From Big Data to Curated Data
Family Office 4.0
by Abhay Gala
9M ago
The importance of curated data for robust portfolio and risk management Only a few years ago, there was much hoopla in the global media around the term ‘big data’. Many people were led to believe that it had become possible to easily access and utilize massive amounts of data, resolving major challenges facing businesses and other institutions. Why then did this fanfare surrounding big data seem to almost suddenly disappear? One likely explanation is that people came to the realization that simply having access to large quantities of data, in and of itself, does not make decision-making any ea ..read more
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Mirror, Mirror, on the wall, which Family Office has it all?
Family Office 4.0
by Abhay Gala
1y ago
Mirror, Mirror, on the wall,which Family Office has it all? “A family office must mirror the family”, says EY Private’s Family Office Leader Ismael Hajjar, “by faithfully reflecting its interests”. “This proverbial mirror can enhance what it sees by advancing the family’s priorities. Which is precisely what it will do, but only if it is professionalized”, adds Mr. Hajjar. Why professionalize a family office by hiring seasoned talent, installing proven processes, and deploying advanced technology? Simple: To protect and preserve the family through effective governance and succession planning. T ..read more
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The five ingredients of effective Family-Office Governance
Family Office 4.0
by Abhay Gala
1y ago
Bon Appetit! What is family-office governance? It’s command and control: a framework for who does what and when; and which processes to repeat, which to modify, and which to abandon. Paul Pratt, Commercial Director at PKF Funds, Family and Family Office, and a G2 family member himself, offers five ingredients for effective governance. The five ingredients of effective Family-Office Governance #1. Purpose: A distinctive, well-articulated vision and mission. #2. Governing board/investment committee: Both are indispensable given the transitions within families, increasing complexity on a global s ..read more
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Predictions 2022: How Technology will Influence Family Enterprise Governance
Family Office 4.0
by Abhay Gala
1y ago
A year ago, family enterprises that wanted to automate governance processes had to buy tools from multiple vendors. Today, vendors assimilate adjacent functionality, turning their point products into full-stack governance platforms. As we enter year three of the global pandemic, a lot is changing in the family enterprise landscape, presenting a goldmine of opportunity for families to look digitally inward and move the technology needle. Trusted Family’s global community of over 160 family enterprises is at the brink of this opportunity. For them and many other family-owned enterprises across t ..read more
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Know your ‘known unknowns’
Family Office 4.0
by Abhay Gala
1y ago
To run your family office as efficiently as you run your business, know your ‘known unknowns’ How? With true transparency: actionable views of all assets and liabilities The “Johari window,” a problem-solving model once used by the U.S. to assess the threat of a missile launch, has three “panes”: 1. Known knowns: things we should know and do 2. Known unknowns: things we should know but don’t 3. Unknown unknowns: things we can’t imagine having to know What are the known knowns of running a family office? They likely include: The intricacies of your partnerships, holding companies, and other in ..read more
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Attention CPAs! Hamlet has a question.
Family Office 4.0
by Abhay Gala
1y ago
To recognize capital gains, or not to recognize capital gains, that is the question. 2021 may be the exception to the standard practices of deferring long-term capital gains, holding assets until death triggers a stepped-up basis, or gifting real estate/business interests when beneficiaries attain a certain age. Why suddenly turn the page on these tenets of tax planning? Because if Congress doubles the tax rate from 20% to 39.6%, as many expect, or eliminates stepped-up in basis at death – thereby incurring gains the day before death – 2021 may be the time to recognize capital gains and pay th ..read more
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The Gatta Doctrine
Family Office 4.0
by Abhay Gala
1y ago
HOW TO EQUIP BENEFICIARIES  FOR ACTIVE ROLES IN YOUR FAMILY LIMITED PARTNERSHIP? Consider “The Gatta Doctrine of Member Participation”; The better their views, the stronger their voices. With Family Limited Partnerships,  clear views make strong voices. Parents keen to involve their children in Family LPs owe them transparency; real-time views of contributions, investments, rates of return, liquidity, and liabilities – without which, members lack the means to get involved. It’s cause and effect: no view, no voice. Designed to preserve generational wealth, Family Limited Partnerships ..read more
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…when the tide runs out
Family Office 4.0
by Abhay Gala
1y ago
Don’t let your clients get caught naked when the tide runs out. As the legendry chairman and CEO of Berkshire Hathaway, Warren Buffet once said, “Only when the tide goes out, do you discover who’s been swimming naked.” What he meant is that rising tides float all boats and that even bad investments can rise in a good market. It is only when the market turns volatile, one starts getting exposed to the risks of fundamentally bad investments (if not in return performance, then in hidden and unfavorable liquidity clauses, exit fees, correlated performance, and much more). Wealth management is a tr ..read more
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A data breach is coming
Family Office 4.0
by Abhay Gala
1y ago
More than 70 billion records will be exposed by data breaches this year alone. Most of them financial. In the time it will take you to read this, data breaches will expose 68,000 more “secure” records. Family offices need to implement strict cybersecurity procedures, which will significantly reduce such risks. And while the importance of cybersecurity has sunk in, there is a large gap between realization and putting in place active measures. This gap exists because Family Offices either don’t believe that they will be targeted, rely on third-party measures, or choose to live in denial. Respect ..read more
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The Patriarch’s Promise Evolves
Family Office 4.0
by Abhay Gala
1y ago
Children, someday, all of this will be yours… The patriarch’s promise to the next generation has traditionally been a given; more, a rite of passage. And it made perfect sense when the generation-skipping transfer (GST) tax exemption was minimal, and the GST tax rate was massive. (As it was in 2000, for example, when the exemption was just $1 million, and the tax rate was a whopping 55%.) Why not transfer wealth directly to one’s children? Skipping a generation made no sense. That was then. And then along came the 2010 midterm elections, which gave Republicans control of the House; a power shi ..read more
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