What Wealthy Families Want

8/12/2019 What Wealthy Families Want

1/17

A R E T H E F O U R N O B L E P R O F E S S I O N S U PT O T H E C H A L L E N G E S P O S E D B Y

D I S R U P T I V E C H A N G E A N D D E D I C A T E DT O T H E S E R V I C E O F T H E W E A L T H Y ?

WHAT WEALTHY

FAMILIES WANT

LA JOLLA ESTATE PLANNING, TRUST AND PROBATE SECTION

J U N E 6 , 2 0 1 3


2/17


3/17

THE CHALLENGE

There exists a New Reality for those whodesire to serve wealthy families, because

these families exist in a world of rapid anddisruptive change. Will the four NobleProfessions be able to contributesignificantly in this new world order?


4/17

FIRST: LETS FOLLOW THE MONEY

Global liquidity does not exist

US: liquidity back to work indomestic economy

EURO: liquidity pushed back ontocentral bank, not working in itsdomestic economy

JAPAN: liquidity increasingbutwhere will it end up?

CHANGE: HNWF exist in a globaleconomy


5/17


6/17

WHERE THE MONEY IS WINDING UP

Shift away from traditional asset classes toprivate equity funds during/post lost decade

But long lock-ups, no flexibility, passive Proprietary deal flow was a myth (aka lie)

2/20 causes GP and LP misalignment

Thus shift to direct private equity akabuilding a business

Benefits: flexibility, control, intellectual


7/17

BUT WHAT ARE THE RISKS?

TIMEI SAID TIME

Thus not only is capital required, but so isfocus, patience, mentorship, leadership, and

benchmarking Advisors will not get on board because new

skills required: investment banking, riskassessment/mitigation, benchmarkingincluding non-financial, valuation

CHANGE: new skills, new metrics required


8/17

AND WHAT ABOUT PHILANTHROPY?

Use of Social Benefit Corporations

Use of direct Private Equity as a mentorshipand educational tool

Direct participation in communitycausesnot just writing checks

Evolution of Family Governance

CHANGE: 2nd/3rdGen professionalphilanthropists


9/17

DEMOGRAPHICS

Only 200,000 US households with investableassets + $ 10 million

At most 1,000,000 US households with networth + $ 10 million (maybe only 600,000)

CHANGE: so there are now more estateplanners in the USA than there are families

who need estate planning, especially whenyou consider only a certain % of families will

ever plan CHANGE: changing demographics will put

many planners out of business when 2nd/3rdGens make changes (by 2030: 25/50/25)


10/17

WEALTH COMES FROM DOING WHAT?

TAKING RISK (almost always concentrated)

Understanding relationship of time/risk

CHANGE: so either you are contributing to it

(benefit) or you are not (cost)this can bea differentiator as well as your succession plan

Leverage: capital, relationships, knowledge

RISK is the multiple Relationships are the glue

CHANGE: Wealth is more than just $$$$$$


11/17

SO IF I AM SELLING BELOW AND DONT LIKECHANGE WHAT CAN I DO?

Tax returns

Financial statements

Hourly billing

Basic estate planning docs, basicasset protection

Low/no return liquidity

Low/mid returns in basic way

with basic (AUM) compensation Basic life insurance

CHANGE: dontexcept for


12/17

CHANGE THIS

Les Brown: you will be the same person in5 years as you are today except for thepeople you meet and the books you read

CHANGE: align yourself with The Firm ofthe Future/ The Most Trusted Advisor

PRECEDENT CHANGE: spending way

more time in front of your best customers


13/17

QUOTES

Stability and balance are for tires andballerinas not for business leaders (me)

The illiterate of the 21stcentury will not bethose who cannot read and write, but those

who cannot learn, unlearn and relearn(Toffler)

In order to try something new, you muststop doing something old (Baker)


14/17

QUOTES CONTINUED

No person was ever honored for what hereceived. Honor has been the reward for

what he gave. (Coolidge)

Wealth is above all an accumulation ofpossibilities (Gabriel Zaid)

In the end, you will only be rememberedfor what you left behind for your

community (me)

So then if not me, then who? If not us,then who? (me)


15/17

SO WHERE TO START ANEW?

Ascertaining cost basis and FMV of allassets begins the discussion ofallocation, risk/return/time, insurance,philanthropy, legacy

Family alignment efforts then follow

CHANGE: Advisor alignment thenfollows (input inclusion, egos left at the

door, concierge facilitates, what is bestfor family)

Goal of Family Governance: allmembers THRIVE


16/17

SO MUSCIO WOULD YOU GET TO THE POINTPLEASE ??!!??!!

WEALTHY FAMILIES WANT 3 THINGS:

COHERENCE: an orderly, logical andaesthetically consistent relation of parts (aka

sticking together)

ACCRETION: growth by measurableaddition, fusion, and/or inclusion (biologicaluse: adherence of parts that are typicallyseparate)

FACE-TO-FACE TIME with their key advisors


17/17

Documents

What Wealthy Families Want