A family with aggregate investment assets of about $500 million had a family office with one investment professional and several support staff. The family office had experienced personnel turnover every few years because the family was not able to create career opportunities for the staff. When their current investment professional had announced her intention to leave, the head of the family decided to explore alternative ways to obtain the services the family needed.
We spent considerable time with the family’s investment professional and the head of the family to explain our investment process and analyzed the family’s investment portfolios.
- We found many opportunities to improve portfolio tax-efficiencies of the portfolios.
- We recommended restructuring the portfolios to reduce investment costs, reduce taxes, reduce certain risk exposures, and improve after-tax returns. We also demonstrated how this restructuring would enhance the after-tax transfer of wealth to family members and make more capital available for charitable giving.
- We shared the details of our due diligence process for private investments, along with the results of our private investment program in various asset classes. The family appreciated our ability to access high-quality private investment opportunities without incurring Wall Street’s distribution costs and conflicts of interest, as they had experienced previously.
As our process neared completion, the family was able to say their situation had improved by:
- No more cost and worries associated with staffing the family office and turnover of key staff;
- Taxes on investment returns were reduced to about 0.75% of assets per year vs. their prior experience of between 1.25% and 1.50% of assets per year – about a 50% reduction in tax impact;
- The client’s costs to gain access to various investment products was reduced by about 50% through greater use of passive strategies and more selective use of active managers, plus our ability to negotiate lower fees with active managers;
- Portfolios were simplified, and the family had improved access to high-quality private investment opportunities;
- The family’s total investment costs were reduced, even after taking our fee into consideration.
In sum, the client experienced investment fee reductions and tax savings while also eliminating several costly staff positions in the family office.
This story was written by Ballentine Partners. It is not a testimonial or endorsement. While this story is based on a real client situation, we have altered some of the details to protect confidential information. No portion of this story should be construed as a guarantee that any other person will experience a certain level of results or satisfaction if Ballentine Partners is engaged, or continues to be engaged, to provide services.