Family Wealth Management: Seven Imperatives for Successful Investing in the New World Order

Praise for Family Wealth Management "Investing with a long-term family perspective requires a deep understanding of both family and finance; Family Wealth Management addresses these two topics in a seamless fashion, providing a comprehensive reference and practical approach for families interested in preserving both lifestyle funds and legacy wealth through all types of investment environments." —H.S.H. Prince Max von und zu Liechtenstein, Chief Executive Officer, LGT Group " Family Wealth Management provides a much-needed practical guide to the intersection of family and finance. The seven imperatives and the many practical examples, case studies, and checklists will make this book an important reference piece for every wealthy family and the advisors who serve them." —John Benevides, President, CTC Consulting, Harris myCFO, LLC "Very well structured and comprehensive in its coverage, this impressive book captures many of the most valuable lessons learned by legacy families, both positive and negative. Those lessons, and the entire content of this book, can provide useful guidance for all family investors and their advisors." —Andreas Baer, Partner, Baer & Karrer "Owning, managing, and nurturing significant wealth involves hard work, discipline, and engagement. This valuable guide puts the family at the core of the complex yet comprehensible web of decisions and disciplines needed to set a family's own successful investment strategies." —Alex Scott, Executive Chairman, SandAire "Thoughtful, expert, and practical . . . highly recommended." —Iu-Jin Ong, Founder, One Global Asia Family Office and Deauville Private Office "Finally! A book that puts family investors back in the driver's seat where they belong. This excellent book provides fresh, sensible thinking and a clear forward road map for wealthy families. This family-centric approach is very positive and long overdue." —Dirk Jungé, Chairman, Pitcairn "In Family Wealth Management , Mark Daniell and Tom McCullough demonstrate that managing for sustainable and productive family wealth is all about integrating across family and finance. Not only do they make that critical point, they lay out a practical and comprehensive guide for doing just that. It should be required reading for both family leaders and their advisors." —Roger Martin, Dean, Rotman School of Management, University of Toronto "Daniell and McCullough skillfully weave theory and practice to demonstrate how successful multigenerational wealth transfer starts with a family's vision and values." —Sara Hamilton, CEO, Family Office Exchange

Foreword xi Preface xvii Acknowledgments xxix INTRODUCTION AND OVERVIEW: A CRITICAL TIME FOR FAMILY INVESTORS 1 Chapter 1 Setting Out a New Approach to Family Wealth Management 3 Chapter 2 Arriving at a Point of Inflection in the History of Family Wealth 23 Chapter 3 Addressing the Differences between Private and Institutional Investing 45 Chapter 4 Reinforcing the Importance of a Disciplined Investment Process 57 THE SEVEN IMPERATIVES 71 IMPERATIVE 1 ESTABLISH FAMILY VISION, VALUES, AND GOALS 73 Chapter 5 Documenting Family Philosophy, Vision, and Values 75 Chapter 6 Determining the Purpose of Wealth and Setting High–Level Financial Goals 89 Chapter 7 Structuring Assets and Aligning Investments to Serve Multiple Purposes 105 Chapter 8 Integrating the Family Business into Wealth Management Strategy 119 IMPERATIVE 2 SET A PRACTICAL FRAMEWORK FOR FAMILY INVESTMENT 133 Chapter 9 Rethinking Modern Portfolio Theory, Considering Goals–Based Wealth Management 135 Chapter 10 Reviewing Different Approaches to Asset Allocation 149 Chapter 11 Comprehensive Risk Management 165 IMPERATIVE 3 SET A LONG–TERM FAMILY WEALTH STRATEGY AND DEFINE THE ASSET ALLOCATION MODEL 185 Chapter 12 The Elements of Long–Term Strategy 187 Chapter 13 Investing for the Future: Mega–Themes and Principled Investment Management 199 Chapter 14 Long–Term Strategy Document (Example) 217 IMPERATIVE 4 DRAFT THE ANNUAL INVESTMENT POLICY STATEMENT AND REFINE INVESTMENT TACTICS 235 Chapter 15 Drafting the Annual Investment Policy Statement and Refi ning Investment Tactics 237 Chapter 16 Rethinking the Role of Traditional Asset Classes 249 Chapter 17 Assessing Alternative Assets and the Search for Recurring Alpha 267 Chapter 18 Selecting Individual Investments and Investment Managers 285 Chapter 19 Investment Policy Statement (Example) 299 IMPERATIVE 5 MONITOR PERFORMANCE AND RESPOND TO THE NEED FOR CHANGE 309 Chapter 20 Monitoring Performance against Internal Goals and External Benchmarks 311 Chapter 21 “White Water Investing” and the Management of Wealth in Turbulent Times 321 IMPERATIVE 6 SELECT AND MANAGE AN ECOSYSTEM OF TRUSTED FINANCIAL ADVISORS 327 Chapter 22 Designing the Ecosystem and Selecting Advisors 329 Chapter 23 The Role of the Family Office 341 IMPERATIVE 7 ENGAGE AND EDUCATE THE FAMILY 359 Chapter 24 Determining the Right Wealth Distribution Strategy 361 Chapter 25 Preparing the Family for Successful Management and Transfer of Wealth 375 CONCLUSION 393 Chapter 26 Pulling It All Together: The Successful Management and Transfer of Wealth Across Generations 395 Bibliography 403 List of Essay Writers 407 List of Figures and Tables 409 About the Authors 411 About the Raffles Family Wealth Trust 415 About Northwood Family Office 419 Index 423

MARK HAYNES DANIELL is the founder and Chairman of the Raffles Family Wealth Trust, based in Singapore. He also chairs The Cuscaden Group, his family's own private office, also based in Singapore. He is a former director of Bain & Company, one of the world's leading strategy consulting firms, where he worked for more than two decades with some of the world's wealthiest families and their businesses. Mr. Daniell has also served as director of Wasserstein Perella, a mergers and acquisitions advisory firm in London and Paris, and was the founder and chairman of Singapore's national Private Wealth Management Initiative. TOM McCULLOUGH is Chairman and CEO of Northwood Family Office LP, a Toronto-based multi-family office which serves the comprehensive financial needs of families of significant net worth. Northwood was founded in 2003 and has quickly risen to prominence as an international leader in its field. Mr. McCullough has spent thirty years in the wealth management/family office field and is also an adjunct professor of finance at the Rotman School of Management at the University of Toronto where he teaches "The Management of Private Wealth."