investment Forum (CAIF), which will be held
Dream Big on April 6th, 2017 in Toronto.
The recent discoveries in the study of neuroscience are
important because they show that even an old brain can
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OPEN
SOURCE
RISK
INTELLIGENCE
55
FAMILY OFFICE MAGAZINE
OSRINT
FAMILY OFFICE MAGAZINE spoke with Sven
Leidel, an expert for HNWI/UHNWI Risk
Mitigation & Protection Strategies located in
Hamburg, Germany.
FO:
Mr. Leidel, please tell us about your professional security
background and introduce yourself to our readers!
LEIDEL:
I was born in 1968 in Hamburg, Germany and I am a Sven Leidel
German citizen. As a former member of the German OSRINT - Open Source Risk Intelligence
military police, I have been dealing with the topic
of protection and security since 1988. Today I am What is OSRINT?
involved, as an honorary member, in various national
and international security and professional associations Leidel:
in advisory and executive functions. I am a professional OSRINT stands for Open Source Risk Intelligence. It
lecturer and trainer, facilitator and specialist author, is probably the most innovative way of identifying
security consultant and expert in the field of protection risks and critical content in respect of a specific target
strategies for exposed individuals. (person or company) in public sources. In order to be
efficient in the most possible way, the internet search
I have gained extensive expertise from more than 25 is done and supported by a 24/7 operating crawler
years of industry and professional experience and I technology. This advanced monitoring technology
have operated in numerous foreign assignments and helps to identify and track personal data online in
projects in Europe, North America, Latin America as open sources, that might also be useful for criminals.
well as parts of Asia. My longtime customers include In addition, experienced risk analysts work as human
many major national and international corporations and filters to identify threats and sensitive details in
insurance companies as well as small and medium-sized public sources on a 24/7 basis. Another part of OSRINT
enterprises, exposed private individuals, family offices is the removal of critical data from the internet and
and family foundations as well as entrepreneurial other online sources, or if a removal is not possible, the
families and high net worth individuals. Last but displace of such content. Especially in todays world
not least, I am an author and editor of two books in where media and online outlets can ruin a reputation
respect of Travel Risk Management; see www.travel- in a matter of minutes, it is important to always be
security-handbook.com (English) and www.handbuch- one step ahead of the criminals and have the latest
reisesicherheit.de (German). monitoring technology in place.
FO:
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Angelo J. Robles
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FAMILY OFFICE MAGAZINE
in order to find out if hackers are interested in a certain FO:
IT landscape, where are they coming from, what kind of Why is it so important to know what kind of Details
search and keywords are used, what kind of technology are available on the Internet?
is used by the third party a.s.o.. Leidel:
It is our experience that criminals also look first on
Our Honey Pots are kind of modern traps. Like I the internet and try to find out as much as possible
already mentioned, we create blogs and homepages useful details about possible targets and victims.
with a specific real-fake content, so people that are The more useful details they find and the easier it
searching for a specific target (person or company) will is to get access to those details, the more likely it
get the search results within the search engine they is, that criminals will pick a so-called soft target
use. As soon as they click on the search result, we are for their criminal activities (kidnapping, burglary,
able to track their homepage visit and also their clicks blackmailing, threatening.
and activities on the Honey Pot blog and homepage. We
are able to see the country and city they are coming The goal of a comprehensive personal risk
from, which online network they are using, how long management is to become a hard target, in order to
they stay on the homepage, which additional content be unattractive and not of interest for criminals.
they have looked at and much more useful details. This
is a risk indicator for us, which somebody is interested You can compare this with the following: You do
in specific information about a target. The information not have to install a tons of physical and technical
of interest could be the private address of the target, security at your house, like they use at Fort Knox.
private activities/hobbies of the target and other Your house just needs to be more secured than the
critical details. In addition, you can spread false and neighbours house. Criminals are looking for quick
fake details about a target, in order to blur the online and easy wins, with hardly any risks of failure.
traces and to make it more difficult for criminals to find
real details and information in open sources. This is a www.privatimus.com
very useful and effective protection concept.
56-7
MAY. 6-72017
Great China Interactional Exchange Square, Shnezhen
www.chinaforexexpo.com
Tel: +862131261015
SWISS WEALTH
MANAGEMENT
FOR US CLIENTS
As an American citizen living in the United States,
a home-biased investment portfolio with equity in
companies operating in the US, held with an American
custodian bank and in US dollars is the norm.
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now over 50 Swiss wealth managers registered with decision to protect purchasing power, wealth and
the Securities and Exchange Commission in the United ultimately, the pursuit of happiness by having some
States as investment advisors. The SEC registration diversification when it comes to jurisdiction, markets,
enables them to provide Swiss wealth management currency and market expertise. A Swiss account is like
services to American clients domiciled in the US as well having a life insurance policy. You hope you never need
as abroad without restrictions. There are several Swiss it but once when you do it can make all the difference.
banks and private banks happy to open a bank account
for US clients but only in collaboration with a Swiss SEC- Felix Weibel, CEO from Pictet North America Advisors
registered wealth manager. SA, one of the early, SEC-registered investment advisors
says, PNAA was set up in 2006 at a time when the
Swiss SEC-compliant wealth managers come in all Pictet private bank partners believed there was a need
shapes and sizes for diversification in terms of investments and regions,
which many HNWI and UHNWI in North America were
Swiss SEC-compliant wealth managers come in all neglecting to a large extent. Today we have a well-
shapes and sizes individual advisors, independent established business as an SEC RIA and can provide
wealth managers, multi-family offices and Swiss banks custody outside the US at our parent company Banque
with subsidiaries established for US business. Minimum Pictet & Cie SA, which is a great additional advantage
amounts of investment range between USD 50,000 and for our US clients.
USD 20,000,000, so there are options for every kind of
US investor. Emanuel Agustoni, an individual advisor at his company
Golden Eagle Services, points out, Switzerland is
Michel Guignard, Managing Director of LFA SA, not a member of the European Union and the EUR
Switzerlands largest, independent SEC-registered currency, which gives Switzerland more independence
wealth manager states, Independent, LFA, is not bound and freedom than other financial centres in Europe.
to any particular bank and we focus entirely on our He continues, Swiss advisors and asset managers
clients specific, individual needs for jurisdictional and also require a Swiss license, which is a guarantee that
international portfolio diversification, complementing they are controlled either directly by FINMA the Swiss
domestic wealth strategies already in place back home. Financial Market Supervisory Authority or another self-
Through discretionary, advisory and special mandates regulatory organization in Switzerland recognized by
with competitive pricing, we enable US clients to take FINMA.
advantage of international investment opportunities
while adhering to US regulations and restrictions. Getting established in Switzerland is uncomplicated
There are Swiss wealth managers affiliated with Swiss Establishing a relationship with a Swiss SEC-registered
banks such as REYL Overseas Ltd. With offices in Zurich, wealth manager and opening a Swiss bank account can
Switzerland and in Dallas, Texas, Oliver Hohermuth, CEO be done from home, even though a trip to Switzerland is
explains some of the reasons for adding Swissness to an highly recommended to establish personal relationships
overall wealth strategy, firsthand.
Since the U.S. has been the worlds superpower for The Swiss SEC-registered wealth managers can be
more than a century and the leading global economy for found on the Swiss platform WHERE AMERICANS ARE
decades, American investors very often forget to hedge WELCOME Swiss wealth management for US clients
their investments which often are in the United States at americanswelcome.swiss where credentials can
exclusively and US dollars only. It is wise to understand be checked before a wealth manager is selected. In
that every empire comes to end and while we all hope addition, Swiss lawyers, tax advisers, trust advisers and
it will not happen in our lifetime, it is a smart business trusted advisers are also available over the platform.
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FAMILY OFFICE
EMERGING TRENDS IN INDIA
By C.A. Raghu Marwah
It is often assumed that the acclaimed American family,
the Rockefellers, pioneered the family office in the late
19th century. However, history suggests otherwise.
Wikipedia defines family office as A family office
is a private company that manages investments and
trusts for a single wealthy family. The role of a family
office is to manage, build and sustain the wealth of the
family for current and future generations. To break it
down, a family office makes life simpler to enjoy life.
Family Office may be a Single Family Office (SFO) or a
Multi-Family Office (MFO). In India, the trend of SFOs
is picking up with about 75+ SFOs operating. Besides,
there are some leading Wealth Advisors who have
morphed into MFOs for some of their larger Clients.
India has had a long and rich history of wealth creation,
but with the advent of the Industrial Revolution,
the centre of wealth creation shifted westward. It is
worthwhile to quote from the ancient Indian treatise
as follows:
C.A. Raghu Marwah
Kautilya holds that wealth and wealth alone is R.N. Marwah & Co. LLP
important, in as much as charity and desire depend
upon wealth for their realisation The concept of Trusts as a means of succession planning
- Translated from Kautilyas Arthasastra is gaining ground, not so much for tax reasons because
unlike in many western jurisdictions where there is a
The Forbes 100 list of richest Indians includes persons high rate of Inheritance Tax, in India, there has been no
with wealth of more than US$ 1.25 billion each, and such tax since 1997 when Gift Tax was abolished. Tax
Indias richest man is listed at Number 36 in the list of on receipt of Gifts does, however, survive in a different
Forbes 2016 Worldwide Billionaires. form thru the Income Tax Act, 1961 when one receives
gifts from non-relatives. With the opening up of the
Indian Scenario: Indian economy in the 1990s, the foreign exchange
By general rule of thumb, Family Offices may be laws were also considerably liberalised, and from
categorised into the following buckets by global 2004 onwards every resident individual citizen is now
standards, however, in India there are variances from free to make investments overseas across different
this:
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FAMILY OFFICE MAGAZINE
asset classes. The limit presently is USD 250,000/- per Global SFOs investing in India Assets:
fiscal year per citizen and minor children, and family I would like to close by sharing my thoughts on a
members may club their limits together to send higher different concept which is of global families investing in
amounts to acquire their favourite Vacation Home in Indian assets, such as Art, Real Estate, Equity, etc. With
London or Chalet in the Swiss Alps. Acquisition of more Indias status as an island of economic stability in an
serious assets overseas would require the person to increasingly topsy-turvy global market-facing political
use his or her corporate vehicle or entity where it is headwinds, this is becoming a more realistic idea.
permitted to remit overseas up to 400% net worth of
the said corporate/ entity. Real GDP growth in India in the first half of 2016-17
has been estimated at 7.2% by the Government. In
A Trust or Society, which is the most common vehicle comparison, the IMFs January 2017 update of its World
for holding the family wealth can only make Overseas Economic Outlook forecast is projecting an increase in
Direct Investments (ODI) from India in the event that global growth from 3.1 percent in 2016 to 3.4 percent
such Trust or Society is engaged in the sectors of in 2017, with a corresponding increase in growth for
manufacturing or hospital or education. So making advanced economies from 1.6 percent to 1.9 percent.
ODI from India from a Private Family Trust can be a Therefore, there is a higher wealth creation potential in
challenge. India.
What has been more common, therefore, has been the The Economic Survey of 2016-17 recently published by
practice of setting up Trusts or Foundations outside the Government in January 2017 has highlighted biases
India in NIL or low tax jurisdictions. However, dealing in perception by the global rating agencies between
with the regulatory impact of transferring assets into China and India. Chinas credit rating was upgraded from
such offshore Trusts, especially where the majority of A+ to AA- in December 2010 while Indias has remained
family wealth is located in India, has been a challenge. unchanged at BBB-. From 2009 to 2015, Chinas credit-
One may also take note of the decision of Mumbai to-GDP soared from about 142 percent to 205 percent
Income Tax Appellate Tribunal (ITAT) in Shri Mohan and its growth decelerated. The contrast with Indias
Manoj Dhupelia & Ors where the ITAT held that the off- indicators is striking. Such biases are likely to be
shore trust had no substance and is a sham and thus to removed in the short term leading to greater money
be disregarded and brought to tax the entire funds of flows into India. We are already seeing the initial signs
the trust as undisclosed income of the beneficiary. of this, with Foreign direct investment (FDI) inflows into
India in 2016 calendar year jumping 18% to a record
In this global village and more-so after FATCA and BEPS, $46.4 billion, at a time global FDI inflows fell.
emphasis by most countries is on transparency by
obtaining information from their residents in respect Equity Gurus have advised that Indian equities are
of financial and other assets held globally. Countries a good buy with markets remaining buoyed by a host
have introduced asset-based reporting (e.g. FATCA, of factors including halt in US$ rally, governments
FBAR, CRS, AML, similar Indian rules relating to foreign spending focus finely balanced with continued fiscal
accounts/assets / beneficial interests, etc.) and entity / consolidation and encouraging corporate commentary.
event-based reporting (e.g. CFCs, offshore trusts, etc.) Based upon FY 2019 EPS of Rs. 575 for Nifty, the
What is the need of the hour is to create a global identity earnings yield is decisively in favour of equities when
and model for Indian family enterprises thru a Multi- the ten year G-Sec yield is quoting at ~6.4% only. Even
Country Family Office. A model which is compliant with after considering a Rupee USD hedging strategy of
regulatory requirements applicable in India as well as three to five years, the upside potential is significant.
other global jurisdictions. The much-touted mantra of
enjoy life which is the main USP of a Family Office, C.A. Raghu Marwah, Partner,
could very easily go horribly wrong if such compliant R.N. Marwah & Co. LLP, New Delhi, India
models are not followed and adopted. www.rnm.in
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PARTNER PROMOTIONS AT CBW
CBW LONDON ACCOUNTANTS
Carter Backer Winter LLP (CBW), London accountants, new promotions bring the total number of partners at
tax and business advisers, has promoted two new CBW to 20. The firm recently ranked 48th in the UK
partners to its team. The new partners are Graham for the second year running, according to the 2017
Foster and Dan Rose who both have significant survey of the UKs Top accountancy firms conducted
experience and expertise in their respective fields. by Accountancy.
Graham Foster, Director of Financial Planning, has 18 Peter Winter, Managing Partner, said: We have
years experience in the financial services industry. He made two new partner promotions that will enhance
has worked in the IFA sector since 1996 and became the existing partnership, bringing fresh ideas and
an IFA in 2001. Over time, Graham developed his own perspectives with their many years of experience.
client base and held senior roles in well-established Developing and rewarding talent is an important part
firms where his input led to their further development. of our growth strategy.
He joined CBWs Financial Planning Team in 2012.
He added: Graham and Dan thoroughly deserve their
Dan Rose, Director of General Practice, joined CBW in promotions, which recognise their hard work and
July 2013 as Audit Manager. Prior to this, he trained dedication to CBW and its values. Their promotions
with a local five-partner accounting practice, gaining a will help us to build a strong platform for future
wide range of experience and insight across a number growth.
of industries.
CBW is a City accountancy, tax and financial planning
His skills range from basic bookkeeping and consultancy, which offers a breadth of expertise
accounting services to more complex share valuations typically only found in the top 20 UK practices. The
and due diligence exercises. He recently completed firm has 20 partners and more than 140 supporting
the due diligence on a 260m London property and staff who strive to be open, straightforward, principled
is currently assisting a client with cashflows and and accountable.
valuations to raise funds to trade internationally. The
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FAMILY OFFICE MAGAZINE
Opportunity. Risk. Return.
Bringing together LPs, GPs, developers, REIT owners, banks and more, to
3 - 4 May 2017 get straight to the heart of the investment opportunities for your business,
Suntec Singapore exploring emerging asset classes and geographies across Asia Pacific.
John Lim
Greg Lapham Hidetoshi Ono
Group Chief Executive Officer
Chief Investment Officer Managing Director
ARA Asset Management
BlackRock Manulife Real Estate
Ltd
Daniel Cerf
Julian Kwan Chua Hsien Yang
Chief Executive Officer
CEO & Founder Chief Executive Office
ARA-CWT Trust
Investacrowd Keppel DC REIT
Management (Cache) Ltd
Khoon Ng
Christopher Chung Michael de Jong-Douglas
Chief Executive Officer
Managing Director (Asia) Managing Director
Country Garden RE Asset
Lewis Trust Group ESR Singapore Pte Ltd
Management
www.terrapinn.com/reiwasia
Prime Ministers Trade Envoy from the UK to Angola
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FAMILY OFFICE MAGAZINE
to bring power to 60% of the population by 2025.
There are significant investment possibilities here. PHILANTHROPIC CAUSES
Angola has the key African potential in solar power;
this has not yet made as much progress as it might
and will merit investment.
UNIVERSAL FILM AND
FESTIVAL ORGANISATION
A major priority for the Angolan Government is in
encouraging the development of its agriculture
sector. It suffered a long and appalling civil war, and
work to clear landmines continues. Its land is fertile,
and once again has great potential to supply not
only the country itself but beyond, but first needs to
rebuild expertise The UK is playing its part here, in The Universal Film & Festival Organisation
conjunction with the Royal Agricultural University (UFFO) was founded to support and implement a
(RAU). Coffee plantations were successful in the code of practice for film festivals throughout the
past and could be again, along with cultivating world. It is now dubbed FEST-COP, and its logo
cotton, bananas, maize, cassava, soya, sugar-cane, is now a familiar sight at many film festivals.
palm oil, cattle-rearing, and much else besides. The UFFO is a global not-for-profit voluntary
organisation, and it created a best business
Angola scores poorly on the ease of doing business code of practice for film festivals to combat the
index, and securing payment in foreign currency high level of corruption that blights the industry.
has proved particularly challenging. Angola knows
Its former president was the legendary actress
that it needs to address this if it is to attract inward
Maureen OHara, and the organisation now has
investment. Support exists for UK businesses
at least 240 film festival members.
wishing to explore opportunities in Angola, in the
form of the Department for International Trade (DIT) UFFOs FEST-COP is entirely voluntary, free and
team at the British Embassy in Luanda. (Contact can easy to implement. Also, it is a blueprint for
be made with them via DIT regional offices across filmmakers in deciding which film festivals to
the UK.) do business with. Only film festivals that have
subscribed to the UFFO best business code of
Some political change is coming to the country, practice are entitled to use the UFFO logo.
with its President, HE Jose Eduardo Dos Santos,
who has been in power since 1979, standing down The organisation is now seeking a benefactor
this year. There will be elections in August, and his to help it move forward with its plans to further
successor will not come from his family, who have its remit and to create an online porthole to
ensure filmmakers can deal with film festivals
long dominated the politics, economy and society
via a trusted source. The porthole will also act
of Angola. This could be a moment of change for
as a distribution platform and as an online TV
the country.
channel for filmmakers to show their work.
Companies investing in Angola need to be resilient, UFFO is now planning the Best of Festivals
but the long-term prospects for the country, if it event and bringing the member festivals, their
follows the path of reform that its leaders say they best films, actors, directors and producers to one
wish to pursue, should bring about the change which event that will rival the biggest events in the
could enable the economy to fulfil the potential that world.
is clearly there.
Email info@uffo.org. - www.uffo.org
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REAL ESTATE
SUSTAINABLE INVESTING AND FINANCING
Energy Efficiency Investing only finding its way into property within the financial services
Energy efficiency is a worthy valuation reports but also into industry to building engineering
cause but has not captured the legislation. Corporate social and specifically to the business
excitement of other impact responsibility (CSR) is creating case assessment, risk analysis
investment classes like a tenant pull for building and delivery of energy renovation
renewables. To date, very few renovation and the wonderful projects. Pivot Energy can enter
companies have approached the fact that 40% of EU building the project development cycle
sector with enthusiasm. However, stock was built pre-1960 means before the commercial building
a few young entrepreneurs are the opportunity is enormous. So owner, or engineering consultant
now buzzing because they have why are so few energy efficiency has even determined the scope
brought together tools from the projects happening? In part of their assessment. Because the
hedge fund industry, engineering because the European legislation Pivot whole-building-energy-
and insurance as a means to is only now growing teeth. In model uses big data and statistics,
clearly enlist the profit motive part because of the landlord/ it can operate on very basic inputs
to tackle climate change. They tenant disincentive makes it about a building, or portfolio of
are determined to address the difficult. Most to blame however buildings. Instantaneously and at
issues that have plagued energy are poor performance projection very low cost it can present viable
efficiency investing to date. They tools making projects expensive projects complete with technology
believe in a modern age with an to finance because the technical solution, savings, business case and
absolute focus on delivering value risk is not accurately assessed and returns all within the gift wrapper
and mitigating risk. therefore cannot be insured. of a technical and financial risk
assessment. The initial expensive
Extracting the Green Premium Whole-Building-Energy-Model engineering assessment is
The demand to extract energy This is the heart of the problem therefore replaced by an algorithm.
efficiencies from commercial that exciting young companies Their model does not negate the
buildings is clear. Good economic like Pivot Energy are addressing. requirement for engineers who
sense to reduce utility bills In their case, a multi-disciplinary will further inform the model
combines with a commitment and international team has come because their involvement now
from Governments across Europe together to grasp the opportunity comfortably meets the cost/benefit
to a reduction in carbon emissions. and requirement to apply the analysis. Rather, Pivot provides an
Energy performance certification longstanding disciplines of investment grade decision support
and green building status is not standardisation and risk pricing tool that cuts right through the
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FAMILY OFFICE MAGAZINE
key inhibitors mentioned above and facilitates an standardised and sophisticated backdrop for financing
educated engagement with the key stakeholders and insurance providers, Pivot believes this will
being asked to go on risk. Pivots Energy Management further reduce transaction costs and enable the energy
Platform produces this assessment and then links up efficiency market to scale and achieve some of its
with the CFO and/or a third party finance provider, a enormous potential.
building engineer and an insurance company and can
then manage the project development at the direction Market Place and Investment Opportunity
of the building owner with the key choices being (a) The focus, for now, must be with large counterparties
financing on or off balance sheet, and (b) whether to who own or consult on sizeable portfolios in need of
hold the technical risk or transfer it to an insurance a front-to-back solution to extract energy efficiencies,
company. drive net asset value and achieve regulatory
compliance. This is a marketplace with both private
Investment Case Evaluation and public institutions seeking the same solution for
Pivot is proving that it is unnecessary for these their building stock; when combining this credit risk
projects to continue to have a problem with confidence with an insurance contract, underwriting the technical
around performance which then leads to prohibitive performance of an energy upgrade, it becomes a very
transaction costs, in particular around the financing. attractive financing opportunity. Pivot Energy is
Early, science-based and commercial engagement offering this to investors at high single digit returns
with C-suite property investors is key to unblocking over 5 10 years and seeking to mitigate risk further
and scaling the market. Further engineering design through both the portfolio effect and On Bill Finance
and diligence of a project can then be done in the (OBF) where debt service is collected through
knowledge there is a real opportunity on the other the electricity bill providing a significant credit
side of it, and indeed if a commercial building owner enhancement given neither tenants, or failing that,
chooses a complete off-balance sheet and insured landlords will switch the lights off.
solution, then Pivot takes all future costs of the project
to full commissioning and beyond. Core to Pivots Key Drivers
proposition is that buildings are not unique, building As one real and timely example of the market drivers,
construction codes are generally followed, and the UKs Minimum Energy Efficiency Standards
energy management assets have generic outputs. The (MEES) will be effective for commercially-let stock
model combines open source software with CEN-ISO from April 2018 and will prohibit the renewal of
accredited standards to simulate a buildings thermal existing tenancies or the granting new tenancies
energy demands. A separate module cross refers to if the building has less than the minimum energy
a library of generalised building construction data performance certificate (EPC) rating of E. This has
coupled with climatological statistics meaning gaps revealed a large capex hole amongst property owners,
in initial data can be accurately bridged. When Monte private and public, that must be filled, and quickly.
Carlo wrappers are added to this heady cocktail, the
model generates probability distributions of energy A New Asset Class
use and energy savings rather than single deterministic The market opportunity for energy efficiency is
estimates. These are quantified into financial and risk expanding, but investors will only enter this asset
metrics familiar to financiers and insurers who need class if it steps up and meets the standards they expect
consistent and reliable performance risk metrics to elsewhere. The sentence should be New thinking
thoroughly evaluate the investment and or insurability is needed to unblock and scale thereby tackling
fitness of proposed renovation projects. climate change while offering diversification and
very attractive risk-adjusted returns for investors.
Hedge Fund Asset Pricing Models Everybody wins (apart from the utility companies).
This is what is meant about applying the practices
Markus Rudling - Chairman of the Board
of hedge fund asset pricing models to the world
Pivot Energy Services - www.pivotenergy.eu
of building engineering. By providing a familiar,
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OWNING MULTIPLE PROPERTIES
London and New York to Sydney and Singapore
Imagine owning multiple and friends on board your employed within the Family
properties across the globe private yacht, while in the Office will be highly specialist
in some of the most desirable winter you enjoy the slopes of experts in their own field one
locations from London and New St Moritz from the privacy of area where Family Offices also
York to Sydney and Singapore. your chocolate-box style chalet. get involved is in the placement
You may have significant art of the insurance programme
collections as a result of a The likelihood is that with from the family. This has
lifetime of passionate investing. this type of lifestyle there are potential to leave the principal
Your possessions may well significant assets to be managed and their family exposed as they
include a fleet of luxury in the background. You may do not ordinarily hire insurance
vehicles including classics and decide that a Family Office professionals.
high-performance cars as well structure provides the best way
as cars supplied to members to manage your wealth resulting The potential insurances that the
of staff. In the summer months in greater control of your assets Family Office will have to place
you spend time sailing around as well as reducing the overall include both personally owned
the Mediterranean with family costs. While the professionals assets, assets held in trust or
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through some other corporate no coordinated approach to for a coordinated, global
structure. This may include managing the various risks. insurance programme with a
Home and Contents across the The first step that a Family clear, open and transparent fee
globe, Valuable collections Office should undertake is to proposal.
including Art, Jewellery and create a shortlist of brokers who
other investments of passion, may be able to assist with the I believe the fee-based approach
Cars including high value and placement of insurance. This is the most appropriate way for
high-performance vehicles, list can be created but seeking the broker to be remunerated in
Liability insurance including advice from other professional these circumstances. This is at
excess layer or umbrella cover, advisors who service the clients odds with most of the general
Yachts and Aircraft, Kidnap and varied needs. insurance industry where
Ransom, Commercial Property commissions are still prevalent.
(Real Estate) The Family Office should The commission model can
And Directors and Officers conduct interviews with lead to conflicts of interest if
potential brokers to ensure the premium is reduced then
In order to protect the family with there is a cultural fit and the so are the brokers earnings.
a suitable insurance programme, broker can provide the full Also, commission levels can be
it is vital that the Family gamut of services required. fairly high which can lead to a
Office Advisors understand After all, it is vital to have a good disconnect between the brokers
the principals lifestyle and working relationship, and if the earning s and the work that they
attitude to risk before it can be personalities do not fit then, it are undertaking. It can also
effectively managed. They will is better to know this upfront. provide additional tax savings
also need to employ advisors There is no benefit in pitting for the client.
who understand the complex one broker against another in
requirements of UHNWIs and the placement of the insurance For any client choosing the
their families. This is where programme. In fact, this can most suitable advisors for their
a specialist insurance broker be to the detriment of the own particular requirements is
should be engaged. client as it prevents the broker paramount. The same is true
negotiating the best possible in the placement of large and
There are only a handful of terms from insurers. complex insurance programmes
specialist brokers who can truly where the ability to mitigate risk
support the clients insurance Once a broker has been across the globe is can only be
programme across the globe. appointed a full disclosure undertaken by a few specialist
It is often seen that clients will of the current insurance providers. The dangers of
have multiple brokers across programme should be made to choosing the wrong advisor can
a number of jurisdictions. At the broker including a copy of have significant financial and
best this can result in the all policy schedules and details reputation harm.
client overpaying across their of the claims experience. It
portfolio as each broker earns is the brokers job to then put Sam Bowen LLB (Hons) Cert CII
a commission for placing the together a full and detailed Head of Sales and Development
policy. At worst this can leave report on the current insurance Stackhouse Poland Limited
the client potentially exposed programme including a gap www.stackhouseprivateoffice.co.uk
to a major loss as there is analysis as well as a proposition
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EVERYTHING FAMILY OFFICES NEED TO
KNOW ABOUT HOUSEHOLD EMPLOYEES
Family offices work hard to make life simpler and more
convenient for their clients. Political circumstances are
evolving, and legislative changes continue, increasing
the scrutiny surrounding tax compliance and employee
rights. The management of household employees has
emerged as a crucial area for family offices to consider
when advising clients.
Many high-net-worth employers leveraging a family Compliance is Becoming More Complicated for
office try particularly hard to avoid any negative media Employers
attention, including litigation with their household As important as it is to properly pay nanny taxes, the
staff. To mitigate these risks, it is important for family scope of the information surrounding compliance
office firms to provide holistic guidance and protection. standards doesnt make things easy for family
Many payroll firms mistakenly believe that regulations offices to understand. For instance, the adoption of
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a Domestic Workers Bill of Rights by several states to offer itemized pay stubs for household employees,
has heightened awareness surrounding the benefits as part of a wave of new legislation designed for
of legally paying household employees, and provided wage theft prevention. Laws suggest that without a
a further layer of protection above FLSA. These laws pay stub, its difficult to ascertain if employees are
also define more nuances for which employers must being paid properly, with the correct deductions. This
be compliant. means that family office clients need to frequently
fill out information about the dates of paychecks, the
Domestic Workers Bills of Rights vary by state, but pay rate for hours and overtime, and itemized lists of
overall, each gives home staff the right to overtime, deductions.
set days of rest, holiday pay, and protection. Just some
of the states implementing these new rules include: Track employee working hours: Because domestic
workers are listed under the Fair Labor Standards Act
Hawaii (Signed in 2013) as non-exempt workers, employers need to manage
New York (Signed in 2010) issues such as minimum wage coverage, hourly wage
Oregon (Signed in 2015) and overtime compensation.
Massachusetts (Signed in 2014)
Illinois (Signed 2016) Complete formal wage agreements with employees:
Connecticut (Signed 2015) Today, every contract with a domestic worker must
California (Signed 2013, updated in 2016) state an hourly wage that must be the greater of the
minimum wage under local, state, or federal law.
Without a thorough understanding of payroll Existing G5 contracts also need to be amended to
accountability and withholding systems, it can be reflect this minimum wage agreement.
difficult to determine how household employees
should be properly paid. Its no wonder that current Pay employees at set intervals: The times at which
estimates indicate more than 85% of domestic domestic workers must be paid vary per state. For
employers fail to file their taxes correctly. In the case instance, Connecticut requires home staff to be paid
of high-profile clients, the risk is certainly not worth weekly, while Mississippi allows for semi-monthly
the reward. payments.
The Complexity of Labor Laws There Is Help Available for Family Offices
Many family office clients still fail to realize that hiring Household payroll experts allow family offices to
an individual to work in their home in a situation offer broader services to their clients, with a focus on
where they have control over how the work is done, compliance. These services can include; electronic
makes them a household employer. It doesnt matter paystubs/direct deposit, employee work agreements,
how many hours the individual works. That means and mobile timekeeping applications. Specialists in
that W4 forms need to be filled out, and employees domestic taxes and payroll can make compliance a
must complete I9 forms for employee verification. more formal part of family office practices. HomeWork
Additionally, its the responsibility of the employer to Solutions is a national household payroll and tax
determine that their staff is eligible to work in the US. compliance company that maintains outsourcing
partnerships with family office firms nationwide.
Under the guidelines of the FLSA, the Department of
Labor works fiercely to protect the rights of domestic HomeWork Solutions specializes in providing
workers. This means that in addition to fair and humane household employers and their tax preparers real
treatment, employers must: solutions for nanny tax compliance.
Provide pay stubs: 39 states now require employers
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CLASSIC CAR INDICES
by Pierre-Yves Augsburger Senior Consultant at Fuchs & Associs Finance SA
Over the past decade, the increased wealth measured by expert and get advice from him. Anyway, the Classic
the number of HNWIs coupled with abundant liquidity Car scene is much more complex than traditional asset
propelled by accommodative monetary policies from classes. Given the observed lack of transparency and
the major Central Banks have contributed to the steady close to a non-existing regulation of the asset class,
price increase of most tangible assets. Classic Cars have it is essential that you really place yourself in the
largely benefitted from this trend and are definitely on hands of a trusted and highly knowledgeable advisor,
the radar as this investment of passion has exhibited or become yourself a true expert. Real independent
the best performance among other tangible assets, both advice is both key and increasingly rare to find in a
on a 5 and ten-year horizon. market where many dealers and auction houses are
just surfing on the wave.
How to invest in classic cars.
Classic cars as an asset class.
For most investors, the investing into classic cars and
benefiting from the attractive returns of the Classic Car If looking at Classic Car Indices, you can imagine that
market does not appear as straightforward, as access is each index has its own construction bias as this is
often difficult. So how does one invest in Classic Cars? also the case with the well-known equity or property
On the one hand, you could have a closer look at Classic indices. And even if a car has a specific identification
Car Indices, just as you would probably do with equity number: the VIN number and can as such be properly
markets. On the other hand, you may find a Classic Car identified. In comparison, in the financial world, a
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company having the same ISIN number is accessible Weighted Index and tracks not only verified auction
to investors via millions of shares. Furthermore, a results but also private sales. The HAGI indices are
Mercedes 300 SL Gullwing is not fungible with the calculated in and only with approved transaction data
same 300 SL bearing the same production year and the of cars in either concours or one condition.
exact same colour, as history matters in Classic Cars and The Knight Frank Luxury Investment Index use the HAGI
counterfeits are sometimes to be found. Index for the Classic Car component of the KFLI Index.
Market Cap-Weighted vs Price Weighter Index. Hagerty, a US company active in the field of insurance
is publishing classic car indices and a rating barometer
In the equity world, most of the indices are Market-Cap measuring the status of the Classic Car market in terms
Weighted Index, well-known exceptions being the DJ of activity. The indices are inflation adjusted and exist
Industrial and Nikkei 225 which are Price-Weighted for the global market (Hagerty Market Index) and
Indices. In the Classic Car world, most indices are Price also with the following sub-indices: 1950 American,
Index, and in particular, if the Index tracks a low number Affordable Classics, Blue Chips, British Cars, Ferrari,
of cars, the evolution of the Index may be largely German Collectibles, Muscle Cars and are tracking on a
distorted by this construction methodology. monthly basis the price moves of cars sold.
The main Classic Car indices. The K500 Powered by Kidston a dealer and consultant
based in Geneva incorporates data from some 30000
In this section, we are going to present the most constantly growing auction results from over two
known Classic Car Indices, with the aim not being to decades of sales and tracks 500 cars. Each car of the
elaborate on the evaluation methods of each index K500 has been chosen for its historical and intrinsic
but simply give a few introductory considerations interest. K500 also produce a curve tracking the price
on each. It is important to mention that even though history fluctuation for each car included in the K500
Classic Cars exists since over 100 years, not much long Index. K500 also calculate a rating for a wide range of
term data is available and it is only recently that we classic car: the Mercedes 300 SLR, a real holly grail
have experienced the emergence of Classic Car Indices would merit 100 points, the Ferrari 250 GT Lusso is
together with an interest group not only composed of rated 72 points, a Fiat 500 15 points...
car enthusiasts but also of investors looking for a good
return. Most of the Index providers make available The German Association of the Automotive Industry
some data and information on their website, however (VDA) publishes the DOX Index, the Deutscher Oldtimers
further information and detailed figures often require Index since 2009. This Index mirrors the majority of
a subscription. Oldtimers driving in Germany; it is calculated once a
year and incorporate 88 cars from 7 different countries
HAGI (Historic Automobile Group International) offers and 35 makes. The average price of the cars is less than
a Top Index incorporating 50 cars with a monthly 5000, which renders this Index more in line with the
calculation of this index; figures exist since 31.12.2008 type of cars driven by most of the Classic Car enthusiast
(back-tested figures since 1.1.1980 using an equally and way different that the mix of cars included by
weighted formula). Additionally to this Top Index, HAGI the other Index providers. The prices are taken from
is calculating make specific indices as the HAGI-F Index Classic Analytics with car condition being 2 and 3.
for Ferrari (12 constituents), the HAGI-P Index (Porsche The constituents of the DOX Index can be changed and
with 14 cars), the HAGI-MB Index with 27 Mercedes rebalanced every three years.
but only 2 Mercedes are part of the Top-Index, this in
order not to distort this global index. The HAGI ex P&F The Coutts Index is developed with Fathom Consulting
is composed of 24 models from 17 makes. HAGI indices and monitors the performance of passion assets. The
are constructed with the same standards as the one used Index captures the price return in local currency (net of
by major financial market indices, the methodology the holding costs) of 14 passion assets across two broad
used is the Market Cap-Weighted including a Survival- categories: trophy property and alternative investments.
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In this last category, we find into collectables, the Classic somewhat non-realistic price tags not reflecting the true
Car component which is weighted at 4.2%. In the Coutts quality offered is too high. Nevertheless, some sectors /
Index. The Coutts Index provides since 2014 a broader segments of the Classic Car market are still following an
story on how non-financial assets performed over upward trend such as for instance sports cars from the
time. The Classic Cars incorporated in the Coutts Index 80s and 90s or race cars with a pedigree. The supercar
only include vehicles( models) which have exceeded and hypercar segments are also continuing to attract
$500000 at auction and which have been sold more new buyers.
than ten times.
In conclusion, we could advise you not to look only at
Putting the indices into perspective. the empirical data derived from classic car indexes as
well as the price fluctuations they are capturing, but
By analysing and monitoring the main International simply enjoy driving your classic car(s) for the sake of
Classic Car Indices, you can somewhat start to compare it. As we are approaching the spring season in the North
the evolution of this relatively new but promising asset Hemisphere, just drive as if youll live forever!
class. But beware, a lot of heterogeneity is present. Since
the end of 2015, Classic Car prices are either slightly up
or tending sideways. The market and the quest for an
attractive return therein are more challenging than they
used to be and only collectors cars and extremely high-
quality cars (as for example the Bugatti 57S Cabriolet
that sold in March 2017 at Amelia Island for 7.7 million
$) are marking new records in terms of price. In some
segments of the market, the supply of cars on sales at
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evaluating different vendor solutions is to make sure Talk to clients whose implementations were the most
it is an apples-to-apples comparison. Know what is challenging. Find out what the issues were so that the
included as part of the software package, and what family can learn from that clients experience.
costs maintenance, training, upgrades, reports,
customer support are additional. There is a big Ask about the companys strengths. Software solutions
difference between a systems price, which is a one- are built for specific markets and functions, and each
time expenditure, and its cost which goes on forever. vendor has its strength. Be realistic regarding what
the accounting system can and cannot do. Perform
When calculating Return on Investment (ROI) for due diligence on the financial health of the software
the project, dont forget to factor in the cost for vendor, their track record, commitment to the market
internal resources, additional hardware/software and and approach to product development.
productivity lost as employees get up to speed on the
new system. Balance those costs against savings as a 7. Forgetting that its not only about the software A
result of new efficiencies. vendor-client relationship is just that a relationship.
Its not only about the software. Its about trust,
5. Getting blinded by bells and whistles Many of service, support, commitment, dedication, people and
todays accounting systems include visual components addressing challenges when they arise. Thats why
and whiz-bang reporting features, which make it is easy selecting a vendor that the family likes and can work
to be swept away by the initial wow effect. Know the with for the long term is one of the most important
familys technology strategy. Are they conservative decisions the family can make.
or cutting edge? Balance the advantages emerging
technologies present versus the various risks, advises Michael Slemmer, CFA is COO - Americas at FundCount,
Hugh Bagatelle, founding partner, Windward Advisory a provider of integrated accounting and investment
Group. management software for family offices, hedge funds,
fund administration and private equity firms.
Peel back the veneer. Dig deeper to understand critical www.fundcount.com
components and what the system can and cannot do.
For example, how is data gathered -- is it manual or
automatic? Can existing spreadsheets be integrated
into the system? Are the financial calculations sound?
Can custom reports be created in-house?
If youre looking for
Request several demonstrations of the software to be
rounded family office
sure the office understands the nuts and bolts of the
expertise, theres
system. Chris Martinez, Managing Director, Oakbrook
one place you
should look...
Solutions Family Office Practice recommends doing a
here.
Proof of Concept (PoC) to stress test the system with the
familys own data. And, make sure to kick the tires early
in the process to ensure the vendor supports all key
requirements. Getting to the final stage only to discover
that a vendors general ledger isnt truly integrated with
their portfolio and partnership accounting, for example,
is not time well spent for anyone.
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FINANCIAL MARKETS
FROM A RULES BASED PERSPECTIVE
Heading into spring the global economic backdrop does of todays financial markets by deploying rules based
lie perkier than it has been in recent times. Following models that encompass both the fundamental and
Trumps election at the latter end of last year as the 45th psychological aspects of global financial markets.
president of the United States, global growth prospects
have taken a tailwind boost into the 1st Quarter of this Such an approach to markets does, however, mean
year. This has been very much evident since the start that Eniso Partners is not a forecasting house. But
of the year with the reported improvements in growth, having said this very few could be counted to have
inflation as well as corporate earnings. the propensity to accurately forecast the wide array of
events that will be taking place in the near future. With
Such optimism has also been reflected within financial the ECB tapering having commenced, a probable FED
markets. The nine-year equity Bull Run still is very hike and subsequent continuous increase in real yields,
much in play with equities continuing to make new as well the frothing political landscape in European
highs, corporate credit spreads be it Investment Grade with this years elections, one could have many reasons
or more so High Yield are trading through post-crisis to alter his or hers asset allocation.
levels, and the VIX remains very much anchored at a low
range. Does such a situation warrant fears of euphoria, What can be distinguished from the graph below are
as your investments may have already exceeded their the shifts in asset allocation that have taken place
full-year profit targets? Or does one remain hopeful within Eniso Partners funds and mandates in recent
that this rally has steam to continue? times. These shifts in asset allocation are as result of
both our Fundamental (GFAS) and Psychological model
(RAI) having signalled a change in either investor
sentiment (RAI) or the global fundamental backdrop
(GFAS). Nevertheless, what they have importantly
achieved is mitigating the sharp drawdowns that have
been witnessed more frequently and sharply since the
trough of financial markets in early 2009.
At Eniso Partners we have established and time tested Today, our fundamental model (GFAS) does find itself
a systematic approach to financial markets that thrives in a weakened position to where it has lied in the past.
on mitigating the behavioural biases and complexities The news flow on the consumer and manufacturing
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FAMILY OFFICE MAGAZINE
fronts has generally been much better than consensus late, on balance there is no evidence of irrational
and signals a further acceleration in the pace of global exuberance.
economic growth. Even so, support for equity markets
especially from the industrial sector is still far weaker
than during the boom phase from January 2005 to
December 2006.
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AN INSIGHT INTO THE MONACO
ECOSYSTEM FOR FAMILY OFFICES
TEMPEST LEGAL SERVICES MONACO
Monaco has become a destination for worldwide and Compliance rules. For instance, in Monaco,
families, in an ever-changing environment. This is banks are regulated by the French regulator (the
because the Monaco ecosystem is well adapted to Autorit de Contrle Prudentiel et de Rsolution); the
Family Offices. Why and How? French Regulator is also closely related to European
supervision. Consequently, even if Monaco is not part of
Why? There are several factors: the European Union, strong Governance and Compliance
Security (including legal certainty) and Confidentiality rules, inspired by European regulations, apply in
being possibly two important incentives for choosing Monaco. Data Protection rules, (Monaco implemented
Monaco. Monaco is very international with a wide range its own legislation on Data Protection a number of years
of professional and service companies being present: ago) such rules being there both to protect businesses
international banks (around 30), asset managers (around and Private Family Offices.
50), insurance brokers, yacht brokers.
Monaco has excellent health care and political
Regulation and Governance are also key factors in security. It is accessibility by air, road and rail/Monacos
Monaco: banks, asset managers, and insurance brokers geographical position in the heart of Europe. The
are regulated and are subject to strong Governance Monaco Government actively encourages families to
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FAMILY OFFICE MAGAZINE
from Monaco) to be close to decision making and
benefit from expertise and advice from international
professionals. Single Family Offices can be set up
in the form of a company in Monaco, including, more
recently, in the form of a limited partnership (SARL)
although the preferred route is as a SAM with civil
objects. By adopting such corporate form allows the
decision makers (who are partners or shareholders in
the enterprise) to benefit from limited liability when
conducting business on behalf of the families with
third parties.
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UNIT-LINKED SOLUTION
FOR HNWIS FROM RUSSIA
The Wealth of HNWIs with Russian tax residence
has been under pressure since 2014: they had to
tackle ruble drop, sanctions, rapidly diminished bank
deposit rates together with changes in tax, anti-money
laundering and foreign currency legislation. Incredible
as it may seem, there appears to be a universal remedy
against all of the above-mentioned issues, which is
called a unit-linked life bond. Lets see how it works.
A unit-linked life policy or bond is a policy opened by
in most cases the offshore company that enables a
policyholder to invest in a wide variety of instruments
within the policy like bonds, equities, ETFs, mutual and
hedge funds, structured and loan notes, etc. In case
of the policyholders death, the current value of the
policy multiplied by 101-105% (depending on the
type of policy, the term, the premium, etc.) is paid to
Natalia Smirnova
nominated beneficiaries. CEO, Personal Advisor ltd
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FAMILY OFFICE MAGAZINE
= RUB 70, one should pay income tax at the rate of and beneficiaries of foreign companies that are tax
13%, and the taxable income will be calculated like residents in Russia are to inform the tax authorities
this: USD 1,200,000*70 USD 1,000,000*50 = RUB about these facts and pay 13% tax on the annual net
34,000,000 (and not USD 1,200,000 USD 1,000,000 profit of their foreign companies if it exceeds RUB
converted into RUB at the exchange rate of the day 10,000,000 (around USD 167,000 in March 2017).
when the fund was sold). This rule is now applied Given the fact that Russia will be part of OECD from
to any investment in a foreign currency for tax- 2018, the Tax Authorities will inevitably get access
residents of Russia, which makes such investments to the information about beneficiaries of these
inefficient due to the instability of ruble. However companies bank accounts. However, investments
there is an exception to this rule according to the within a life policy dont require neither annual
article # 213 of the Tax Code of Russia, any income reporting nor annual declaration since income
from a life insurance policy is taxable at the rate of within the policy becomes taxable when redeemed
13% if it exceeds annual interest rate set by the from the policy (if it exceeds the premium amount)
Central Bank of Russia (10% as per March 2017). or when the policy matures. In addition, all holdings
This helps investors diminish their taxes if they are with the policy have a nominal holder (an insurance
investing in a foreign currency via a life policy. company), whereas a policyholder remains the sole
beneficiary, which makes it impossible to reach the
Access to a wide variety of investment opportunities policyholder for the Tax Authorities since the official
with no declaration and reporting. Even if the holder of all investments is not a tax resident of
exchange rate remains stable, HNWIs will be Russia.
facing other difficulties while investing in a foreign
currency. In particular, there are few bonds and Confidentiality and protection. The fact that a
stocks in USD available in the Russian market, which foreign life insurance company remains a nominal
makes it impossible to create a well-diversified holder of all assets within the policy protects them
portfolio for any HNWI. As a result, one should open from potential suspension should further sanctions
a trading account abroad to get access to NYSE and against Russian residents continue since such
other markets. According to anti-money laundering investments within foreign life insurance companies
and foreign currency legislation , if one opens a tend to be offshore, and offshore jurisdictions
bank account abroad he would have to inform the would hardly obey any sanctions. On top of that, life
Tax Authorities in Russia about that within 1 month policy also protects all holdings from a divorce and
and then start sending them an annual report on potential collection since life policy plays the role of
inflows and outflows within this account together a trust for all holding within a policy.
with annual tax declaration, which would be time-
consuming and inappropriate for tax-optimization As a result, investments via a unit-linked policy
purposes. instead of a traditional asset management strategy
is a more beneficial solution for the estate planning
If one opens a trading account abroad he will have for HNWIs with tax residence in Russia. It protects
to send an annual tax declaration anyway, since foreign assets from the collection, allows his family
Russia will be joining OECD from September 2018, to have immediate access to the funds in case of the
so the Russian Tax Authorities will get access to clients death. In addition, the client will be able to
information about every financial account opened avoid 13% income tax on the profit of his foreign
by or in favour of the Russian tax resident. If any investments as well as obligatory reporting and
HNWI decides to use his foreign company for foreign submitting a tax declaration as well. The only thing
investments, this will also be an inefficient solution left is to choose an appropriate life bond provider.
for tax-optimization. Starting from 2015 all owners
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KEEPING WEALTH IN THE FAMILY
What do Abraham Lincoln, Pablo Picasso, Jimi Hendrix
and Stieg Larsson have in common? They all died
intestate. Despite hard-working, and in some cases
hard-living, careers, none had put in place measures
to protect their accumulated wealth and ensure it was
passed on to those they cared about.
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FAMILY OFFICE MAGAZINE
protect inherited wealth from divorce settlements, but the protection of funds to benefit a family for decades
it needs careful planning and expert advice. Without to come. Trusts still play a major role in succession
this, divorce can significantly deplete family wealth planning, although they must be properly structured
and may force the sale of assets that have been in the and need not be the only consideration. There are other
family for generations. Subsequent marriages can also investment solutions and planning methods available.
introduce new members to the family- such as step- Every day St. Jamess Place works with families with
children and step-grandchildren - who may also need differing needs, but one thing most families share
to be provided for. is the desire to do the best for themselves and their
successors. The impact of taking no action can be
Other threats might be, for example, a family devastating. So take advice, make a plan and leave a
business falling on hard times, or the next generation legacy. Dont let your family wealth fall into the hands
mismanaging an inheritance. So it is essential to build of those you have not chosen.
a flexible plan for the future, to ensure that assets are
preserved and protected until the next generation is The levels and bases of taxation, and reliefs from
old enough and wise enough to manage the family taxation can change at any time. The value of any tax
estate themselves. relief depends on individual circumstances.
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HOW DIVERSIFICATION IN PROPERTY INVESTMENT
CAN GROW FAMILY OFFICE WEALTH
on direct property investments and Residential Buy to Let:
alternative property funds. While The Residential Buy to Let market
investors have a wide variety of is still a huge marketplace in the
needs, they all often strive for the United Kingdom despite recent tax
same thing, to ensure the financial changes making it less attractive
security and well-being of their than it previously was. Income
family! For instance, I see clients all gained from a rental property is
the time that are interested in saving long-term and consistent. Todays
for a house deposit in the short term, lenders will still readily lend
and then saving for University fees monies to invest in these types
for their children in the medium of properties, and rental demand
term and of course planning for a continues to stay high. There can be
comfortable retirement in the long disadvantages to consider with buy
term. The latter two goals, and to let, including having to sell the
Neil Willis particularly retirement planning asset to realise capital repayment
Rycal Group LTD require a combination of capital and the potential costs and void
growth followed by income rental periods significantly reducing
Alternatives assets have become generation. yield. There is also the chance you
an important investment end up with a `nightmare` tenant.
consideration in the hunt for Further, in todays world where If you do end up in a situation
income. If we look at periods of traditional working patterns no where a tenant is not paying the
low-interest rates, such as in the longer seem to be the norm, many rent but staying in the property, and
current environment, alternatives clients simply strive towards potentially damaging the property,
can offer more attractive yields `financial independence` as quickly there can be a long and costly legal
than traditional investments. Today, as possible. They want dependable process to resolve the situation,
as allocations continue to increase monthly income (e.g. having enough with no guarantee of costs being
in global alternative assets, PwC investments and assets to generate recovered.
has predicted that the market for income to live) without necessarily
alternatives will increase to $15.3 having to work a 9 to 5. Depending Commercial property:
trillion by the year 2020. on an investors goals and timing, Casual investors tend to and should
there are several strategies clients stay away from this type of property
So whats the reason for this increase should consider: investment as the property prices
and why focus on real estate? As can be much higher and rental
youll find, alternatives come in Direct Property Investments returns lower. However, the
many forms, real estate being one The Residential Buy to Let and advantage of commercial property
of them. Investors see it as one of Commercial Property market is investment is that rental contracts
the more popular alternative asset for the long-term investor -- and tend to be much longer, often with
classes to invest in because of its ultimately the goal with these costs fully covered by the tenant.
stability and consistency over the investments is to provide passive It can be more difficult to finance
long-term. For many years now I income. Below Ive broken down the these properties and be subject to
have helped investors to achieve reasons to consider Residential Buy higher interest rates. Over the long-
their short, medium and long-term to Let versus Commercial Property: term, the asset eventually needs to
investment goals through focusing be sold to realise capital.
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However, as a long-term home for your money, without land and property that is expected to increase in value,
needing to provide day to day help to your tenants, and usually keeps a margin available in liquid funds to
commercial property can still work very well. cover redemptions. From my experience of this, when
the fund does well, proportionally more clients want to
Property development cash in their investments and take the benefits. This can
It may have seemed at one point in the late 90s that often lead to the demand for redemptions exceeding the
every third person was a property developer. However, amount allocated into liquid funds. We have seen this
with fewer houses around in need of renovation, recently in a large way with Student Accommodation
following the upsurge in competition from amateur funds. The net result is that restrictions are placed on
developers in recent years, it has become much more the fund while assets are sold to allow for the increased
the preserve of professional firms. Significant profit can redemptions. This provides worry and drives the fund
be made investing in development, however, as banks price back down, not to mention that the fund is forced
are now much less willing to lend money to customers, to sell assets rather than choosing its own time frame to
significant funds may be required from the investor to do so. A far from ideal situation for clients!
move forward. During the planning and development
process, as an investor/developer, the individual should There is now a new variety of property funds that
have a great level of control over expenditure to ensure provide fixed exit strategies by planning to buy and
that the profit margin isnt eroded and that the finished sell assets. These can, if well managed, provide a great
price is realistic. The property is only worth what a buyer alternative to more established funds.
is willing to pay, and that is often capped by the upper
values of properties in the same area. All too often In the past, we have worked successfully with the
amateur developers see their expected profit reduced, Carlton James Commercial Real Estate Fund, which
as their finished sale cost has been over ambitious. allows investors to move into a fund that finances
USA-based commercial hospitality property. This
Property development is typically used for capital type of investment has worked well through careful
growth over the period of development. It can then management of the underlying risks, and through having
move into income generation if the developer decides a fixed exit strategy from the fund manager to provide a
to retain and rent part of the development. All the return of funds to investors in a timely manner.
above direct property investments are subject to market
fluctuations. Residential and property prices are now You can find out more about Carlton James offerings at
looking very high in certain parts of the UK compared www.carltonjamesgroup.com.
to average incomes, and while demand is still high, we
may see a correction happen in the near future. So what is best? Well, of course, there is no right or
wrong answer. Diversification is always the answer,
Real Estate Funds across property types, areas and even countries using
Property funds are an alternative to holding direct property funds. Using the above investments, you can
property that is still asset-backed but often provides help your client structure a new portfolio to achieve
significantly more liquidity. Funds can also diversify their financial goals, and review an existing portfolio
investments away from the UK market to other areas, to make sure the capital invested is working as hard as
also providing diversification of currency. possible for them.
These funds can provide both income generation
and capital growth, usually as a passive investment. Neil Willis is Managing Director at Rycal Group LTD, a
Clients are not actively involved in the management US- and UK-based property advisory firm.
of the properties that the funds own, but they can reap
the benefits of the return on investment. One area to
be careful of with property funds is looking at exit
strategies. Traditional property funds tend to have open-
ended timescales for investment. The fund simply buys
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FAMILY OFFICES
TAX PLANNING IN THE POST-BEPS ERA
BEPS stands for Base Erosion and Profit Shifting,
and refers to tax planning strategies that exploit gaps
and mismatches in tax rules to artificially shift profits
to low or no-tax locations where there is a little or
no economic activity. To address tax avoidance, the
OECD/G20 developed the BEPS Project, consisting of
15 actions, which equip governments with domestic
and international instruments to ensure that profits
are taxed where economic activities generating the
profits are performed and where the value is created
(see www.oecd.org/tax/beps/beps-actions.htm).
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a fixed ratio rule, which allows an entity to deduct rich MNE group member, where those returns do not
net interest expense up to a benchmark net interest/ correspond to the level of activity undertaken by the
EBITDA ratio, within a corridor of 10%-30%, and funding company; recharacterization of transactions
an optional group ratio rule which allows an entity which are not commercially rational; and service fees
to deduct net interest expense up to its groups net and commodity transactions (see www.oecd.org).
interest/EBITDA ratio, where this is higher than the
benchmark fixed ratio. It is undeniable the importance of the BEPS Project.
On the other hand, it is also important to distinguish
One of the most significant approaches of the BEPS between tax avoidance and tax evasion, or between
Project rests on transfer pricing rules. It is important tax avoidance and tax planning. Defining clear
that the fund managers check if it is the case to review boundaries is always a good guidance for both the
the applicable circumstances. The OECD work has taxpayers and the tax authorities, avoiding gray areas
focused on strengthening the guidance on applying where the sailing is not safe.
the arms length principle to ensure outcomes where
profits are aligned with the value created through
underlying economic activities. This work has
focused on several key areas, such as transactions
involving intangibles, since misallocation of the profits
generated by valuable intangibles has contributed to
BEPS; contractual allocation of risks, and the resulting
allocation of profits to those risks, which may not
correspond with the activities actually carried out;
the level of returns to funding provided by a capital-
Digital innovation has impacted of wealth managers currently offer on impact investing. The next
most of the financial sector in the digital channels beyond the usual theme that is emerging focuses
past ten years and has recently email. According to a survey, 82% on the investment of passion
gained rapid pace. Whereas retail of high-net-worth individuals in such as art, classic cars, vintage
banking and consumer finance the Asia-Pacific region expect their watches, rare stamps or any other
have been early adopter, the wealth management relationship sought-after collectables. Passion
wealth management space has to be conducted entirely or mostly investments are also often referred
been on the sideline, applying through digital channels, while to as a store of value in times of
the not so efficient wait-and- 83% of them said that they are financial stress. They also have the
see strategy. Except for standard far more likely to leave wealth particular characteristic of being
online banking portal, private management firms that cannot an emotional asset on top of being
banks were not investing heavily offer an integrated digital and a potentially lucrative investment.
on digitalization. The players direct channel experience.
could afford to wait for part due to
their older client base, sustained New private banking service
return on equity and high barrier delivery model are empowering
to entry. The wakeup call has clients with round-the-clock
arrived, mainly driven by the new access to comprehensive
generation of clients embracing information about their accounts,
technologies and social media, market insights and intelligence
forcing the institutions to rethink personalised according to their
their value proposition. portfolio. The next trend is the rise
of digital platform used as market
The three main areas witnessing place helping wealth management
the most appeal for the digital age institutions to create synergies
are enhancing client relationship, among their client base, unlocking
reducing the cost of the middle new opportunities.
and back office and smoothening BIO: Douglas Azar is the founder
risk and compliance tasks. The Regarding family offices, a few and CEO of Wealth initiative. He has
main question that arises for most trends are shaping the industry 12 years experience in Banking in
wealth management institutions is on top of the fact that the number various locations (U.S.A, Middle
whether to focus on the external, of family offices around the globe East, Switzerland) including eight
client-facing (front-office) or is increasing at a rapid pace years in Private Banking focusing
internal (middle and back-office) mirroring the higher number of on investment advisory. He also
type of initiative. the ultra wealthy. To mention only has extensive knowledge in art
It is interesting to point out that two two in the investment space, there investment and wrote articles in
third of high net worth individuals is a tendency to get exposure to newspapers on the subject. He is a
(HNWIs) are now using online direct investment versus the fund CAIA charter, holder.
mobile banking but only a quarter approach as well as a greater focus
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Adapted from a Holland & Holland catalogue produced between 1910-1912
O
LLAN
LONDON
OL
H D
33 Bruton Street, London, W1J 6HH | www.hollandandholland.com | +44 (0)20 7499 4411
LESSONS LEARNED FROM INCORPORATING
ARTIFICIAL INTELLIGENCE-BASED FUNDS
TO FAMILY OFFICE PORTFOLIOS
by Andres Bagnasco
Andres Bagnasco is a post-graduate professor of finance, and Director of the Investment Management
Programme at the Uruguayan Catholic University. He has held several positions such as Derivatives Market-
maker, Risk Manager, Quant Researcher and Trader, Data Scientist and Portfolio Manager
Artificial Intelligence (AI) applied based funds, often led by former by other participants or after the
to alpha generation is without Silicon Valley Data Scientists and incorporation of new technologies,
any doubts the most disruptive Quants. former money-making strategies
innovation in Finance in the last cease to generate further profits.
decade. Even though algorithmic Alternative Investment analysts Lesson learned: Paraphrasing Nobel
trading dates back to the 70s, with backgrounds in Economics, Laureates Eugene Famas words;
technological advances such as MBAs, CFA and even CAIA charter markets efficiency is in constant
Cloud Computing, GPUs and Big holders are unfortunately not increase.
Data techniques have shaped qualified enough in order to
forever markets and are here to properly screen the most suitable Several years ago, while working
stay. funds from a risk management as a Fund of Hedge Funds analyst,
perspective. A couple of real-life we used to perform the regular due
Several AI-based hedge funds examples will shed light on some of diligence/risk audits on a target
currently top fund rankings, the problems faced by family office fund which was using Machine
exceeding in risk-adjusted terms analysts and portfolio managers Learning algorithms in order to
their human counterparts. Others when analysing these very specific trade US Futures, based on certain
such as Renaissance Technologies type of funds. automated COT (Commitment of
Medallion HFT Fund, has proved to Traders) report feeds the fund
weather over 35 years with average I used to work as a buy side Hedge subscribed to.
yearly returns in the mid-thirties Fund quant, developed some FX
and a breath-taking Sharpe ratio interbank arbitrage-like strategies. Risk-adjusted metrics were pretty
close to five. Low correlation with One of such strategies was in solid, operationally the firms
traditional assets and the highest production for about 14 months processes, people and systems
risk-adjusted performance are with excellent results, a Sharpe were robust and passed with
the main drivers for considering ratio in the order of four, until fireworks our firms toughest acid
allocation in AI-based funds. it was suddenly arbitraged out tests regularly considered before
by the market. What happened? allocating funds to it. My boss,
Undoubtedly markets are nowadays Backtesting, stress-testing and a the Portfolio Manager, was eager
more efficient than ever before. good track record are necessary to allocate funds to that Hedge
Thus it is increasingly harder to conditions for the assessment of a Fund, and we did so. I just had one
consistently beat the market with quantitative trading strategy/fund, objection to it, most of the funds
active management strategies however the ease of information alpha was derived from a 3rd party
given the highly competitive access and pure reliance on data feed vendor, who was also
environment. Access to technology, execution speed typically reduces licensing such feed to several other
open source tools and knowledge the shelf life of simple low hanging market participants. To me, it was a
has derived into a new breed of AI- fruit strategies. Once discovered matter of time and traded volume,
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for the strategy to stop working. Most of the profits were The fund management and their legal advisors wanted
obtained from thinly traded instruments as opposed to initiate actions against their service providers.
to the most liquid ones on the considered exchanges. Unfortunately, our research was not conclusive enough
Time confirmed my hypothesis, the strategy stopped in order to precisely locate the exact responsible(s) in
working, and the fund had to be liquidated. During the order to either sue them or file a regulatory demand
post-allocation monitoring phase, we requested one against them. The presence of an execution broker,
meeting with the fund as well as their data feed provider. broker employees, data centre personnel, connectivity
We presented them an early forensic microstructure providers, as well as the lack of additional data made
analysis pointing some scalability issues we observed the task of individualising the end responsible simply
as there were early signs of trading performance decay. impossible.
The fund manager was extremely concerned about
it. Their feed provider, despite being quite polite and Lesson learned: Even the most secret black boxes
approachable, was obviously not willing to commit any deserve thorough and continuous TCA monitoring
hard limit to the distribution of their product to other (Transaction Cost Analysis), not only before but all along
firms. That meeting marked the end of our allocation the post-allocation phase.
to such fund.Eight months after liquidating our stake,
the death of such strategy was confirmed by a drop The research process by which a funds strategy has been
in the funds AUM, given the incompatibility of the developed is crucial for ensuring the scalability and
vendors data feed sales expansion plan vs the fund shelf life of the alpha-generation process. As a Quant,
overreliance on such source of alpha. In a zero-sum Big Data Scientist and Algorithmic Trading Postgraduate
game, not everyone can own the secret sauce and still Professor I have been not only trusted, but lucky enough
make money. in having the opportunity to carefully learn and dissect
many fund strategies in the search for their Achilles
Lesson learned: In todays highly competitive arena, heel. Deep Learning Neural Network structures, training
being fast, smart or different is not enough; fund algorithms, feature engineering building process, cost
managers need to faster, smarter and unique vs. the rest functions or analysing concepts such as precision/recall
of the market participants in order to stay in business. charts has proved to give us remarkable insights about
On another page, a BVI-based hedge fund manager its expected strategy shelf life. Most of these concepts
trading European stocks once contacted me as they had as well as being fluent with technologies such as
some concerns about fund performance degradation. Googles TensorFlow, XGBoost, h2o.ai, Spark or Apache
Apparently, it was mainly attributable to seemingly Storm are technologies simply out of reach for most
higher trade execution costs. I carefully designed some CFAs, MBAs and Alternative Investment Analysis.
experiments and statistical tests in order to determine
the possible reasons behind it. There were three main Sorting Alternative Investment databases by Sharpe or
hypotheses, namely: Sortino ratios as well as asking standard operational
a) Market impact/scalability issues due diligence questions is mandatory, nowadays it is no
b) Stolen IP perhaps within the fund or former longer sufficient in order to select the best allocations
employees leaving with code or ideas for your Family Office portfolio. Analysts and Risk
c) Fund replication (i.e. some service provider such Managers need to go one step beyond the underlying
as primer broker, data-center personnel, either front- fund by modelling what the fund manager may not have
running or replicating trades for their own benefit). planned for, even if it is a black box from the analysts
standpoint. Nowadays it is mandatory to engage expert
After the experiments, we were able to statistically Data Scientists consultants in the due diligence and risk
determine with a probability of 99.97% that fund audit process before allocations.
replication was the undisputed responsible explaining
the fund underperformance. Needless to say the fund Your family office analysts truly have the required
no longer executed trades through the same service knowledge in order to address these issues? Remember
providers after our findings, returning to happy days. the old trading adage: What you dont know may kill you.
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LITIGATION FINANCE ATTRACTING
FAMILY OFFICE INVESTORS
In a world of over-inflated asset prices driven by near-
free debt, some investors are on the edge of their
seats with respect to what the future holds for their
portfolios. This tension has resulted in investors
looking toward more esoteric asset classes which are
not correlated to the financial markets. As an example,
university endowments, who have traditionally been
forward looking investors in the alternative asset sector,
are looking at the maturity of the private equity space
and reducing their allocations therein in favour of
investing in non-traditional alternative asset classes
such as insurance driven strategies, intellectual property
royalties and litigation finance. Edward Truant
Balmoral Wood Litigation Finance
The interest in the litigation finance asset class is twofold:
non-correlation and inefficiency. As you can imagine,
the outcome of a piece of litigation is idiosyncratic to the Litigation Finance Basics
litigation itself and is generally not influenced by other In essence, litigation finance involves veteran litigators
external factors and hence the value is not dependent (typically former litigation partners at large law
on external factors or the performance of the financial firms), who work for the litigation finance manager
markets. Accordingly, the asset class is viewed as one of and underwrite an investment in a particular piece of
the least correlated asset classes available to investors. litigation. Their underwriting process typically focuses
on the following case attributes:
Average annual increase in tort costs from 1951 2009
was 8.7% (i) merits of the plaintiffs case,
The Evolution of Litigation & Risk Management: a 50- (ii) plaintiffs legal representation,
year Retrospective, Chartis 2011 (iii) defendants settlement history,
(iv) defendants legal representation,
The asset class is also relatively inefficient (i.e. demand (v) jurisdictional considerations, and
is greater than supply) because the opportunity to invest (vi) collection risk.
in litigation finance only presented itself in the last two
decades, depending on the jurisdiction. Prior to that, in Once the litigation funder determines that the
most English common law jurisdictions, old common law probability-weighted outcome of a piece of litigation is
doctrines of champerty and maintenance prevented a compelling, the litigation funder provides a commitment
third party from profiting from another partys litigation. (non-recourse in nature) to fund the litigation, typically
However, as justice systems grapple with increasing pursuant to funding milestones, in exchange for a share
litigation costs, the global trend has been toward of the ultimate proceeds derived from settlement or
improving access to justice through the use of third- a court/arbitration award. The asset class has been
party litigation finance. described as an option on an instalment plan because
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funds are slowly invested, in installments, to support lay-off and the Miller family has repaid personal debts
the case. The litigation funder can react as more that they had assumed to pursue the litigation.
information is received about the case and ultimately is Demand for outside funding outstrips supply. Returns
able to withdraw from the case if the situation changes are impressive.
from that which was originally underwritten. This level The Economist, April 2013
of optionality has made the asset class attractive to
hedge fund managers. Challenges to Investing in the Sector
While the asset class does present the opportunity to
Litigation funding is the life-blood of the justice generate impressive returns. There are challenges to
system. It helps maintain investing in the asset class in the form of manager access
our society as an inclusive one. & selection and portfolio diversification. Given that the
Lord Neuberger, President of the U.K. Supreme Court asset class is in the early stages of its life cycle and there
are barriers to entry associated with entering the asset
class, there are a relatively small number of managers
Australia was an early adopter of litigation finance, with whom to invest. Accordingly, getting access to the
followed by the UK and USA. Today, there are several best-in-class managers requires an investor to dedicate
other countries whose judiciary supports the use time and resources to finding, diligence and negotiating
of litigation finance and the global trend is toward with these managers.
increasing the use of litigation finance, although it
remains a niche asset class in terms of its overall size. The second issue and perhaps most important aspect to
successfully investing in the asset class is diversification.
Many of the cases tend to be David vs. Goliath in One of the difficulties litigation financiers have is
nature, but the industry is evolving in terms of its proper portfolio construction because, different from
application to the types and size of cases. A recent case many other asset classes, litigation financiers do not
brought against Caterpiller Corporation by Miller UK Ltd. know exactly how much of their committed capital will
is a prime example of where litigation finance is used get deployed until the capital is required. Accordingly,
and how it benefits individuals and corporations. Miller portfolios, when viewed on a capital deployed basis,
UK Ltd. was a long-time supplier of Caterpiller for a can end up being very concentrated. Were it not for
quick decoupling device they had invented. Caterpiller the potential for binary outcomes in the asset class, this
management decided to develop their own device and would be acceptable, but the quasi-binary nature of the
end the long-standing supply arrangement with Miller. asset class means that diversification is more important
than traditional private equity asset classes.
When Miller viewed the competing products
developed and marketed by Caterpiller, they quickly The Way Forward
determined Caterpillar had stolen Millers design ideas As with any asset class, manager selection and diligence
and commenced litigation against Caterpillar. The is critical to investing in the asset class. Specific to this
litigation took its toll on the Miller family members, asset class, diversification should be central to your
both financially and emotionally. Ultimately, the Miller investment decision-making process. If the appropriate
family turned to a US litigation finance company who portfolio design considerations are made, the asset class
provided the capital necessary to pursue the case in looks promising to deliver exceptional performance!
US federal courts. The courts ultimately ruled in favour
of Miller with a US$74 million judgement (which will Edward Truant is a principal of Balmoral Wood
reportedly increase to close to $100MM when interest Litigation Finance, a litigation finance fund manager
is applied). Subsequent to the judgement, Miller UK based in Toronto, Canada. The author can be reached
Ltd. has re-hired many of the employees it was forced to at edwardt@balmoralwood.com.
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YACHT CHARTER
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from the dormant volcano. An awesome natural sight
looming over Naples and distinctive landscape visible
even from the island of Capri, the volcano could one
day change the skyline of the Amalfi Coast forever.
Pompeii
The famous site of Pompeii is only a short journey
from Naples, making this UNESCO World Heritage Site
an easy stop on your trip. When the settlement was
rediscovered and excavated, archaeologists found
empty pockets within the ash: by pouring plaster
within; the casts revealed the final moments of the
town folk. A selection of these casts is still on display
today.
Amalfi
The town after which the coastal stretch is named is
densely packed with historic buildings and fishing
boats that create an unassuming front to this once
powerful town. Amalfis historical significance coupled
with her striking landscape and laid-back pace saw
her rise again as a tourist destination. Many famous
personalities, including Richard Wagner and Henrik
Ibsen, have also stayed in the town. The imposing
Cathedral (also known as the Duomo di Amalfi and
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CONTUINUED FROM PREVIOUS PAGE
YACHT CHARTER
Cattedrale di SantAndrea) looms over the town square spectacular views of the winding Via Krupp road,
in a stately blend of Byzantine and Gothic styles and is profuse flowers in the late spring and summer months
perhaps the biggest attraction for tourists. The imposing and numerous examples of the regions traditional hand-
stairs lead up the cathedral entrance, where the oldest painted Majolica tiles.
post-Roman bronze doors conceal sacred relics from the
holy crusades within. Saint Andrew is buried within the Anacapri
crypt, having been brought from Constantinople during The second largest town on the island has fewer tourists
the Crusades. Not only is Amalfi Cathedral a worthy visit and plenty of atmospheric locations, making Anacapri
for the religious, the architecture and artwork within is an attractive prospect for holidaymakers looking for
astounding and deserving of a closer look. a quieter break. As with Capri, Majolica tiles decorate
public spaces both outdoors and inside and nowhere is
Capri this art form more spectacular than in the San Michelle
A short trip from the mainland towns of Sorrento, Church where Paradise on Earth is depicted in the floor
Positano or Naples, Capri is a small island with plenty tiles.
to occupy the young and old alike. The Blue Grotto is
Capris most famous natural attraction: the limestone For visitors wishing to discover more about the famous
in the cliffs forms the walls, ceiling and bottom of the and infamous antics of the nobles and artists who
grotto, and when sunlight is reflected a brilliant blue holidayed and lived on the island, Villa Lysis and Villa
glow appears to emanate from the waters under your San Michele are two perfect destinations to round off the
boat. The Green Grotto and White Grotto are accessible trip.
on the other side of Capri and well worth a visit away CharterWorld Luxury Yacht Charter Specialist
from the crowds of the major town if you have the time. www.charterworld.com
The Gardens of Augustus are a must-see, offering world.reservations@charterworld.com
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Today,
I will pilot my boat out into the blue ocean,
I N T RO D U C I N G T H E COV E ,
A R I TZ - CA R LT O N R ES ERV E R ES I D EN C E
AT CA RO LI N E BAY, B ER M U DA .
Re s i de n c e s p r i c e d f r o m $ 2 . 5 M .
These materials do not constitute an offer to sell nor a solicitation of offers to buy or lease real estate at The Cove, a
Ritz-Carlton Reserve Residence by residents of Connecticut, Hawaii, Idaho, Illinois, New Jersey, New York, Oregon,
Pennsylvania, or South Carolina, or any other state or jurisdiction where prior registration, license or advance
qualification is required but not yet completed or where otherwise prohibited by law. Void where prohibited by
law. The features, fixtures, and amenities described herein are based upon current development plans, which
are subject to change without notice and there is no guaranty that said features, facilities, and amenities
will be provided, or, if provided, will be of the same type, size or nature as depicted or described.
Offer subject to change at any time without prior notice. The complete offering terms are in an
Offering Plan available from Sponsor. The Cove, a Ritz-Carlton Reserve Residence, is not
owned, developed or sold by The Ritz-Carlton Hotel Company, L.L.C. or its affiliates
(Ritz-Carlton). Georges Bay Residences Limited uses The Ritz-Carlton marks under
a license from Ritz-Carlton, which has not confirmed the accuracy of any of the
EXPERIENCECAROLINEBAY.COM statements or representations made herein.
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FAMILY OFFICE MAGAZINE
order to not invest in the same underlying investments, to invest money with either a large or small company
the situation that investors can face is that they are stems from the ability of either one to make the client
invested in hundreds of different direct holdings. feel valued. From my experience, client feels valued
when they feel like they matter and when they feel like
While I completely agree that this will achieve they are in receipt of a service that they cannot easily
the institutional objective of reducing the level of be provided with elsewhere. This is where, in my mind,
investment risk experienced within the proposition, the boutique investment management companies have a
outcome for the client is often that any outperformance competitive edge over larger institutions.
(alpha) that has been generated, is diluted across the
vast number of investment holdings. I have also noticed A rising number of clients feel dissatisfaction at how
rising positive correlations in off the shelf strategies automated the financial services industry has become.
which may perform detrimentally when markets move Whether you look specifically at day-today banking,
into the reverse. financial advice or investment management, it is clear to
see that technological advances have shifted the client
Investors face a further hurdle due to the lack of experience from personable to more automated.
transparency regarding this type of investment.
Often investors are only made aware of the top ten Boutique investment companies are rarely automated,
investments held within the fund, with little clarity are able-to treat clients individually and do not suffer the
provided on where the rest of their money is invested. consequences of scale that hinder larger organisations.
Therefore, it can become extremely difficult and Bespoke, client centric investment mandates can be
confusing for a client to interpret the reasons for their generated and implemented that will be custom made
investments performance, whether good or bad. to suit the needs of the client rather than be designed
to simply generate an income stream that will improve
A major outcome from the improvement in financial the profit margin of an institution. A Boutique will
regulation is that the cost of financial advice and often base a bespoke investment portfolio on direct
investment management now receives more attention investment into fixed interest securities, equities and
than ever before. Large Financial Organisations will other asset classes, providing clients with transparency
often include a number of different charges, that will and the ability to monitor investment performance.
have an erosive impact on the performance of a clients
investments. Initial charges often relate to the cost Direct investing also provides clients with a more cost
of the financial advice a client has received and the effective return as there is a significant cost saving
administrative costs that a company will bear in order in comparison to the multiple layers of fees levied by
to invest on behalf of a client. larger institutions and their fund of mutual funds.
This upfront entry fee is often a percentage of the initial In the retail food industry, it is the smaller bespoke
amount invested, meaning that clients who invest larger enterprises that offer high-quality products and
initial monetary sums will pay more for the financial personal service. These establishments are popular
advice received, then they would if they invested with the discerning client who would generally avoid
a smaller monetary figure. The initial fee charged the large mass-market supermarkets such as Asda and
by a large financial institution could potentially be Tesco. It is somewhat perverse that gatekeepers often
justified should that company possess a wide number steer clients towards the financial supermarkets rather
of different investment solutions. However, more than bespoke purveyors of quality financial advice.
often than not, the client will have to choose between
2-3 different options, highlighting a one cap fits all Luciano Lombardo Chartered FCSI, Dip PFS
approach, rather than providing a bespoke solution Wealth Manager
that relates to the clients objectives. Ultimately, the Lombardo.estudio@gmail.com
main difference between a Private Client choosing
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IS A SINGLE FAMILY OFFICE
REQUIRED TO BE LICENSED
IN SINGAPORE?
(b) of the Second Schedule to the Securities and Futures
(Licensing and Conduct of Business) Regulations.
Alternatively, a corporation that provides financial
advisory services to its related corporations may rely
on the licensing exemption under regulation 27(1)(b) of
the Financial Advisers Regulations.
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T H E U LT I M AT E A I R P O R T E X P E R I E N C E
the worlds leading centres for investment funds and have delivered specialist fiduciary and administrative
asset management, with approximatively US$1.8trn services to individuals, intermediaries and corporations.
of total assets managed by Singapore-based asset The Group is headquartered in Singapore and has
DE D I C ATED ENTRANCE
managers, PRIVATE
according to MAS HOST EXCLUSI VE
2015 data. SECURITY
additional EXPERIENCE
operations CHAUFF
in Hong Kong, EU RIslands,
the Cook P L AN E
Dubai, Nevis, New Zealand, Panama and Samoa. We
Its political stability, well respected regulatory are Asia Pacific focused with global reach, able to offer
standards and friendly tax system offer an attractive structures and solutions in almost any jurisdiction via
environment for local and international business. our extensive international network.
MAS refers to Singapore as the Global City, World Asiaciti Trust was established in 1978 by our founder,
of opportunities and with the clarity now given Graeme W Briggs. Over time the Group has expanded
reinforces its strong commitment to its asset and steadily and is now one of the most recognised and
wealth management industry. Singapore offers the professionally respected names in the industry. We
stability and regulatory security which are two key remain family owned and fully independent.
components for wealthy families and Ultra High Net
Worth Individuals when considering the establishment
of a family office, the opening of a foreign branch in
the APAC region or even the relocation of the family
office headquarters. Asiaciti Trust is an international
trust and corporate services, provider. For 40 years we
T H E U LT I M AT E A I R P O R T E X P E R I E N C E
For the most luxurious way through Heathrow when travelling first or business class,
for unparalleled service and your own private airport lounge, book Heathrow VIP.
Visit www.heathrowvip.com or call +44 (0) 20 8757 2227 and reference your unique code FOE
108
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DAVID FOWKES JEWELLERY
Fabulous, artisan cut gemstones closely with both the miners and result in a whole diversity of
are the focal point of David the cutters, David has the luxury colour and intensity. With this in
Fowkes Jewellery. He has sourced of being able to cherry pick mind, David will choose the mines
a wonderful selection of stunning the finest opals for his creations. in order to generate an interesting
quality gems, ready to become Together with his in-house opal variety of these alluring rocks.
part of a unique collection of cutter, he can create unique opal Throughout history, gemstones
jewellery. Not only is David widely cuts you wouldnt see anywhere have been associated with various
known for his use of wonderful else. The opals David prefers to beliefs and superstitions. Even
coloured gemstones, but he is use originate from a few selected today, Opal might be considered
also one of the leading jewellery mines in Australia. Different by some as being unlucky; a
designers to use boulder and colour spectrums are often found closer look into the history of
black opal. Exquisite Australian and mined within close proximity gemstones explains it all. Queen
opals are at the core of the David to each other, but the prevalent Victoria adored opals and opal
Fowkes Opal-collection. Working conditions of their birth can jewellery, which made them very
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FAMILY OFFICE MAGAZINE
wonderfully equipped for every day wear. All one
needs is a little understanding of how to care for opal
jewellery. The hardness of an opal is about the same
as glass. Hence it is important to treat your opals with
care. It is also vital to avoid heat or rapid temperature
changes as most precious opals contain 5-6% water,
they might crack or dry when exposed to heat or
stored in a warm place. Should opal jewellery need
cleaning, warm water and mild detergent with a soft
toothbrush is the best way to do it. There is no need
to store your opal in a damp cloth a misconception
that is deeply rooted in the minds of many. Even
though opals do contain some water, this doesnt
fashionable in that era. Around the same time in 1900 mean that water will penetrate them and enhance
black opal was discovered, and its hypnotising beauty their colour or durability. Things that do damage
captivated the gemstone market. Due to its unusual, opals are strong detergents, perfumes and cleaning
exceptional dazzle, it was immediately perceived products. Normal hand wash should not damage an
as an incredibly lucky and desirable stone. Diamond opal ring.
dealers, who feared losing their clients to this newly
found competitor, released the rumour of opals being
unlucky in an attempt to protect their business. Another
possible reason for the negative reputation of the Opal
might have come from the jewellers themselves: due
to its brittle nature, opal can be difficult to cut and
complex to set. These issues can be dealt with through
knowledge. The understanding of how to treat and set
opals is much better these days than in times past.
Opals naturally contain water, which partly gives
them their mesmerising radiance and life. They are
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DONT GET HACKED
CYBER SECURITY FOR THE FAMILY
On a daily basis, the media is flooded with reports
of cyber security breaches. The victims appear to
be targeted indiscriminately impacting families and
companies alike. There are plenty of statistics available,
but the two most relevant are the recent Crime Survey
of England and Wales that states 50% of all crime is
cyber-related, supported by the Center for Strategic
and International Studies findings that it costs the
global economy $300 billion annually.
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folders so that the victim is unaware of what is going Dont post anything anywhere on the internet if
on. The loss of funds has ranged from 100,000 to you dont want the world to see it. A good analogy
over 1m. Also, address books of the victims have is to imagine you are writing a postcard if you are
been copied, and similar thefts have been attempted happy for anyone to see the content, then you can
on their friends and relations. Swift action at this post it on social media.
point has helped cease the losses, protect reputations If you are breached, ensure you have a plan in
and enabled the limited recovery of funds. place in order to speak to your advisors, security, PR.
And least popular of all consider having children
These are some basic rules for keeping the family using their devices in a semi-public area at home, not
cyber safe: locked away in a room and think about setting limits
Trust your instincts if something seems too good on how often children can be online and how long
to be true, it usually is. those sessions should be. A friend of mine allows
Dont click on attachments from unknown sources, the devices to be fully charged at the start of the
and take caution opening attachments from known weekend. He takes all chargers and when the battery
sources if they seem unusual or out of context. runs out screen time ends. That breeds different
Dont reply to a text, email, or pop-up messages behaviour and his daughter uses her devices
that ask for personal or financial information. sparingly then has her brothers running errands in
Avoid clicking links in email messages, particularly order to earn screen time from her!
from unknown sources. Where possible, manually
go to the website by typing in the address into your Heyrick Bond Gunning
browser. Heyrick is the CEO of S-RM. As well as leading S-RM,
Dont give personal information on the phone in he keeps close to the clients and is responsible for
response to a text message. the development and strengthening of existing
Use security software and update it regularly, client relations across S-RM. He has over 25 years of
especially on your apps. experience managing risk, and prior to joining S-RM
Check your bank account statements for in 2006, he was the Managing Director of Security
unauthorised charges and transactions. Consulting at Kroll, where he was also Head of
Show your children examples when you get a Kidnap for Ransom.
phishing message so they can learn to identify them.
Make sure you have strong passwords. You should He previously consulted to DHL for a year in Iraq,
change them every so often. However, you dont flying into the country the day the second Gulf
need to change them all the time if they are strong. War ended and setting up a business with annual
It is important that passwords are kept private, easy revenues in excess of $70m. In 2000, he was the
to remember and hard to guess. Head of Client Engagement at Mergermarket, a
Watch out for scams - when disasters happen, financial services information provider, servicing
good-hearted people, young and old, can be clients in EMEA and USA, before which he served in
vulnerable to fake appeals for help. the British Army.
Use secure Wi-Fi and ensure your home network
uses encryption and a password. Heyrick has an Honours Degree from the University of
Use geolocation sparingly and disable it for all Manchester, specialising in Anatolian Archaeology, is
apps, except those you specifically need it for. an Alumni of INSEAD Business School and in 2004 his
Lock down your social media and check the first book Baghdad Business School was published.
security settings regularly, because site such as
Facebook regularly change them. www.s-rm.co.uk
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AROUND THE WORLD WITH
EXCHANGE TRADED FUNDS
MORE THAN JUST A PASSIVE VEHICLEG
The narrative around the growth of ETFs continues
apace, as most of you are reading this article will
know. For those of you who dont a quick recap. And
no, we are not an ETF provider. We are an established
boutique investment management firm that identified
the advantages of portfolio construction with ETFs in
2007 when the industry had just over $500bn in
assets.
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Investments as an investment management firm as a definition of risk, generally accepted as Markowitzs
global asset allocation manager. The aim of the firm modern portfolio theory which is still widely used
was to provide an alternative to the proliferation of for portfolio construction today. Even Markowitz,
mutual funds and brokerage services and provide the however, suggested his modern portfolio theory, which
type of high-caliber, globally diversified investment gave rise to a risk/reward framework for investors,
management to high net worth individuals that was limited by the computing power that existed at
pension funds had access to. the time. Mean-variance optimised portfolios were
du jour in the 60s, but can be improved upon with
With its macro-oriented approach, clients were offered advances in computing power. Today, we can capture
a manager of manager portfolio, incorporating some the types of risks Markowitz would have liked to have
of the best investment talent available in the industry incorporated. With todays computing power we can
at the time. This approach was ultimately improved capture and construct portfolios for the real world,
upon in 2007 when Cougar Global decided to adopt unlike the strategic ones captured by defining risk as
ETFs as its implementation tool. Cougar Global was standard deviation around a mean, is a meaningful
both a pioneer in global asset allocation and an early advancement, similar to the internet, chip technology,
adopter of ETFs as it made its global asset allocation and the iPhone. We all know that when there are
decisions. Black Swan events such as 9/11, the tech wreck,
and the 2008 meltdown, investors buckle down.
The equity bull market that began in the late 80s
and continued through the 90s, as today and every This is when risks in a negative macro environment
decade in investment management, brought about are not symmetrical around a mean. This is when no
great change. This era saw the proliferation of mutual matter how good a stock picker you are, the likelihood
funds, which provided access to great investment of losing money increases dramatically. Conversely,
talent, access, and diversification to the mass affluent. this is when even in a favourable macro environment,
They helped provided pools of capital to the firms a bad stock picker has a high chance of making money.
that went public, distributed by in-house advisors. Of
course, some not insignificant fees went along with all The investing world has always been an uncertain
that. However, it seemed everyone won. Until the tech place. Bear markets can result in significant losses.
wreck, 9/11, and eventually the market meltdown in The advancement in computing power combined
2008 changed everyones attitude towards risk. with the many investment opportunities created
by ETFs allow for a completely different portfolio
So, lets talk about risk. Do you want to make money construction option. One that can be geared to
when markets are going up, but want to avoid losses achieving an outcome based investing by taking
when in a bear market? Welcome to the club. No matter an active approach to risk managing your portfolio
if you are the most sophisticated, or unsophisticated based on the macro environment which we all know
investor in the world, this is what everyone wants and is important to managing equity risk. After all, who
tries to achieve. Investors dislike losses a lot more says the S&P or any index should be your personal
than they like gains. benchmark when all you care about is consistent
returns.
This theory was proven mathematically by
behavioural psychologists Daniel Kahnemann and
Amos Tversky, who were awarded the Nobel Prize
in economics (2002) for doing so. They helped
provide an alternative to the modern portfolio theory
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CANNABIS INVESTING BOILS DOWN
TO FAMILIAR FUNDAMENTALS By Chris Ganan Chief Strategy Officer, MedMen
The numbers are impressive and familiar to many who risk. The regulatory environment is highly fragmented
follow the U.S. cannabis industry. Triple-digit growth and rapidly evolving, while the underlying business
in recreational marijuana sales in recent years and is operationally intensive. Understanding the various
predictions of more than $50 billion in total annual layers is key for investors to achieve outsized, risk-
sales within the next decade. The recent passage adjusted returns.
of recreational marijuana in California, Nevada,
Massachusetts and Maine, and new medical marijuana UNDERSTANDING THE MARKET
laws in Florida, Arkansas and North Dakota have served
only to solidify those predictions. This is by far the The federal ban makes investing in marijuana an
fastest growing industry in the U.S. today. inherently risky proposition, but it is only one factor
in the risk assessment, and not a very big one if you
Naturally, there has been a lot of investor interest in the understand the facts. The U.S. Congress has prohibited
space. From an investment perspective, the federal ban the Department of Justice from cracking down on legal
creates significant opportunities since it limits options medical marijuana programs as recently as December.
for traditional financing. Given the large addressable Medical marijuana is legal now in 29 states and
market and the general lack of liquidity, much has been accounts for roughly a third of the $7 billion market.
written about the Green Rush. It is easy to get caught Given that public support for legalisation is the highest
up in the novelty of it all. But heres a newsflash; the its ever been, and the near sweep of pro-marijuana
cannabis industry is governed by the same fundamentals state measures in 2016, it is unlikely that Congress
that govern every other industry. Knowledge is still will change its stance. A bigger challenge for cannabis
power, and it boils down to evaluating and mitigating ventures is the patchwork of state and local regulations
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that govern business operations. Practically speaking, and Scotts Miracle-Gro is a household name that does
there is no such thing as a national cannabis market, not depend on marijuana for its core business.
say in the way that there is a soda market. The legal
cannabis market is hyper-fragmented along state, Venture capital and private equity are two other popular
and sometimes municipal, regulations. New York, cannabis investment vehicles. Generally speaking,
for example, has issued only five medical marijuana venture capital invests in start-ups with high growth
licenses for the entire state. Licensees are highly potential, whereas private equity firms buy existing
restricted on what they can produce and sell limiting companies and take over management in an attempt
their ability to diversify offerings, but the small number to increase revenues and value. Investors also may opt
of licenses also means less competition and potentially to invest directly in start-ups, marijuana-related real-
big returns. estate or private companies.
On the other end of the spectrum, California was the Regardless of the investment option, at the core of
first state to pass medical marijuana, but the state any successful cannabis investment strategy should
legislature took nearly two decades to formally be a clear understanding of the regulatory landscape,
regulate the program, allowing a huge grey market with and a deep grasp of the complex nature of cannabis
thousands of businesses operating in this arena. Today, operations. Running a cannabis business involves a
California is the biggest marijuana market in the U.S. lot more than knowing the difference between sativas
Los Angeles alone accounts for an estimated $1 billion and indicas. Does the company or venture you are
in medical marijuana sales a year. New state regulations interested in have the expertise to run and scale a
for both medical and recreational marijuana will go into successful operation?
effect in 2018 and are expected to profoundly shape
the way the industry operates going forward. Investors The industry is quickly becoming institutionalised
who understand those impacts will be better equipped requiring top-notch expertise in fields like agro-
to evaluate winners and losers. technology, chemistry, marketing, operations and
logistics, to name a few. Some of the most cutting edge
UNDERSTANDING INVESTMENT OPTIONS techniques in indoor cultivation like new LED lighting
technology, for example, are being developed in the
The Green Rush has spawned myriad investment cannabis industry today.
opportunities, including venture capital, private equity
and several public companies, most of them traded The offerings are so many, and the market is growing so
in the over-the-counter stock market. The over-the- rapidly that even sophisticated investors are tempted to
counter exchanges are less liquid, transparent and skip the fundamentals. But it is important to remember
regulated than traditional stock markets such as the that this is less about investing in marijuana, and all
Nasdaq or the New York Stock Exchange, making such about investing in solid business models backed by the
investments highly speculative. right premise, and the right people.
Late last year, San Diego-based Innovative Industrial About the author:
Properties became the first cannabis-related company Chris Ganan is chief strategy officer of MedMen, a
to be listed on the NYSE. IIPR is a real estate investment leading cannabis firm based in Los Angeles, and a
trust that seeks to acquire properties and lease them to general partner of the firms investment fund. Mr
plant touching companies, meaning they work directly Ganan will be a featured speaker at the Institutional
in the production and distribution of cannabis. Capital & Cannabis Conference, March 28 through 29
in San Jose, California. The conference, the countrys
Companies that offer ancillary services or products to first ever cannabis expo for institutional and accredited
the industry have garnered some attention. For instance, investors, is a collaboration between MedMen and
Scotts Miracle-Gro (NYSE: SMG) has positioned itself as IMN, a global organiser of institutional finance and
the premier supplier for indoor marijuana growers. Both investment conferences.
companies offer some risk mitigation for investors, real
assets in the form of commercial buildings in IIPRs case
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THE PICASSO GURU