Advising Ultra-Affluent Clients and Family Offices / Edition 1

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Despite the downturn in financial markets, there are still alarge number of ultra-affluent individuals and families across theglobe. And in light of recent events, these clients-defined here asthose having $50 million or more in liquid assets-need help on avariety of fronts. That's why author Michael Pompian, anexperienced investment consultant in the private wealth arena, hascreated this timely guide.

Advising today's ultra-affluent clients (UACs) and familyoffices requires solid investment knowledge and the skills to dealwith "soft" issues such as family governance and philanthropy.Understanding this idea and integrating it into your professionalendeavors will put you in a better position to serve your clientsas well as excel in one of the most-dynamic segments of thefinancial services industry. Although targeted at financialpractitioners, this book is also a valuable resource for familiesconsidering whether to establish or join a family office.

Divided into four comprehensive parts, this thoughtful resourceopens with an informative introduction to advising UACs, includinga detailed discussion of which clients are considered"ultra-affluent" and an in-depth look at their attitudes,aspirations, and investment behavior. Part II outlines variousinvestment strategies for UACs, examining the best practices of topinvestment organizations and reviewing many of the alternativeinvestments available to UACs. Part III takes the time to outlinethe key aspects of advising multigenerational families-includingselecting an adviser, considerations for creating a family office,selecting an investment vehicle structure, and wealth transfer.Part IV rounds out this extensive exploration of advising theultra-affluent by covering special topics in advising UACs, such asfamily governance, equity risk management, philanthropy, assetprotection, and developing a multigenerational asset allocationstrategy.

Working with the ultra-affluent has great upside potential,especially given the generational transition of wealth that istaking place globally. In order to take advantage of thisopportunity, you need to gain a fundamental understanding of boththe investment and noninvestment issues that affect ultra-affluentclients. Advising Ultra-Affluent Clients and Family Officescontains the practical insights and expert advice that will allowreaders to successfully navigate this complex field and effectivelyserve some of today's most sophisticated investors.

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Product Details

  • ISBN-13: 9780470282311
  • Publisher: Wiley
  • Publication date: 5/4/2009
  • Series: Wiley Finance Series, #459
  • Edition number: 1
  • Pages: 392
  • Sales rank: 815,797
  • Product dimensions: 6.30 (w) x 9.10 (h) x 1.30 (d)

Meet the Author

Michael M. Pompian, CFA, CFP, is the director of the PrivateWealth Consulting Group for Hammond Associates-based in St. Louis,Missouri-which consults to over $55 billion. He works with some ofthe largest family offices in the United States. Prior to joiningHammond Associates, Pompian was a wealth management adviser withMerrill Lynch, a private banker with PNC Private Bank, and servedon the investment staff of a family office. He earned an MBA fromTulane University and holds a BS in management from the Universityof New Hampshire. Pompian is a member of CFA Institute and the NewYork Society of Securities Analysts. He is also the author ofBehavioral Finance and Wealth Management (Wiley & Sons).Pompian is married with three sons and can be reached

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Table of Contents

Foreword xiii

Preface xv

Acknowledgments xvii

PART ONE Introduction to Advising Ultra-AffluentClients and Family Offices 1

CHAPTER 1 Who Are the Ultra-Affluent? 3

Defining the Ultra-Affluent 5

Quantifying Ultra-Affluence Among Total Global Wealth 10

Looking to the Future 11

A World of Opportunities for Advisers 17

CHAPTER 2 Understanding the Mindset of the Ultra-AffluentClient 19

Why Advising the Ultra-Affluent is Different 20

What Ultra-Affluent Clients Value in an Adviser 23

Building Relationships by Asking Questions and Listening to theAnswers 29

Matching Client with Adviser 32

Consultant Questionnaire 33

Conclusion 37

CHAPTER 3 Wealth Attitudes, Aspirations, and InvestorBehavior of Ultra-Affluent Clients 39

Family Aspirations 40

Wealth Attitudes of Ultra-Affluent Clients 42

Where Psychology Meets Finance 47

Investor Biases 48

Conclusion 60

CHAPTER 4 Noninvestment Best Practices 61

The Challenges Associated with Wealth 61

Guidelines for Sustaining Multigenerational Wealth 63

Conclusion 71

PART TWO Investment Strategies for Ultra-AffluentClients and Family Offices 73

CHAPTER 5 Practices of the Best Investment Organizations75

Differences between Endowments and Private Investors 76

Investment Committees 77

Investment Policy Statements 82

Key Considerations for Portfolio Oversight 88

Conclusion 93

CHAPTER 6 Asset Allocation Considerations for Ultra-AffluentClients and Family Offices 95

What Is Asset Allocation? 96

The Importance of Assumptions in the Asset Allocation SelectionProcess 97

The Importance of Asset Allocation 99

Considerations in Asset Allocation for Individual Investors100

CHAPTER 7 Domestic and International Equity 111

Introduction to U.S. and International Equity Securities 112

The Five-Step Equity Strategy Process 115

CHAPTER 8 Domestic and International Bonds 135

Introduction to Bonds 137

Descriptions of Bond Asset Classes 141

CHAPTER 9 Private Equity 159

What Is Private Equity and How Does It Work? 162

Three Primary Types of Private Equity Investments 166

Creating a Customized Private Equity Program 172

CHAPTER 10 Hedge Funds 179

What Is a Hedge Fund? 180

Hedge Fund Investing by UACs and Family Offices 185

A History of Hedge Funds 187

The Legal Environment of Hedge Funds 189

Hedge Fund Strategies 191

Manager Selection 202

CHAPTER 11 Real Assets 203

The Portfolio Benefits of Real Assets 204

Real Estate: A Long-Term Inflation Hedge 205

Natural Resources 210

PART THREE Multigenerational Considerations forUltra-Affluent Clients and Family Offices 223

CHAPTER 12 Selecting an Adviser 225

Trust: The Key Ingredient 226

How UACs Select an Adviser 228

Questions for Prospective Advisers 234

Conclusion 237

CHAPTER 13 Selecting a Custodian and Investment VehicleStructure 239

Custodial Services 239

Investment Vehicle Structure 250

Conclusion 257

CHAPTER 14 Considerations for Creating a Family Office259

What is a Family Office? 261

Challenges of Wealth 262

Practical Reasons to Create a Family Office 264

Challenges of Running a Family Office 265

Services Provided by a Family Office 267

Administrative Considerations for Establishing a Family Office268

Considerations for Establishing a Private Trust Company 274

Conclusion 277

CHAPTER 15 Wealth Transfer Planning 279

Estate Planning Basics 282

Conclusion 295

PART FOUR Special Topics for Ultra-Affluent Clientsand Family Offices 297

CHAPTER 16 Concentrated Equity Risk Management 299

What Constitutes a Concentrated Equity Position? 300

Concentrated Stock Risk Minimization Strategies 304

Conclusion 315

CHAPTER 17 Family Governance 317

Generational Division 318

Family Governance: An Essential Part of Successful WealthTransfer 319

The Incredible Family 320

Policies 326

Stages of Development 327

Conclusion 328

CHAPTER 18 Risk Management and Asset Protection 331

Family Office Risk Management 332

Individual Family Member Risk Management 337

Legal Asset Protection 341

Conclusion 344

CHAPTER 19 Philanthropy 345

Philanthropic Strategy Development through Asking Questions347

Mission Statement 348

Implementation of Philanthropic Strategy 349

Philanthropic Investing 352

Best Practices of Giving Large Gifts to Colleges andUniversities 355

Appendix: The Next Generation: Redefining the PhilanthropicLandscape 358

CHAPTER 20 Multigenerational Asset Allocation Strategies367

Different Asset Allocations for Different Generations 369

Single Allocation for an Entire Family 370

Customized Asset Allocation by Generation or Family Unit 371

Asset Allocation Targeting 374

The Behavioral Finance Approach to Asset Allocation 374

Conclusion 375

Notes 377

Index 387

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    Ok so iv been with this guy for a while and its acuall been a two weeks any wa he aske me out thursday and i said yes then on friday i went to his house and we went to his bed. I layed with him and we got under the bankets. (Bt im 15 hes 17) when we did he glide my leg aroun him and he smiled and kissed me. Then led him on top makin out. I put my hands through his hair then he puts his hands in my hirt feelin my t.ts. when i sat up he had a massive boner. So he asked me to give a bl.ow jo.b to him i said mabey then he kisse my neck an i get extreamy hr.ny when someone kisses my neck. So i gav in. I started to give him hea.d (firsst time doin it) and i almost gaged with inches in (9in and thick) i put pressure with teeth and he said i did good and nxt time less teeth on it. Then he tried fing.eriin me andd hhavin sex. I said no sex cause on peri.od. he said ok but wanted another b..... j so i sd lets go just grt his friend. We did and he wanted b.... j there and told his friend i taisted his rainbow. What should i do? How can i get gagin out i wanna put it all in? And how can i get bttr? And how do i kno he liked it?

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