FAMILY GOVERNANCE

A Peek Inside the Mysterious World of Family Offices

Family offices are notoriously secretive. Curious outsiders recently received a rare look into the largest U.S. family office of Bill and Melinda Gates: Cascade Asset Management. The disclosures came during their very public divorce proceedings, providing some surprising revelations into the goals and concerns of the wealthiest tech billionaires.

If you are curious about how similar or dissimilar your goals are to the Gates family, read on.

Not Familiar with Family Offices?

Surprising Priorities of One Family Office

For many, the priorities of one of the wealthiest families in the world may come as a shock. Wealthy families are not necessarily seeking public attention and investing aggressively. In fact, goals of the Gates family may not be different from a typical wealthy family.

The #1 goal of Cascade Asset Management is reputation: Keep the family out of the headlines. They focus on conservative investments, work from nondescript offices, and operate under a generic name.

Next, invest conservatively. While maximizing returns is good, they don’t want to lose any money. They diversify and utilize unusual assets like art and farmland.

Finally, low turnover is OK. Of Cascade’s top 15 investments, 10 of them are the same today as in 2010. (For a complete report, see the Bloomberg article “Gates Split Casts Harsh Glare on $170 Billion Money Manager.”)

Trade Secrets

If your family’s priorities are similar to the Gates’, then you are off to a good start! But there is more that wealthy, multi-generational families can learn from the best practices of billionaires. Consider these tips from Conifer Bay Capital:

Upgrade your team. Are your tax accountant, estate planner, and other advisors up to the task? If not, find more talented professionals. As your assets grow, you may need more experienced or sophisticated professionals to handle complexities. If you live in a major metro area, you’re in luck. Your city probably has a variety of talented advisors.

Get organized. Key to stewarding your family is access to timely information and accurate records. Whether you are looking for estate planning documents, historical investment performance, or old tax filings, these documents need to be secured and accessible.

Focus on the big issues. Have a strategic plan for your family and communicate it. Do you need to diversify from the family business? Address estate tax liability? Or maybe rally your family around philanthropic objectives? Make sure everyone in the family and your advisors know what your key priorities are so you can all pull in the same direction.

Learn. A key characteristic of successful families is the ability to evolve. Whether addressing tax law changes, new investment opportunities, or a global pandemic, families must adapt to survive and grow.

Bottom line

Too many headwinds already exist that will erode wealth. Families need a repeatable process that enables them to efficiently manage their assets, communicate among members, and transition knowledge from generation to generation.

A family office can help billionaires establish such a process. But even without a formal office, your family can achieve similar goals. You may already be functioning like a virtual family office. Commit yourself to formalizing your process. If you need help, call us.

Learn More About Conifer Bay Capital

6/30/2021