But wait. But it works both ways. We listen very carefully to our clients and learn a lot from them. Entrepreneurs and business titans mostly made their money from shooting the lights out on a single venture. Their recipe? Highly-concentrated investments, risk-taking, innovation, and sheer audacity. Wealth is created by entrepreneurs, but maintained by diversification, sophisticated risk-management, and prudence. People good at wealth-creation have had little time or experience with wealth-maintenance, where capital preservation is paramount, and diversification is the key.
People who offer investment-management services to the affluent have their own ways of slicing up the market and peddling their wares.
Long ago there were just bank trust departments for Old Money. Quiet, discreet gentlemen who inherited their clients just as their clients inherited their wealth. Now wealth management is an industry, diced into segments and chasing every dollar. A good move for many in the HNW bracket has been the semi-custom services of an OCIO outsourced chief investment officer provider, offered by many established asset-management firms.
Or, a so-called Multi-Family Office even more customized, but still an external institution. But many who can afford it prefer the maximum control, service, and privacy of a traditional Single-Family Office, or just plain FO. They hire a chief investment officer and build capabilities in diversification, asset allocation, and direct investments. FO heads must deal with estate, foundation, investment, art collections, and organizational issues; implement an accounting and reporting infrastructure; establish generation-skipping trusts; manage personal properties and staff; and, navigate the delicate task of educating and mentoring family members.
John D. Rockefeller, William Bill H. Gates and American Philanthropy. Rockefeller essentially created the modern American corporation, warts and all. And his family office and philanthropic endeavors are legendary role-models for modern philanthropists and family wealth managers. Of those who have followed, no one has done it better than Bill and Melinda Gates. And their investment office is a template for contemporary family offices.
