Skip to main content

ARE YOU A FAMILY OFFICE?


So “family offices” are increasing, but are they??  What is the classification of a family office?   From spending the last five years working for a family office, I think I can tell you.  An this is not just from my understanding but from seasoned veterans who were in this space before anyone outside of the “club” ever heard the word family offices.

$250MM in assets and they not only have investments to deal with (which I like to call the hard side (investment side) but also the soft side which deals with the family issues.    Governance, generational issues, tax planning, legal planning, internal family issues per se.  All of the things great wealth can bring outside the investment side.

Outside of the net worth number ($250MM), I also think you can distinguish if they are a real family office by asking the question.  Are investments made from a company checkbook or the personal checkbook of the family??   If it is from the business side, then that is not from a family office pocketbook but the business pocketbook.  If it is from the personal wallet then bingo there you have it.  Now some family offices do have a blended pocketbook whereas the family office is ran in conjunction to the business (sharing the CFO, accountant, etc.) but still the check is for personal investment, not a business investment.   Let's remember for those that have businesses you still have a personal bank account, and so does a real family office.

Labels

Labels:

Comments

Post a Comment

Popular posts from this blog

Harvard's Endowment commits to a target investment range into real estate between 10% to 17% for 2016

Years ago, before the downturn I was paying very close attention to the investing allocation of my Alma Maters Endowments Investing Strategy HMC (Harvard Management Company), especially in the area of real estate.  I believe that not only was Harvard a great place to understand the importance of investment allocation strategies before the downturn but even more so since the downturn. In fact, investors who are looking to enhance the performance of their investment portfolios probably won’t find a better investment model than the one used by the $37.6 billion endowment for Harvard University. The entity in charge of managing the endowment, Harvard Management Company (HMC), has accrued an impressive investment track record across its 41-year history. As of fiscal year 2015, the endowment had produced an average annual return of 12.2% – 290 basis points higher than the average 9.3% return of a typical U.S. 60/40 stock and bond portfolio. The methodology behind HMC’s success i...
1 comment
Read more

Real Estate Analysis

Just a little while ago myself and my patriarch sat down with another family and began discussing real estate and our strategy.  As the family office really didn't understand real estate, they started to ask questions on how we looked at deals and evaluated opportunities. Thinking back I think that a lot of the questions came from the fact that they created their wealth in the LBO market and thus understood the different nuances of businesses.  Now many families created their wealth from a business but this particular family was involved in 39 different industries, thus I believe their frame of reference was a little different. Our family office created their wealth in real estate and one big part of that has to do with the degree of analytics that is used in our office.  In fact, I have been asking for about 10 years why people are not more analytical about real estate decisions.   All too often a family office is approached by rea...
Post a Comment
Read more

Real Estate - The Bedrock Asset for Family Offices

Global Family Office Report 2015: Largest Family Office Research Study undertaken offers insight into family office investments in real estate  The average family office portfolio allocates approximately 13% to real estate, and there is a home bias in holdings according to The Global Family Office Report 2015, produced by Campden Wealth Research, in partnership with UBS.  The average family office, with assets under management of USD 806 million, invested approximately USD 105 million in real estate activity in 2014, be it in residential or commercial real estate.  Family offices prefer to invest locally or nationally for both commercial and residential property. Since real estate direct investment typically takes place in-house, this may be a reflection of the local knowledge and skill set of the staff. Where investments are made further afield, they are made with the expectations of higher returns, with international or regional investments coming with signi...
Post a Comment
Read more