Our Thoughts

by Russ Alan Prince

The uncertainty surrounding the coronavirus named Covid-19 is forcing action by governments, businesses and large swaths of the population. It is also prompting strategic and tactical action by many of the world’s super-rich with a net worth of $500 million or more.

“We’re seeing a large percentage of wealthy families take action to protect themselves and also their businesses and the people who work for them," said Cliff Oberlin, chairman and CEO Oberlin Wealth Partners.

"A greater reliance on private jets, the ability to have their families stay at possibly ‘safer locations’ and preferential access to the best medical resources are all approaches they are using to protect themselves. However, their actions usually don’t stop with their families. They are also—because of their concern for the people that work for them—are taking steps to keep them well informed and provide them with additional medical and other resources.”

By Russ Alan Prince

In the last decade, the family office has become the preferred business model by the wealthy – especially the very wealthy. A number of factors have contributed to this including the explosion in private wealth at the high end.

“Throughout the world, the wealthy have gotten much wealthier, and there are more of them than ever before,” says Angelo Robles, founder and CEO of the Family Office Association. “This increase in private wealth is fostering the creation of more and more single-family offices. Other types of providers are not doing a good job addressing the requirements and preferences of these hyper-successful families, which also contributes to the increase.”

It is not only at the top of the economic pyramid where family offices are multiplying. “The promise of a family office is that it addresses – using the best talent there is – the needs and wants of the family,” explains Peter Sasaki, Managing Member of SDS family Office and co-author of Maximizing Your Single-Family Office: Leveraging the Power of Outsourcing and Stress Testing. “Who wouldn’t want high customization using the best-of-the-best providers? Because of the strategic use of external experts, it’s now possible to deliver the promise of the family office to families that previously couldn’t afford to set up a single-family office.”

By Cliff Oberlin, Chairman and CEO, Oberlin Wealth Management

Family offices are quickly becoming the preferred way the wealthy, and even more so the very wealthy, are managing their monies and a good portion of their lives. The reasoning is simple: family offices are delivering superior results and a better experience than the alternatives.

The complication is that to get the superior results and better experience families have to work with high-performing family offices. Clearly, working with a badly operating family office is regularly unproductive. All high-performing family offices, including single-family offices, multi-family offices, and the newer variation of virtual family offices, rely on three drivers of exceptionalism.

According to Russ Alan Prince, one of the foremost authorities on family offices and co-author of Your Optimal Financial World: How Driven Entrepreneurs Benefit from High-Preforming Virtual Family Offices,

“The three drivers of all high-performing family offices are the human element, a cohesive team, and systematic processes. As high-performing family offices are able to provide all the expertise any particular individual or family requires, it’s all about understanding what is needed and wanted, having the network to get whatever is required, and doing so methodically.”

By Cliff Oberlin, Chairman and CEO, Oberlin Wealth Management

Just about everyone, irrespective of wealth, is subject to taxes, and everyone will one day die. Notwithstanding the smartest legal maneuvering, many of the wealthiest families worldwide will either owe inheritance or estate taxes. To deal with these taxes, one of the most effective tools is life insurance.

According to Frank Seneco, President of Seneco and Associates, a leading life insurance specialist, “For very wealthy families, life insurance has two main advantages. One is the certainty of the death benefit. There is no question that at death there will be a specific amount of money available to the family to address taxes and other concerns. The other advantage is the cost-effectiveness of life insurance. When done well, life insurance for many very wealthy families is the best economical solution for these taxes.”

In working with extremely wealthy families the world over on addressing inheritance and estate taxes, a good place to start is by evaluating the quality and viability of their current life insurance.

“The complexity of the lives of the very wealthy often means that it’s smart to regularly gage if their existing life insurance effectively meets their needs,” says Rudi Eyl, President of Bremen Capital Group Family Office. “When we do this, we often find everything is good. However, when their life insurance portfolios are not made up of the best policies, adverse results can be very severe.”