The Christmas Village and the Santa Claus Workshops are in full swing on the Port of Monaco until Sunday, January 7, 2018, and as every year, the Monaco City Hall will offer a free ice show on the open-air skating rink.
This year’s special event – “Folie de Noël sur glace” – will be on Saturday, December 23, at 5:30 pm; as presented by the troupe Patin’air.
On the programme: slides, waterfalls, mountain biking, aerobatics, magic, live music, elegance, jokes and, of course, Santa. The grace of the ice and the magic of the circus will come together to offer an enchanting and wonderful show to discover with the family, young and old.
The Ice Christmas Madness event is free, but spaces may be limited.
Sergiy Gladyr, Olivier Mura, Geneviève Berti, Oleksiy Yefimov, Dr Ilhani Aygun, Minister of the Interior Patrice Cellario, Laetitia Mikail, Paul Lacombe and Amara Sy. Photo: Philippe Fitte
Wednesday night, Monaco’s Junior Chamber International (JCI) hosted its fourth and final Business Time of the year for 2017.
The evening’s theme was “Business and Communication in Sport: the Monaco Basketball Project”, which coincided with the signing three days earlier of the AS Monaco Basketball Partners Association.
Around 70 members and friends of JCI, as well as Minister of the Interior Patrice Cellario, AS Monaco Basketball team captain Amara Sy and players Sergiy Gladyr and Paul Lacombe, gathered at the BMW showroom at 9 rue du Gabian to hear about basketball and its relationship with the Principality from three speakers: Geneviève Berti (Director of the Government Communications Department), Oleksiy Yefimov (General Manager of AS Monaco Basketball) and Dr Ilhani Aygun (President of AS Monaco Basketball Partners Association and President and CEO SSI-Monaco Space Systems International Monaco).
Oliver Mura. Photo: Philippe Fitte
JCI’s outgoing president Oliver Mura opened the event, followed by Director of Business Network Events 2017 Laetitia Mikail, who explained that, in addition to the obvious sporting attractions of international stature in the Principality – the Grand Prix, the Rolex Monte-Carlo Masters and the Herculis track and field meet, Monaco is home to 70 sports associations and 38 sports federations.
Genevieve Berti commented that “sport is a universal language” and that the Government’s Communications Department is responsible for all the PR for AS Monaco Basketball, and with a budget of €1.5 million per year, they want the team to be known internationally as a Made in Monaco product. She added that while sports unite people in values and solidarity, when you are a small country like Monaco, you must look to the outside.
Ms Berti also pointed out the long history of basketball in Monaco – AS Monaco was created in 1924 – with the Harlem Globetrotters playing in Monaco and the US American Dream Team, including Michael Jordan, practiced in the Principality prior to the Barcelona Olympics in 1992. NBA Legend Magic Johnson, a frequent visitor to Monaco, celebrated his 25th wedding anniversary at the Yacht Club last year.
Dr Ilhani Aygun (President of the AS Monaco Basketball Partners Association and President and CEO SSI-Monaco Space Systems International Monaco), Oleksiy Yefimov (General Manager of AS Monaco Basketball) and Geneviève Berti (Director, Government Communications Department). Photo: Philippe Fitte
This international appeal is the reason for the creation of the AS Monaco Basketball Partners Association. As its president, Dr Aygun, said, “This association will give us a voice in the world of basketball, to attract more sponsors which will financially support the club and provide sustainable long-term success.”
Success seems to be a key word for AS Monaco Basketball, also known as Roca Team. GM Oleksiy Yefimov painted a clear picture: “Four years ago, Monaco’s basketball team was in the 3rd French Division and less than 100 people would come to a game. Last weekend, the match was sold out with 3,000 fans in attendance and we now lead the Pro A Division.”
Riding on a wave of victory, Roca Team has won nine consecutive games and is looking for number 10 this Saturday, December 23, at 7 pm, when they play ESSM Portel in Salle Gaston Medecin – a game which will be complete with cheerleaders and a Kiss-Cam.
Sergiy Gladyr, Paul Lacombe and Amara Sy. Photo: Philippe Fitte
As is fitting just before Christmas, this weekend’s match will join in the spirit with a collection of new toys for children and adolescents for the French non-profit charity, Secours populaire.
AS Monaco Basketball and the National Basketball League count on the generosity of fans in this holiday season: receptacles will be placed at the entrance to the Salle Gaston Medecin to accept gifts.
Wednesday’s Business Time event was partnered with EFG Bank, Your Private Driver, Studio Gentile, Monaco Receptions, Gordon Blair and Athos Partners.
Business Time is a quarterly event in French and English dedicated to Networking in Monaco to highlight an example of excellence in the Principality, with the exceptional participation of recognised speakers. For more see the website.
Pauline Ducruet, eldest daughter of Princess Stephanie, has graduated after completing her studies at the Parsons School of Design in New York. The 23-year-old posted the news to her 33,200 Instagram followers on Monday, December 18, together with a photo of the school building.
“THIS IS IT!! Goodbye to that school where I spent my days and nights for more than two years. Today is the first day of the rest of my life!! I AM DONE,” she wrote.
Photo: Instagram paulinedcrt
Ms Ducruet – whose full name is Pauline Grace Maguy Ducruet – previously studied for three years at the prestigious Istituto Marangoni Fashion School in Paris. The qualification from the Parsons School of Design is an Associate’s Degree, the equivalent of a BTS in France.
Meanwhile on Wednesday, her older brother Louis, 25, assisted Prince Albert and Princess Charlene in their role of Santa at the annual children’s Christmas celebration at the palace.
From January 1, 2018, the implementation of France’s new Wealth Tax – Impôt sur la fortune immobilière (IFI) – will come into effect.
Keeping his campaign promise, President Macron has announced that this tax – an upgrade to the existing Impôt de solidarité sur la fortune (ISF) – will see investors taxed solely on their real estate assets, rather than all financial assets, meaning all other wealth, such as securities, bank and financial investments, is exempt.
On real estate assets worth €1.3 million or more, IFI will apply a 0.5 percent rate to the net value of property above €800,000. Therefore, the tax is only applicable to the amount of equity an investor has in the property. For example, if an investor owns a €1.3 million property, and has €900,000 equity in it, they will pay 0.5 percent tax on the €100,000 above €800,000.
France is the most popular location for second property investment and those looking to do so may save thousands in tax as a result of the IFI, according to Hugh Wade-Jones, Managing Director of Enness International, the high-end lending division of Enness that caters for clients looking to acquire or refinance overseas properties, specifically those located in France, Monaco, the Balearics and Switzerland.
In 2017, Enness International, arranged over €297 million in French property finance. “Monaco saw the highest total loans, with €167,695,000 worth of finance arranged, followed by Cap Ferrat and Paris, with €29.85 million and €19.3 million respectively. Furthermore, Cap Ferrat saw the highest average loan amount – at €9.95 million,” said Wade-Jones, adding, “Next year will be very interesting to see how the new Wealth Tax changes affect prices and sales.”
ML: The Monaco Red Cross was created in 1948. How has the organisation evolved since then? NG: The Monaco Red Cross was created on March 3, 1948 by Prince Louis II. In 1949, Prince Rainier III took over the Chairmanship until 1958, when he handed over this responsibility to his wife, Princess Grace of Monaco, who successfully developed the National Society while pursuing the actions undertaken by her predecessors. Since 1982, HSH Prince Albert took over from his mother as Chair of the Monegasque Red Cross, and has really been committed while undertaking all activities, both locally and internationally.
The Monegasque Red Cross (MRC) is presided over by Prince Albert and is assisted by a Board of Directors of 15 members appointed for three years by Sovereign Ordinance. Between two meetings of the Board of Directors, it’s the more restricted body, the Executive Committee, which ensures the proper functioning of the company.
In addition to the President, it includes the Vice-President, Mr Philippe Narmino, the Secretary General, Mr Frédéric Platini, the Treasurer General, Mrs Bettina Ragazzoni, and the Councilor, Dr Michel-Yves Mourou.
The National Society of the Red Cross of Monaco is constituted on the basis of the Geneva Convention of August 12, 1949 to which the Principality of Monaco belongs, and of the seven Fundamental Principles of the Red Cross adopted unanimously by the International Red Cross Conference in Vienna in October 1965: Humanity, Impartiality, Neutrality, Independence, Voluntary nature, Unity and Universality.
Since 1948, the MRC has been working with the most vulnerable. Through its role as an auxiliary of the public authorities, it helps those with a link – nationality, residence, work, schooling – with the Principality.
In recent years an economic crisis has had visible and profound social consequences, particularly for the elderly and the isolated, and the Monaco Red Cross has therefore adapted to this growing demand in the fields of social assistance and health, as well as providing first aid and international action.
ML: Could you give us some key facts and figures about the association? NG: Here are some key figures from the Monaco Red Cross in 2016:
11 Sections and Services
550 volunteers in Monaco
109,450 hours of volunteer work during the year
60,925 hours of presence at emergency stations in the Principality
290 nurses’ shifts for emergency stations
10 countries of intervention of our teams
70,700 direct beneficiaries worldwide and in Monaco
1,120 visits to the Social Service’s cloakroom
560 children took part in a Red Cross activity
90 children attending our nursery/day-care facilities
3,080 hours of sewing by our retirement residence and workshop sections
60 articles in the press about our actions
ML: You are “recognised by the International Committee of the Red Cross and admitted to the International Federation of Red Cross and Red Crescent Societies”. Why is this recognition important? NG: The International Red Cross and Red Crescent Movement is the largest humanitarian network in the world. Neutral and impartial, it provides protection and assistance to communities affected by disasters and conflicts. It is not recognition but an intrinsic link between the various organs of the movement.
The movement consists of three main components: The International Committee of the Red Cross (ICRC); The International Federation of Red Cross and Red Crescent Societies; and the National Red Cross and Red Crescent Societies such as the Monaco Red Cross.
The various members of the Movement work in close partnership to help vulnerable communities to become stronger and safer through a wide range of development projects and humanitarian programs. The Movement also works with governments, donors and other aid agencies to help vulnerable people around the world.
The Red Cross and Red Crescent movement is particularly well positioned to tackle the complex humanitarian challenges of our time. Some 190 National Societies are part of the movement and employ 300,000 people around the world. But they are mainly based on voluntary service and 17 million volunteers work in these National Societies today.
The National Societies programs and services are designed to meet both short- and long-term needs. This includes emergency aid, disaster preparedness, community health and care, first aid (including training), re-establishment of family ties in crisis situations, and youth mobilisation and volunteers.
ML: Humanitarian missions are not always associated with a privileged country like Monaco. What are your daily activities and what projects have you recently implemented? NG: The increase in poverty, economic crisis and proliferation of precarious situations are all factors that lead people from all walks of life to seek social assistance from the Monaco Red Cross, even in the Principality.
The Social Service of the CRM provides a listening ear and psychological support on a daily basis, in order to guide people, to accompany them and to help them financially or materially.
We are faced with an increase in the number of cases handled (which has tripled since 2000), following the recruitment in 2015 of two people (one receptionist and one additional social worker); from 578 cases in 2015 to 688 in 2016 (+ 20%).
First Aid Section Rescuers must provide emergency stations, requested by the State and the various associations, during sports, social and cultural events taking place in the Principality; reinforce sister societies during floods, attacks, aid stations; participate in exercises of civil security in the Principality and abroad.
This year, we reorganised the Section to meet the increasing demand for emergency stations and training needs: + 20% of emergency stations from 2015 to 2016.
Nursing Section This Section participates in our country’s health policy in terms of prevention and health education, prevention of risk behaviour and safety attitude. It also manages training for volunteers.
Pôle Avenir It was established on January 1, 2016, to provide special support to young people as beneficiaries, volunteers and leaders. The Pôle Avenir has alone reached out to more than 500 children and young people.
Young volunteer members meet regularly to draw up a plan of action and achieve four goals: to strengthen the capacity of the MRC, to increase the share of young people in MRC, to improve the image, and to increase the volume of the activities of the MRC.
Four Nursing Homes, the CHPG & the Rainier III Gerontology Centre Volunteer teams bring comfort and affection to residents and patients, and organise weekly activities throughout the year: snacks, outings, parties, bouquet competitions, lotos, Carnival, Easter, Christmas, Tortell (Gâteau des Rois)…
Rosine Sanmori daycare This facility meets the needs of parents to enable them reconcile family and professional life by welcoming their young children under conditions conducive to their development and growth.
The Workshop Volunteers meet on Wednesday afternoons to do needlework (sewing, knitting, crochet) to produce items to be sold at the Annual Flea Market and meet demands from other Sections.
International Humanitarian Section This Section is able to meet the needs expressed by the most vulnerable populations in the world and to act in each of the three levels of intervention of humanitarian aid: emergency, rehabilitation and development.
Flagship project 2017 One of our flagship projects in 2017 will be the inauguration of the Loumbila Multipurpose Learning Centre in Burkina Faso, made with the containers that constituted the Monaco Pavilion at the Universal Exhibition in Milan in 2015. This centre will aim at training in the field of first aid for the West African sub-region and vocational training in the hotel and restaurant sector.
This year, we have helped raise awareness, educate and rescued more than 70,700 people, that is 22% more than in 2015 (57,514 in 2015).
These simple figures alone lay emphasis on the dedication and hard work of the 550 volunteer members and 50 employees of the MRC.
In a changing environment where natural disasters, economic crises and migratory phenomena are felt at the gates of the Principality of Monaco, the Monaco Red Cross maybe solicited in future more than ever before.
ML: What are your main events in Monaco, especially at Christmas? NG: The Monaco Red Cross organises numerous events throughout the year.
The flagship event is undoubtedly its prestigious Gala held annually at the Monte-Carlo’s Sporting Salle des Etoiles, in the presence of HSH Prince Albert II, President of the Monaco Red Cross and his Family.
Each year, the MRC is offered a work of art created specially by a renowned artist. This fabulous evening, featuring world-renowned artists, allows MRC to express its gratitude to the generous donors, and to welcome the actions carried out with the help of donations: financing through its local and international activities.
This past winter, and during the holidays, the Monaco Red Cross organised to bring a little well-being and sweetness to more than 900 beneficiaries.
Social service: a touch of humanity for more than 300 people Under the watchful eye of social workers, MRC volunteers prepared 169 food and gift parcels for the elderly registered on the Monaco Red Cross list, and the beneficiaries of the Collectif Réfugiés d’Orient. The Princely Couple presided over a ceremony held for the event.
Another 121 people, living in Beausoleil or La Turbie, in nursing homes, in hospitals, or beneficiaries of Saint-Vincent de Paul, were also able to receive these Christmas parcels. The detainees of Monaco Prison were not forgotten, to whom 35 packages of sweets were delivered.
Magic for the youngest The Rosine Sanmori nursery, located in Fontvieille, was festive again, with a show prepared by the children for the Princely Couple on the theme of the five senses. HSH Prince Albert and Princess Charlene then distributed beautiful gifts to the 97 toddlers.
The children of the staff of the Monaco Red Cross also had their moment of celebration, and received gifts and chocolates at the headquarters of the organisation, in the presence of Santa, who had invited young and old to share this moment in the Salon d’honneur at the foot of the big fir tree.
Finally, again this year, Christmas gifts were distributed to the young guests at the Foyer de l’Enfance Princesse Charlène, to whom the Princely Couple honoured with a visit. On this occasion, young and old had made Christmas decorations and desserts.
A comforting Christmas for more than 500 elderly or hospitalised people The Monaco Red Cross also has a presence in four retirement homes in the Principality. And the Christmas holidays, with their gift distributions, are much awaited by the residents. HSH Princess Stephanie paid a visit to Cape Fleuri and Qietüdine, while HSH Princess Caroline visited Bellando de Castro and Residence Giaume. In total, more than 300 elderly people living in nursing homes received gifts and a moment of magic thanks to the assistance of the Monaco Red Cross.
Princess Grace Hospital was visited by Prince Albert II of Monaco, who, with the help of volunteers, distributed boxes of chocolates to patients in the digestive surgery department.
Lastly, MRC volunteers at the Rainier III Center also actively prepared the celebrations to offer gifts to the residents of the institution.
ML: What types of training do you offer? NG: Our first aid section offers many training courses throughout the year in Prevention and Civic Safety Level 1 (PSC 1), and Level 1 and 2 First Aid.
During the training, the instructors simulate accidents (concrete cases) so that the procedures are learned quite naturally. This 2-day training is entirely free. The First Aid section also trains first-aid trainers!
Finally, primary school pupils (at the moment, pilot activity at FANB), Charles III Collège, or the Albert 1er Lycée, receive first-aid training and initiation as part of their school education.
Thanks to the Monaco Red Cross, the Principality is moving towards the generalisation of the knowledge of the emergency chain, the teaching of life-saving gestures and the use of the semi-automatic defibrillator.
The Nurse section has two types of internal and external training. Internal training helps nurses integrate and coordinate in a rescue team. This is to understand and control the role of the nurse in the rescue team.
Resuscitation training is also provided by instructors external to MRC. The nursing section offers ATCN training twice a year. Its concept allows a systematic treatment of the seriously injured and strengthens the collaboration between doctor and nurse.
The nursing section also helps to train the youngest with workshops on diet, the effects of the sun, or, for teenagers, sexuality and transmission of diseases.
Other training programmes are also available , especially to younger people, including international humanitarian law, knowledge of the solidarity environment and work on certain current issues, humanitarian principles and values.
ML: What message do you want to convey to the people of Monaco about what you do and what support you need? NG: With the ever-evolving world, the Monaco Red Cross must renew its vision. MRC’s activities are in line with the “Strategic Plan 2016-2020” of the International Federation of Red Cross and Red Crescent Societies, in particular:
Saving lives, protecting livelihoods and enhancing recovery from disasters and crises
Promoting healthy and safe lifestyles
Promoting social integration and a culture of non-violence and peace
To date, the CRM counts over 550 volunteers for the implementation of all these activities. Some wish to engage in humanitarian action, or simply wish to make themselves useful and acquire new skills. Volunteering being one of the seven principles of the International Red Cross and Red Crescent Movement, we pay special attention to the development of our volunteers. Each of them wants above all to contribute their time and share a unique experience. Choosing to join Monaco Red Cross volunteers means choosing to commit to serving those who are struggling on a daily basis.
The CRM is always in need of volunteers, without them our Society would not accomplish its goals.
ML: How can someone become a volunteer? NG: You can become a volunteer member of the MRC as of age 16, by engaging in one of our solidarity actions. Rescuer, animator, logistician or just listening, everyone can join our teams and share a unique experience.
The tasks entrusted to the volunteer correspond to their tastes and skills. As long as their abilities meet specific needs in an appropriate context, everyone can be useful in an activity that interests them for several reasons: to engage with those who are in distress, to take their true place in the community, acquire knowledge, open up to others, develop skills, maintain an activity and status during retirement, exploit professional knowledge.
From a few hours a month to a week a year or part-time hours, volunteering makes use of all types of availability, including one-off.
Students are not always regularly available during the school year, especially during exam periods. One-off solidarity actions (a weekend, a week) suit them better. These activities can represent as many opportunities of enriching experiences – possibly in the form of internships – as part of their initial training.
Retirees are more available on weekdays at “working hours”, and their experience renders them particularly valuable for the daily operation of MRC.
Jobseekers, while looking for a paid activity, can maintain a quasi-professional rhythm with fixed schedules and possibly acquire additional experience.
Apart from the activity itself, volunteers are regularly invited to information meetings, meetings for exchanges of experiences, and for distribution of tasks.
Volunteering involves rights and duties, thus forming a real exchange between the volunteer and the Monaco Red Cross.
Our commitments:
Welcome and consider the volunteer as a full-fledged collaborator
Give them clear information about our organisation, its objectives and its operation
Entrust them with an activity that suits them
Provide their training and support
Help them to integrate and flourish within the team
Cover them with adequate insurance
The commitments of our volunteers:
Accept the Principles and Values of our Movement and comply with our objectives
Feel responsible and supportive of MRC’s promotion and development
Regularly follow-up proposed training activities
Manage the chosen activity with seriousness, discretion and regularity
Work together in a spirit of mutual understanding with other volunteers and employees
The MRC would like to express its appreciation and profound gratitude to its benefactors and volunteers, for their commitment and unwavering generosity are a valuable and essential support.
Family Wealth Background We are witnessing an era of unprecedented transfer of wealth from one generation to the next as the world’s most affluent individuals approach retirement and contemplate their succession and wealth planning issues.
The needs of these families are extensive, complicated, and require expert advice, so many are considering a Family Office to help them manage this transition and provide a crucially provide a framework for the Next Generation (Next Gen).
The problem is especially difficult for many advisers is that they are ill-equipped to connect with these Next Gen clients who are technology savvy and expect a very different service experience than their parents did.
Wealth Transfer in numbers There were 187,500 global Ultra High-Net-Worth Individuals (UHNWI), those with investable assets of over $30 million, in 2016, according to Knight Frank in their annual Wealth Report.
According to Bank of America the great transfer of wealth will see a handover of about $12 trillion from those born in 1920s and 1930s to the Baby Boomers. However, the Boomers are expected to transfer some $30 trillion in assets to their heirs over the next 30-40 years in just the US alone.
This transfer of wealth is staggering in its size and also in its execution as the children may not share the same goals or aspirations as their parents.
The simple, undeniable truth is this: 66% of children fire their parents’ advisers after they inherit their parents’ wealth, according to an InvestmentNews survey of 544 advisers in April 2015. However, with proper guidance, these new heirs will need to be better stewards of their family’s wealth than past generations.
According to oft-cited research of 3,250 families conducted in 2003 by Mr Preisser and Roy Williams, an independent wealth transfer consultant, 70% of family money disappears by the end of the second generation, and 90% is gone by the end of the third (this is “the shirt sleeves to shirt sleeves in 3 generations” analogy often cited).
Franco Lombardo, Veritage Family Office, a specialist in working with Next Gen clients: ”Bringing up wealth transfer with clients shows them you care about the future success of their children; it can be a huge differentiator, it’s about taking the current relationships to a deeper level.”
We will return to this crucial subject of the Next Gen in our next White Paper.
What is a Family Office? This is a question that perplexes even those who work in the profession a every Family Office is not the same so “when you have seen one Family you have seen one Family Office”.
The tax, legal, business and regulatory environment for entrepreneurial families is constantly changing and not always favourably, which presents both obstacles and opportunities for families around the world.
Because family offices are, by definition, unique, involving complex and often idiosyncratic structures, critical decisions reached in one area of importance for the family will invariably lead to consequences, intended or otherwise, in another.
With families now facing an ever-growing array of complicated issues affecting every facet of their global business endeavours, it has become mission critical for them to develop a comprehensive strategy deeply grounded in their stated values, and fully aligned with their cross-generational vision.
A modern Family Office exists primarily to centralise, preserve and transfer significant family wealth across generations while at the same time acting as an effective inter-generational safeguard and touchstone for the family’s collective values, aspirations, heritage and legacy.
While the Family Office may not appear officially on an organisation chart detailing the family’s business holdings, it will frequently operate as the strategic catalyst for the family’s various enterprises.
What services does a Family Office provide? A Single Family Office (for those with a net worth above USD $500m) is often structured as a formalised independent business entity or, alternatively, as a cost centre embedded within a private operating company, with the goal of centralising services for the family.
This operation is usually out of reach to only the super wealthy, so a Multi Family Office (MFO) will typically supply an outsourced, but extremely comprehensive solution to managing a family’s wealth and financial affairs.
The Family Office will handle a myriad of issues including wealth advisory and investment services, data aggregation and performance reporting, corporate and family governance, accounting, tax and legal issues, estate planning, philanthropy, risk mitigation, IT security, family education, as well as integrated personal financial planning.
As each family requires different solutions no mandate is ever the same, so each client has a bespoke solution created for them.
A Family Office may also specialise in managing the wealth of multiple generations within a family and advising on inter-generational wealth transfers and the financial security of family members.
For a select handful of global families, creating their own single family office may make sense in planning for the future. However, for the overwhelming majority, the administrative expenses, management concerns and compliance requirements swirling around the day-to-day operations of a single family office are astonishingly complex and utterly cost prohibitive.
This has therefore given rise to the independent MFO model, of which Cavendish Family Office has modelled its services around.
Finding the right MFO Designing and implementing an MFO to customise a family’s unique circumstances and strategic requirements will certainly involve thoughtful discussion, careful preparation and nuanced execution, including consideration of key threshold questions that should ultimately help to frame an earnest and honest conversation amongst members of the family:
Where is the family in the life cycle of wealth? (i.e. first-generation entrepreneurial wealth versus multi-generation established family fortune)
What is the family’s collective vision and game plan for the next 5, 10, 15 years and what is the family prepared to sacrifice in order to achieve this success?
What are the family’s special financial and personal goals and how do they align with one another?
Is the strategic objective to preserve family values or family assets or both?
Is the family genuinely aligned in its desire to implement a Family Office structure?
Experience reveals that a number of discreet indicators (perhaps better stated as “pain points”) may often prompt a family to take deliberate and immediate action towards adopting some variety of Family Office model.
Alignment
The family’s immediate financial horizon has become increasingly murky and uncertain, and family leaders have become overwhelmed with the details and financial minutiae required to manage increasingly tangled family matters and business operations, spurring a strong desire to achieve superior alignment between family advisors and family members.
Framework
The family wealth creator is considering alternative goals and benchmarks for the family business and requires a formal roadmap and aligned team in order to pivot successfully to the next stage.
Strategy
The family has multi-generational intentions and objectives, however it can no longer clearly and cogently articulate its long-term vision. Moreover, certain family members have moved in different and often incompatible directions from the strategic goals and aspirations originally embraced by the family.
Family Cohesion
Following a liquidity event or anticipated transfer of family wealth, a Family Office model can serve as a focal point of identification and cohesion for family members regarding any number of critical issues, including business exit planning and value acceleration considerations.
Privacy and Confidentiality
The overarching priority for the family has become to ensure absolute privacy and preserve strict confidentiality on all levels.
Succession Planning The family has not selected a qualified successor and no clearly defined succession plan has yet to be considered.
Wealth Preservation
While the family has been traditionally focused on cost control, allocation, investment returns and dividend policy, wealth preservation is now becoming a rapidly growing priority owing to deep-seated concerns surrounding family cohesion and inevitable generational transitions.
Governance Architecture
Multi-generational family members are becoming increasingly alarmed that no formal governance architecture has been put into place to provide an effective and efficient operating structure by which to guide the family to the next level.
Information Overload Critical family information has evolved into an eclectic amalgam of current and relevant, but also outdated and useless, information that is frequently impossible to decipher. The personal coordination of various investment managers, tax information and estate planning documentation has quite simply become overwhelming, chaotic and confused.
Regulatory Regime
The domestic and international tax, legal and regulatory regimes are constantly changing and more complex to manage, as the family’s social and business relationships similarly evolve to include other like-minded families around the world.
Perils of group think A certain amount of insularity may begin to settle in, and a “group think” mind- set can emerge within a family. Consistently reaching out to solicit advice and new ideas should help to mitigate this risk.
Desire for flexibility The Family Office journey requires a sustained commitment of time, energy and resources to the mission, which may reduce the family’s capability and bandwidth to pursue new business ventures or other opportunities. The family’s desire to maintain maximum flexibility may argue for pursuing a Family Office strategy.
Evaluating the financial component A full-service Single Family Office can easily cost more than USD $1 million annually to operate, and in many instances may cost considerably more. The single largest components are consistently compensation and benefits, which together generally average around 60% of the total, followed by office overhead at 12%-15%.
From a benchmarking perspective, Family Office costs are typically defined as a percentage of wealth (liquid and illiquid) and can vary widely depending on the nature of the wealth and the range of professional services required. A general rule of thumb is that annual costs will typically range between 50 and 150 basis points. A smaller Family Office will frequently come in at the higher end of the range because it has fewer economies of scale.
Resources and related costs for a Single Family Office are both internal and external:
Internal costs include staff compensation and benefits, training and education, premises and infrastructure upkeep, office operations and overhead, technology and cybersecurity, and in-house regulatory costs.
External costs include all the services and functions required by the family that are not otherwise covered internally.
Whether to house a specific family office function internally or externally will depend on a number of factors including economies of scale, relative need for control, and the degree of active management required on components of wealth that may be unique to the family, amongst other factors.
A key additional consideration is the increased demand on free cash flow that a family office will require, which is in addition to funds required to cover the economically efficient operations.
In this instance an MFO may negate a number of the economic disadvantages of an SFO, as an MFO is generally better positioned to spread the cost of investments over a larger asset base and achieve higher cost efficiencies.
While a SFO can be established at a lower cost (assuming you have a net worth above USD $500m to justify it), its range will likely be limited to rudimentary services: administration, control of assets, consolidation and risk management.
For families on the cusp, where this narrower scope may be problematic, the tailored services of a multi-disciplinary MFO may make more sense than a stand-alone SFO.
A SFO by its nature is not as cost effective as an MFO (owing to its relative lack of scale), it will be called upon to revisit and re- evaluate its overall cost structure in order to maintain economically efficient operations.
Conclusions Highly successful families and family businesses the world over face an increasingly diverse and distinctly challenging array of risks and opportunities in today’s hyper-connected global business environment. Entrepreneurial families clearly have unique needs and requirements in comparison to corporate business operations. Similar challenges confront Family Offices around the world.
The breadth, scope and focus of a Family Office are as unique and personal as the family that creates it. While the primary functions of a Family Office are to centralise the management and preservation of the family fortune and to effect over time a financially astute and tax- efficient transfer of the family’s wealth, additional critical Family Office functions include family governance, estate planning, philanthropy, education and maintaining a critical complement to the core family business to the extent it continues to operate in family hands.
Fashioning a successful Family Office is a business process requiring a clear vision, a realistic business plan, a thorough understanding of the resources available internally and externally and a granular roadmap by which to design, launch and operate.
The decision whether to embed certain functions in your own Family Office, or outsource all or part of the functions to an MFO, can be as weighty as many of the decisions that led to creating the family’s wealth in the first place.
It is always in the best interests of a family to seek out the broad experience and wise counsel of recognised experts and trusted advisors in the Family Office community as it evaluates the benefits and opportunities, as well as the challenges and drawbacks, of designing and implementing a Family Office structure.
Article first published March 1, 2017. Mark Estcourt is CEO of Cavendish Family Office in London. For more information, see cavfo.com.
