For more information contact: emailus@marcusevans.com Michael Zeuner from WE Family Offices and a speaker at the marcus evans Private Wealth Management Summit Fall 2013, held in Las Vegas, NV, delivered his presentation entitled "The Business of the Family: Looking through the Lens of the Wealth Enterprise". Join the 2014 Private Wealth Management Summit along with leading regional investors in an intimate environment for a highly focused discussion on the latest investment strategies in the market. For more information contact: emailus@marcusevans.com

1. The Wealth Enterprise:
TREATING THE FAMILY WEALTH
AS A FAMILY BUSINESS
October
O t b 21, 2013

2. Smith Family
Family Structure
Mr. & Mrs. Smith
3 Adult Children
$200 Million Net Worth
Operating Company Net Worth
Liquid Wealth
$100 Million
$100 Million
Liquidity/Investment Profile
Relationships With 3 Primary Financial Institutions/Private Banks
150 Distinct Investments (Passive, Active & Partnerships)
(Passive
12 Distinct Ownership Structures For Estate Planning Purposes
50 Distinct Financial Accounts
19 Tax Entities
100+ K-1s
2

3. An Interview With The Principals Around The
Business Enterprise ($100 Million):
What’s the mission of the company?
What’s the s a egy for value c ea o
a s e strategy o a ue creation?
What does your P&L look like?
How much do you spend on critical activities and suppliers to
your company?
Do you have high quality MIS to support your decision
decisionmaking?
What s
What’s your plan for succession in key roles?
3

4. An Interview With The Principal Around The
Wealth Enterprise ($100 Million)
What s
What’s the mission and purpose of your wealth?
What’s are the objectives – short term and long term – for your
wealth?
Do you have high quality MIS to support your wealth management
decision-making?
How do you make decisions around your wealth and who’s involved
in decision making?
decision-making?
What’s your plan for succession and education?
What is your ecos stem of pro iders what role does each pla and
o r ecosystem providers, hat
play,
how much are you paying, all in, to your financial services providers?
4

5. The Wealth Management Paradox
Families that are successful in creating wealth do not always apply
the same best practices they use to manage their business
enterprise, when managing their personal wealth enterprise
Families often abdicate, rather than delegate, critical wealth
management decisions, something they would never do with
respect to their operating companies
5

6. Perhaps One Reason Why Is That Managing A Wealth
Why,
Enterprise May Be More Complex Than Managing A
Business Enterprise
Business Enterprise Seeks To Maximize Financial
Capital
C it l
Wealth Enterprise See s To Maximize Financial Cap a
ea
e p se Seeks o a
e
a c a Capital
PLUS The Family’s Human & Intellectual Capital
6

7. Managing Wealth As An Enterprise Entails Three
Primary Activities
Strategy,
Strategy,
Structure &
Governance
Family
Wealth
Enterprise
Wealth
Management
M
t
Activities
Ecosystem
y
of Providers
7

8. Strategy, Structure & Governance
St ategy, St uctu e Gove a ce
Conceptualize wealth as a “business”, NAME it, and map out all the pieces
Establish a mission and strategy – short term and long term
Define decision-making and governance f
D fi d i i
ki
d
framework f th enterprise
k for the t
i
Articulate key roles in the management of the enterprise and who inside
and outside the family will play what roles
Be explicit about succession for key roles and have development plans for
leaders identified to take on key roles in the future
8

9. Wealth Management Activities
Wea t
a age e t ct v t es
A complex and inter-locking set of activities
Values
& Mission
Governance &
Education
Investment Advisory
I
t
t Ad i
(Asset Allocation; Portfolio
Construction; Manager Selection;
Performance Measurement)
Financial & Estate Planning
and Risk Management
Financial Administration
(Expense Management/General Ledger; Cash Flow; Net
Worth; Tax Compliance; Reporting
9

10. Ecosystem Of Providers
cosyste O
ov de s
Given the complex set of activities – a
complex network of providers is often
necessary
The ecosystem needs to be managed
Map the current set of providers
Understand fees and manage
expenses
Coordinate across providers
Ensure all are working around
E
ll
ki
d
the family’s “big picture” and in
support of the family’s strategy
10

11. Managing Wealth As An Enterprise Means
Thinking Strategically About The Ecosystem O
g St ateg ca y bout e cosyste Of
Providers
Understand each provider’s role
Understand your role
Understand the implications
11

12. Understanding Each Provider’s Role
Provider s
The simple truth: all wealth management
firms sound the same in their marketing
material
The stark reality: there are fundamental
and important differences between wealth
managers
12

13. Cutting Through The Clutter: The Key
Diff
Differences
Manufacturers
Create & Sell Products
Sell To Investors Directly Or Through Distributors (banks, brokerage
firms, RIAs)
Paid by investors in funds – management fees
Distributors
Sell Products To Their Clients
Products Sourced From Manufacturers
Affiliated Asset Management Units
Unaffiliated Asset Management Firms (Open Architecture)
Paid by clients and by manufacturers for whom they distribute
Advisors
Advise Clients On Which Products To Buy
Unaffiliated With A Manufacturer Or Distributor (Ideally)
Paid Only By The Clients They Represent (
y y
y
p
(Ideally)
y)
13

14. When Mapping Your Ecosystem – Identify
Whi h Role Each Firm I Pl i
Which R l E h Fi
Is Playing
Which firms are “providers”:
providers :
manufacturers and distributors
Which firms are “advisors”: paid by you to
represent you and buy/source for your
What l do
Wh t role d you want t play
t to l
14

15. Implications To Your Role Of Working With Each
T
Ad i
Type Of Advisor
Working Directly With Manufacturers:
Can be economically beneficial by avoiding the added cost of
the distribution firms
Sourcing and diligence across all asset classes can be a
challenge
Integrating across all providers to be sure they are not working
at cross purposes & in consort with your objectives
t
i
t ith
bj ti
Need to solve for getting support around overall asset
p
allocation & portfolio construction
Need to solve for aggregated reporting and risk analytics
Need to solve for quality control
15

16. Implications To Your Role Of Working With Each
T
Ad i
Type Of Advisor
Working With Distributors:
Category with which most families have familiarity and
longstanding relationships
Conflicts of interest and high costs can be a challenge
Need to solve for being sure the “right” products are being
bought at the “right” price for the “right” reasons
Need to solve for aggregated reporting and risk analytics
across providers since most families work with multiple
“distributor” firms
Need to solve for integration across providers
Need to solve for quality control
16

17. Implications To Your Role Of Working With Each
T
Ad i
Type Of Advisor
Working With Advisors:
Category which can help families solve for challenges of working
directly with manufacturers or distributors
Sourcing
g
Avoiding conflicts of interest
Buying/Negotiating
Aggregated Reporting
Quality Control
y
Requires families to pay an explicit fee
Not all advisors are the same with respect to
Allowing you to stay in control
Accommodating your unique constraints and preferences
Accommodating your desire to work with more traditional wealth managers
(
(manufacturers and distributors)
)
17

18. There Is No “Right” Answer
Right
But thinking strategically about your
ecosystem of providers – just as you
would about the providers for your
business enterprise – is a critical activity
Being clinical about which providers are
playing what role and what role you
therefore have to play, is essential
18

19. Bottom Line: Making Sure Your Enterprise
Management F
M
t Function Is Explicit & I t ti
ti I E li it Intentional
l
Strategy,
Strategy
Structure &
Governance
Family
F il
Wealth
Enterprise
Wealth
Management
Activities
Ecosystem
of Providers
19

20. By Thinking Of Their Wealth As An Enterprise, A
Family Can Achieve Significant Benefits
Think of developing the family’s wealth as a business or
professional endeavor
Manage wealth in a purposeful, strategic manner
Take a greater role in managing the enterprise and those they hire
to support them.
Focus on effective decision-making, governance and
succession/leadership preparation
20

21. Continued….
Be explicit about all of the activities required to manage wealth,
how they are connected, and identify the most effective providers to
accomplish each activity
p
y
Have robust information systems and reporting that allows them to
measure progress and support decision-making
p g
pp
g
Buy only those products and services that are right for them, at the
right p
g price.
21

22. info@wefamilyoffices.com I www.wefamilyoffices.com
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