Choosing the right ring

Time and time again I hear the same concerns being voiced even by those with family offices: ‘I am not sure my adviser is up to speed with all the dangers and risks – he lacks direction’ and ‘I need to protect my assets and privacy, but my adviser seems lost as to what to do’ or ‘My CIO does not seem to be plugged into direct investment opportunities, I do not want to pay fund managers more than I am making out of my own money’. 

It is impossible for any one given adviser to know it all. Here are my suggestions.

I have been spending the last two weeks re-reading the copy of my sold out book When you are Super Rich who can you Trust, first published in 2014. I am updating it, as well as its sister book – Uncovering Secrets on How to Win Business from Private Clients in preparation for our re-launch on 11th October. I was surprised at how much has changed in only three years.

We all know that wealthy families are always fingered for money but over the last three years it has gotten much worse. Their offshore financial data is due now to be exchanged automatically and their private bankers have been gagged in giving advice; banks have been fined $320 billion since 2008!

It is not rocket science to learn that UHNW families want to be in control of their wealth, if they are to enjoy it. But gone are the days when one suitable homme d’affaire was all that was needed to guide the family to opportunities and steer them away from the pitfalls.

Gone also are the days when advisers would ‘own’ their client. Keeping their clients sweet with a wall of obfuscation, impenetrable jargon, intimidation and flattery. Families are now actively looking for a new dawn and the family office, despite its meteoric rise, is not by itself the solution.  

Many have come to realise that in this complex world, and even more now than three years ago, that it is impossible for any one adviser to be able to guide their family to the best opportunities and away from the pitfalls and traps. There is now no substitute for each family having their own team or cabinet – or what I call the Ring of Confidence.

The advice I give in my book, and the one I work on with my client families (if not the founder then the second generation), is first know what you are hoping to achieve, and what you fear. Unless the family is clearly aware of their goals and traps, it will never be able to pick the best team of advisers.

You may think setting goals is obvious – make more; lose less – but, when you drill down into the detail, it is usually much more complex. Some families like to collect art, support their charity, avoid litigation, groom the next generation to take meaningful positions in the business, smooth succession and so on. Unless these goals are understood, the inner circle may not be suitably well balanced.

It is only when the goals are fully understood that tan the Ring of Confidence can be selected, reviewed and built.

Second, the structure in which they work needs to make the team work together, not in silos.

A business run by a company has a board of directors who meet. They know what the business goals are, which should be clearly set out in the business plan. They meet together, knowing that each Director has something to contribute to the proper running of the business and they need to hear what the other advisers are saying, since it may impact on their area of expertise.

When I first wrote my book When you are Super Rich Who can you Trust?  in 2014 having a Ring of Confidence run on a commercial basis, was a nice to have. In most cases their financial assets were offshore; out of sight and out of mind. This is now no longer possible. Running your Ring of Confidence on a commercial basis is no longer a nice to have, but a must have.

The time to act is NOW.

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