Tuesday, April 8, 2014

Wealth Management: "Family Offices For Dummies"

From Barron's Penta blog:
Kirby Rosplock is intimately familiar with the issues debated in her recently published book The Complete Family Office Handbook. The 39-year old from Jupiter, Florida not only served as director of research at GenSpring Family Offices for a better part of a decade, but was also client material, when, in 2007, her fourth generation family-timber business, Babcock Lumber, sold 92,000 acres of Florida ranch land.

After her family’s liquidity event, Rosplock was left both cash flush and wondering if she could keep the family together. At GenSpring, she calmly sat across the table coaching a client through their troubles; suddenly, the emotional-side and sheer complexity of her own situation had her looking for guidance. “I looked to my book shelf to see what would be helpful and this book didn’t exist,” she said.

So she wrote the book she wished she had back in 2007. Back then, for example, her family was “facing a number of issues that were new.” Though the family was tied together by their foundation and a few still held board seats at Babcock, most of their wealth had long since been tied up in various operating businesses. After the payout, family members could afford to go their own way.

So Rosplock’s first issue to negotiate – universal to all multi-generational families after a liquidity event – arose from a major philosophical question: Should family members keep managing their assets together or should they all go their separate ways?

In the end, Rosplock’s relatives separated their wealth, each sending their share of the spoils to single family offices, multifamily offices, and to accounts belonging to the few do-it-yourselfers who were comfortable dictating their own financial strategies. Rosplock herself decided not to step-in and start dispensing advice, even though working as director of research at GenSpring more than qualified her to speak up.
“It was better that they find their own way or seek out third-party advisors,” she says. Probably a wise decision; the last thing she wanted to do was start a feud or be perceived as a know-it-all. Everyone is, after all, entitled to their own learning curve.

As Rosplock’s decision to stay quiet suggests, there is no one answer for all families, she says. So her book serves as a starting point for that initial philosophical discussion – How do we move forward from here? – before tension, misinformation and perceived slights overwhelm the dialogue.

The book combines Rosplock’s research with more than 60 interviews conducted with family office executives, industry professionals, and family members. It begins with a rather top-down view of family offices ­– from how much a family needs in investable assets to start a single family office (about $250 million, she claims) to their historical origin and how the Rockefellers, Mellons, and DuPonts underpinned family office development in the United States. Later chapters tackle issues like family governance, succession planning, and regulatory compliance standards....MORE