DELIVERING A TRULY DIFFERENT EXPERIENCE TO UHNW FAMILIES: THE FAMILY OFFICE EXPERIENCE - Presentation delivered by Maria Elena Lagomasino & Michael Zeuner of WE FAMILY OFFICES at the IFG Wealth Management Forum April 20-21 in Arizona.

1. || The Family Office Experience
©2015 WE Family Offices, LLC.

2. Introduction & Agendag
|| Our Background & Experience
|| Primary Objectives:
• Bring Clarity To The Family Office “Conversation”
• Provide Redacted Client Examples Of How A Family Office Experience Is Different & BeneficialProvide Redacted Client Examples Of How A Family Office Experience Is Different & Beneficial
To U-HNW Families
• Discuss How A Family Office Can Fit Into A Family’s Existing Ecosystem Of Wealth
Management Providers – Not Replace It
INDEPENDENT, FAMILY‐ FOCUSED WEALTH MANAGEMENT
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3. The Family Office Landscape:y p
Cluttered & Confused
|| ”Family Office” has become a popular term
|| Family Office label being put on firms of many different stripes for marketing purposes
|| Many different kinds of family offices
|| The RESULT: It can be confusing and difficult for families to cut through the clutter and understand
th l dthe landscape
“Single Family
ffi ”
“Virtual Family Office”
Office”“Smith Family
Office” “ ilOffice
“Multi-Family
Office”
“Family Investment
Office”
INDEPENDENT, FAMILY‐ FOCUSED WEALTH MANAGEMENT
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4. EXHIBIT A: BLOOMBERG RANKINGSEXHIBIT A: BLOOMBERG RANKINGS
INDEPENDENT, FAMILY‐ FOCUSED WEALTH MANAGEMENT
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5. HOW DOES A FIRM MAKE THE
BLOOMBERG LIST?
|| ”Family offices…were included if…[they] offer direct and comprehensive investment and non-
investment services to high net worth families”
|| ”Non-investment services may include family meetings, financial education, art consulting, estate
planning, family governance, foundation management, business consulting, property management, travel
arrangements and shopping assistance.”
INDEPENDENT, FAMILY‐ FOCUSED WEALTH MANAGEMENT
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©2015 WE Family Offices, LLC

6. IT’S EASY TO UNDERSTAND WHY THE
FOCUS IS ON “SERVICES”
|| All U HNW Families Need A Core Set Of Wealth Management Services|| All U-HNW Families Need A Core Set Of Wealth Management Services
• Investment Advisory
• Asset Management
• Estate Planning & Wealth Structuring• Estate Planning & Wealth Structuring
• Tax Planning
• Risk Management
|| A d M t R i Additi l N Fi i l S i A W ll|| And Most Require Additional Non-Financial Services As Well
• Family Governance
• ArtArt
• Philanthropy & Foundation
• Property Management
• Etc.
|| All Wealth Managers Provide Some Combination Of These Types Of Services – Be They Family Offices,
Private Banks, Brokers, Trust Companies, etc.
INDEPENDENT, FAMILY‐ FOCUSED WEALTH MANAGEMENT
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©2015 WE Family Offices, LLC

7. WHAT DIFFERENTIATES A FAMILY OFFICE IS NOT THE
SERVICES IT PROVIDES, BUT INSTEAD THE ROLE IT
PLAYS
|| Professionals hired and compensated by a family to exclusively
serve the family and its agenda, often across generations
|| Professionals who’s primary role is to help buy & integrate
|| Professionals who can help the family aggregate all of
their data into a “big picture”
|| Professionals who can provide oversight and quality control
INDEPENDENT, FAMILY‐ FOCUSED WEALTH MANAGEMENT
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©2015 WE Family Offices, LLC

8. BY ADDING A FAMILY OFFICE INTO THE MIX, AN U-HNW
’FAMILY CAN FUNDAMENTALLY CHANGE IT’S WEALTH
MANAGEMENT EXPERIENCE
|| Overcoming “platform” constraints that are a normal part of their relationships with their existing
financial services providers
The Benefits To A Family Of Using A Family Office Can Include:
financial services providers
|| Taking advantage of macro trends that are potentially disruptive and disintermediating to traditional
providers, but that can provide real benefits to investors
• Liquid Markets: Growth of low-cost passive investment opportunities
• Privates & Alternatives: Go direct and reduce costs and conflicts associated with intermediation
|| Reducing total fees and expenses|| Reducing total fees and expenses
|| Making empowered decisions around their financial life with greater confidence
INDEPENDENT, FAMILY‐ FOCUSED WEALTH MANAGEMENT
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©2015 WE Family Offices, LLC

9. OVERCOMING PLATFORM CONSTRAINTSOVERCOMING PLATFORM CONSTRAINTS
|| EXAMPLE: Non-US Client Being Served By A US Wealth Management Firm
|| PROBLEM: Exposure Desired To Specific Asset Class But No Offshore Vehicle Available On
Platform So Family Is Invested In US Vehicle & Exposed To Unnecessary
Withholding Tax
|| FAMILY OFFICE SOLUTION: Reallocation Of Investments Among Family’s Providers To Optimize
Around Each Provider’s Platform Capabilities
|| BENEFIT: $600,000+ per year savings for family in unnecessary tax expenses on a nine-figure
portfolio
INDEPENDENT, FAMILY‐ FOCUSED WEALTH MANAGEMENT
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©2015 WE Family Offices, LLC

10. TAKING ADVANTAGE OF MACRO TRENDSTAKING ADVANTAGE OF MACRO TRENDS
(PUBLIC MARKETS)
|| EXAMPLE: Family Principal Asking Investment Advisor On Private Banking Platform “Should I Be
Investing In More Low Cost Passive Investments Like ETFs”
|| PROBLEM: Investment Advisor Response: “Our Firm Doesn’t Believe In Passive Management,
So We Don’t Have The Ability To Help You”
|| FAMILY OFFICE SOLUTION: Open Global Custodial Relationship That Is Platform Neutral &
Purchase Low Cost ETFs For Some Portion Of Portfolio & Then
Optimize Active Manager Exposure Across Existing ProvidersOptimize Active Manager Exposure Across Existing Providers
Capabilities
|| BENEFIT: 50 150 basis points savings in investment management fees on relevant exposures|| BENEFIT: 50 – 150 basis points savings in investment management fees on relevant exposures
INDEPENDENT, FAMILY‐ FOCUSED WEALTH MANAGEMENT
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©2015 WE Family Offices, LLC

11. TAKING ADVANTAGE OF MACRO TRENDSTAKING ADVANTAGE OF MACRO TRENDS
(PRIVATE MARKETS)
|| EXAMPLE: Family Investing In LP Structures Through Traditional Wealth Manager
|| PROBLEM: Traditional Wealth Manager Adding “Distribution” and Placement Fees To
Underlying Manager Fee
|| FAMILY OFFICE SOLUTION: Facilitate Family Investing Directly With GP
|| BENEFIT: Savings of 25 50 basis points per year over life of fund and 1 2%+ up front on sales fee|| BENEFIT: Savings of 25-50 basis points per year over life of fund, and 1-2%+ up front on sales fee
INDEPENDENT, FAMILY‐ FOCUSED WEALTH MANAGEMENT
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©2015 WE Family Offices, LLC

12. TAKING ADVANTAGE OF MACRO TRENDSTAKING ADVANTAGE OF MACRO TRENDS
(PRIVATE MARKETS)
|| EXAMPLE: Investing In Private Equity
|| PROBLEM: Challenges Of Misalignment Between Traditional Private Equity Fund Structures
& Family (Fees & Timing)
|| FAMILY OFFICE SOLUTION: Source non-sponsored, no-promote deals that involve families
co-investing with each other with much greater alignment of
interests
|| BENEFIT: Potential for lower fees, and greater returns
INDEPENDENT, FAMILY‐ FOCUSED WEALTH MANAGEMENT
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©2015 WE Family Offices, LLC

13. REDUCING TOTAL FEES & EXPENSESREDUCING TOTAL FEES & EXPENSES
Hypothetical Annual Fees
$900 000
$1,000,000
Hypothetical Annual Fees
($50 Million Portfolio)
$600,000
$700,000
$800,000
$900,000
Annual Custody Fee
Annual Advisory Fee
Managed Account Fees
$200,000
$300,000
$400,000
$500,000
g
Transaction Fees
Plcmt Fees For Alt Inv.
$0
$100,000
$ 00,000
Working Directly With Banks With Family Office
Asset Mgmt Fees
INDEPENDENT, FAMILY‐ FOCUSED WEALTH MANAGEMENT
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©2015 WE Family Offices, LLC

14. REDUCING TOTAL FEES & EXPENSESREDUCING TOTAL FEES & EXPENSES
$50,000,000
$60,000,000
Cumulative Fees Paid
$
$250,000,000
Portfolio Value
$218MM
$30,000,000
$40,000,000
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$168MM
$0
$10,000,000
$20,000,000
Y 1 Y 15 Y 30
$0
$50,000,000
$100,000,000
Year 1 Year 15 Year 30
Working Directly With Banks Working With A Family Office
Year 1 Year 15 Year 30
Working Directly With Banks Working With A Family Office
Note: Hypothetical Example, $50MM Portfolio, 6% Annual Return
INDEPENDENT, FAMILY‐ FOCUSED WEALTH MANAGEMENT
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©2015 WE Family Offices, LLC

15. MAKING EMPOWERED & INFORMED FINANCIALMAKING EMPOWERED & INFORMED FINANCIAL
DECISIONS WITH CONFIDENCE
|| EXAMPLE: $50MM+ Investor Working With A Private Bank, A Broker, And An Investment
Manager – All Of Whom She Trusts & Enjoys Working With
|| PROBLEM: Each Provider Performing In Their Role, But No One (Other Than Investor) Is
Focusing On “Big Picture” & She’s Too Busy With Her Career To Pay Too Much
Attention
|| FAMILY OFFICE SOLUTION: Provide Investor With Aggregate Analysis Of Her Overall Financial
Life (Balance Sheet, Cash Flow/Spending, Sources & Uses)
|| BENEFIT: Investor Able To Make Series Of Major Decisions About Her Financial Life
That She Was Unable Or Unwilling To Make Before
INDEPENDENT, FAMILY‐ FOCUSED WEALTH MANAGEMENT
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©2015 WE Family Offices, LLC

16. BY INTRODUCING A FAMILY OFFICE INTO THEIR
WEALTH MANAGEMENT ECOSYSTEM, A FAMILY DOES
NOT HAVE TO DISPLACE IT’S EXISTING PROVIDERS
|| Most of the families we see do not have a family office or group of professionals working on|| Most of the families we see do not have a family office – or group of professionals – working on
their behalf
|| Most work with a broad mix of financial and other service providers including lawyers and|| Most work with a broad mix of financial and other service providers, including lawyers and
accountants; on average 20+ providers
|| We’ve seen how by adding a family office into the mix families can gain a better view of the big|| We ve seen how by adding a family office into the mix, families can gain a better view of the big
picture, a greater sense of control and confidence, and reduce their overall fees and expenses
|| But the critical point is that a family office is not a replacement for any of the existing providers it is|| But the critical point is that a family office is not a replacement for any of the existing providers, it is
an additional role, hired by the family, to help them plan, source and execute on their wealth
management agenda
|| And while the family office’s objective is always aligned with the family’s, it’s role is not to displace
financial services providers, but instead to help the family optimize them
INDEPENDENT, FAMILY‐ FOCUSED WEALTH MANAGEMENT
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©2015 WE Family Offices, LLC

17. SUMMARY & RECAP
|| A Family Office Provides A Fundamentally Different Wealth Management Experience
|| The Benefits Of Introducing A Family Office Into A Family’s Wealth Management Ecosystem Can
Be Significant
• More control
• Access to the “big picture” and powerful, aggregated reporting tools
• Lower fees and expenses
• Greater confidence in making financial decisions
• Access to “disruptive” capabilities that may not be found on more traditional wealth management platforms
• Better ability to engage the family in the overall management of the enterprise vs just the asset• Better ability to engage the family in the overall management of the enterprise, vs just the asset
management
• Truly “independent” advice – free from constraints, conflicts and other agendas
|| A Family Office Is Not A Replacement For A Financial Services Provider (Bank, Broker, Trust
Company, Custodian, Investment Manager, Etc.)
INDEPENDENT, FAMILY‐ FOCUSED WEALTH MANAGEMENT
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©2015 WE Family Offices, LLC

18. IMPORTANT DISCLOSURES
• This presentation is not an offer to sell nor a solicitation of an offer to
purchase any security.
• This material is for informational purposes only. It does not constitute
• When an investment adviser provides tailored investment advice to
clients based on its investment skills and analytical abilities, there is a
chance that such investment advice will not be successful or will not meet
i d h bj i d i i d b h i
This material is for informational purposes only. It does not constitute
investment advice and is not intended as an endorsement of any
specific investment.
• This presentation includes a potential investment portfolio cost
savings analysis prepared by WE for illustrative purposes only. All
fees except the strategy’s published fees are estimates. Fees and
expenses are subject to negotiation with respect to each client’s
expectations and that subjective decisions made by such investment
adviser may cause a client to incur losses or to miss profit opportunities.
Similarly, asset allocation risk is the risk that an investment adviser may
allocate or recommend the allocation of a client’s assets to an asset class
or mandate that underperforms other asset classes or mandates. For
example, fixed‐income securities may underperform equities at times,
and at other times equities may underperform fixed‐income securities In
account. All fees listed are based on published figures or on WE’s
actual experiences negotiating those fees with financial service
providers on behalf of our clients. Your actual costs are likely to vary
materially from the amounts presented here depending on, among
other factors, the actual bank, brokerage, investment adviser, family
office or other advisor(s) you select, the specific investments selected
f tf li d th ti l f d
and at other times, equities may underperform fixed income securities. In
addition, some asset classes may be less liquid or provide less protection
against various risks than other asset classes.
• In accordance with the rules of Treasury Department Circular 230, any
information in this presentation pertaining to federal taxation is not
intended or written to be used, and cannot be used by you or any other
person, for the purpose of (i) avoiding any penalties that may be imposed
for your portfolio, and the particular fees and expenses you are
charged by your service providers
• Until you and WE enter into a written advisory agreement, WE and its
representatives are not your investment advisers. The information
presented here is provided for informational purposes only and is
not, and should not be construed by you to be investment advice.
Th i d t th i i f W E F il Offi LLC
p , p p ( ) g y p y p
by the Internal Revenue Code, and (ii) promoting, marketing or
recommending to another party any transaction or matter addressed
herein.
• The information contained herein is not intended to be, and should not
be construed as, legal or tax advice to any person.
• Statements of future expectations, estimates, projections, and other
• The views expressed represent the opinion of W.E. Family Offices, LLC
(“W.E.”). The views are subject to change and are not intended as a
forecast or guarantee of future investment results. Past performance
is not an indication of future results. There are risks involved with
investing, including loss of principal.
• Stated information herein may have been derived from proprietary
and nonproprietary sources that have not been independently
p , , p j ,
forward‐looking statements are based on available information and W.E’s.
view as of the time of these statements. Accordingly, such statements are
inherently speculative as they are based on assumptions that may involve
known and unknown risks and uncertainties. Actual results, performance
or events may differ materially from those expressed or implied in such
statements.
and nonproprietary sources that have not been independently
verified for accuracy or completeness. While W.E. believes the
information to be accurate and reliable, we do not claim or have
responsibility for its completeness, accuracy, or reliability.
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©2015 WE Family Offices, LLC

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