Family Office Elite Magazine 2 PDF

DOMOS FINE ART
DOMOS CONSULTANTS
FINE ART
DOMOS International has a portfolio of very Fine
Art on sale (Off Market) on behalf of our clients
which include works by Cezanne, Renoir, Monet,
Van Gogh, Matisse, Rembrandt, Picasso, Rouault,
Bonnard, de Lempicka, Kandinsky and more.
DOMOS International
is an experienced
We offer the following services
consultancy of Fine Art Arrange Valuation and Sale of Fine Art
and large collections. Locate specific pieces of Fine Art
Assist in verifying provenance of Art
UK Office | TEL: + 44 (0) 29 2125 1994 | SKYPE: domosfineart | info@domos.co.uk | www.domos.co.uk

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ING Luxembourg, Socit Anonyme 52, route dEsch, L-2965 Luxembourg R.C.S. Luxembourg B.6041
FAMILY
OFFICE ELITE MAGAZINE
GULFSTREAM ROLLS ROYCE

100TH G650 JET HUNGER PHANTOM
DROPHEAD COUPE
DRIVES THE WOLF
07 33
Innovative thinking for reinventing
Private Banking in a sustainable
way
11
CAN MACHINES SCIENTIFIC
THINK DETECTION
Defensible arguments that OF FORGED PAINTINGS
machines can resemble thinking
15 INVESTING IN
23 37
US OIL BOOM BUSINESS
IS NOT GOING ANYWHERE
FAST
SUCCESSION
Are You Prepared for the Next
Chapter?
25 43
BURGESS McLaren-Honda
INVICTUS 66 METER 2015 Lineup Announced
SUPERYACHT
CHANGING
27 TIMES 51
80% of clients are dissatisfied with their
SPORT OF advisor ART
KINGS SCANDAL
31
INVESTING IN BLOOD STOCK
NATALIA GONCHAROVA
29 53
01
FAMILY OFFICE ELITE MAGAZINE
A SATO GROUP
PUBLICATION
MINERAL
DEVLOPMENT
59
$855,000,000
HONDA JET 61 Greatest Sale of Artifacts
FIRST FLIGHT
THE Lin Family Collection of Chinese Art
TRUSTED 65
03
FAMILY OFFICE
PORTHOLE
FAMILY 71
OFFICE OUTSOURCING
CHINA 73
BRITISH POLO DAY
CHINA 75
FAMILY OFFICES
HEDGE 82
FUNDS MANY FACES
WALL ST 85
DIASPORA SEEKS NEW SFO
MAN - VS - MACHINE.
WHO WILL WIN OUT IN THE END?
87
A long-recurrent debate in the field of investment
management
02
WWW.FAMILYOFFICEELITE.COM
The Most Expensive
Sale of Artifacts
$855,000,000
03
CHINESE TREASURES from the past
DOMOS Fine Art recently announced that
they are representing the sale of over 60
ancient Chinese artifacts from the Lin Family
Collection.
Not only is this collection ancient, but the

sheer beauty and level of art is astonishing.
This rare collection includes items of furniture,
wood carvings and sculptures and are all from
the most famous artists in Chinese history.
This very rare collection started its journey
almost three generations ago during the
2nd World War. Chiang Kai Chek, (the First
President of Taiwan) lost the war to Mao but
took all the most valuable gold, jewelry, art
and antiques and stored them at the National
Palace Museum in Taipei.
During this time, the Lin Family owned vast

amounts of property across Taiwan. They used
a large portion of their gold assets to connect
to the Chinese royal families and exchange
it for priceless antique treasures in order to
protect them from the ravages of war. There
is not a museum anywhere in the world that
has a collection of rare Chinese Artifacts that
can compare to this outstanding collection of
rare works.
04
T his rare collection includes
the Prime-Ministers Seal from
the Warring-States period, this is
spokesperson, Toni Muricu, DOMOS
are very pleased to be representing
the sale of the Lin Family Chinese
for both buyer and seller who save
money by buying at a lower price
from sellers who would rather not
over 2,210 years old and has been Collection pay substantial auction fees and
valued at US $330 M. The Tang privacy is assured.
Dynasty Gilded-Bronze Dragon in Interest in Chinese art is climbing
the collection is one of only two at an incredible rate, 64 percent of DOMOS is one of these specialist
ever made. One is the signature UHNWIs in China have now invested companies that deal primarily with
piece at the Shaanxi Museum in in some form of artwork. This figure Family Offices and UHNWIs in Off-
China; the second one was thought increases to over 81 percent among Market fine art collections. DOMOS
lost, however, it was protected by those with over $500 million. not only represents the Chinese
the Lin Family. This rare piece is at Records are regularly being broken Lin Family Collection but has many
valued at $55 million USD. The on Chines works such at the Chicken works of fine art by the worlds
White-Jade, Tang Dynasty Buddha Cup which set an Auction Record of greatest painters within their
head has been appraised at a $36 Million USD when bought by Liu current portfolio.
similar level to the Bronze Dragon Yiqian. The previous Chinese record
at $55 million USD. This incredible auction price was $30 million USD According to the DOMOS
collection is being represented for a bronze Buddha. Although spokesperson, Toni Muricu, we
by DOMOS International Fine Art well-known auction houses such advise any potential buyer of Fine
Consultants, who are marketing as Christies and Southebys have Art or Artifacts to conduct their
this rare collection to a select dominated the world market for own Due Diligence by reviewing
clientele at $855,000,000 USD. This many years, there is now a trend documentation and seeking expert
is the highest price ever sought for amongst some UHNWI and Family opinion. However, we do arrange for
a private collection of Artifacts. Offices to buy or sell off-market. This forensic testing and experts opinion
According to a DOMOS Fine Art is a mutual beneficial arrangement of any work of art
05
TANG DYNASTY BUDDHA HEAD WHITE JADE
T his is said to be the most
perfect and famous jade
his infant son. Most Chinese
Buddha statues were
Buddha statue in existence. It created according to the
was created on the orders of a fashions of the day, without
Tang Dynasty emperor so that knowledge of Western
he could bow to it at daybreak artistic three-dimensional
and ask for Buddhas blessing space calculation - bone
and to protect the empire. structure and classically
This statue was hand carved perfect proportions. In all of
from the hardest and highest history, this is the only statue
quality white jade and gilded of Buddha that shows perfect
with pure gold. It is said proportions from every angle,
to be the ultimate artistic yet also catches the ancient,
expression of Buddhist Spirits mysterious meditation
and radiates pure kindness, effect of a delicate, perfect
care, joy, and freedom while joyful smile. Also known in
capturing the majesty of the philosophy as Thousand-
emperor and the innocence of Layer Awakening Smile.
TANG DYNASTY, GILDED BRONZE DRAGON

T his is one of the most
striking and evocative
artistic archeological objects
Dragon, the Emperor ordered
that the site with the best Feng-
Shui in China be found. It took
of power, as a symbol of royalty
and the honor of the Emperor.
The Tang Dynasty Golden Dragon
ever found in China. It dates many years, and the power of was originally designed to be one
from the Tang Dynasty, which the entire empire to bring the of a pair, representing the two
spanned three centuries (618- best Feng-Shui masters and opposite forces of the universe:
906 AD). This period is regarded the greatest dragon sculptors Yin and Yang. When these two
as one of the most glorious together to complete the task. are together, they embody the
periods in Chinese history. To Most ancient Chinese dragons idea of Taiji: extreme opposite
create this astonishing Gold were created for the appearance forces of harmony.
06
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GULFSTREAM G650 INTERIOR
08
GULFSTREAM
MANUFACTURES
100TH G650
HIGH SPEED CRUISE Mach 0.90 / 956km/h
RANGE 7,500nm / 13,890 kn/h
G650 DATA
SPECIAL PERMISSIONS FOR RE-DISTRIBUTING THIS ARTICLE, CONTACT US
Gulfstream Aerospace Corp. announced recently that it has

PERFORMANCE manufactured the 100th G650. The ultra-long-range business jet was
Range - 7,500nm.13,890km delivered to the customer on Nov. 14, 2014.
Crusie Speed-Mach 0.85
High Speed Crusie-Mach0.90 The production of the 100th G650 is a testament to the demand for
Takeoff Distance 6,299 feet this incredible aircraft, said Larry Flynn, president, Gulfstream. It truly
Initial Cruise alt 41,000 ft set a new world standard for performance, range, speed, safety and
Max Crusie Alt 51,000 ft comfort when it entered service in December 2012.
WEIGHTS The aircraft was certified by the Federal Aviation Administration on

Max Takeoff Weight 103,000lb September 7, 2012, and by the European Aviation Safety Agency on
Max Landing Weight 83,500lb December 21, 2012. The aircraft can fly near the speed of sound, with
Max Zero Fuel weight 69,500lb a maximum speed of Mach 0.925. It has a range of 6,000 nautical
Basic operating weight 54,000lb miles/11,112 kilometers at Mach 0.90 or 7,000 nm/12,964 km at Mach
Max Payload 6,500 lb 0.85. It can connect passengers nonstop from London to Los Angeles
Payload & Max fuel 1,800 lb and Beijing to New York.
Max Fuel Weight 48,200lb
Since it entered service, the G650 has proven it is a performance
ENGINES leader, said Scott Neal, senior vice president, Worldwide Sales and
Two Rolls Royce BR725 A1-12 Marketing, Gulfstream. The G650 has claimed 42 speed records and
secured an around-the-world speed record. Its more fuel-efficient than
AVIONICS many other aircraft, offers customers one of the most comfortable cabin
Gulfstream PlaneviewTM II experiences and is equipped with industry-leading safety features.
TAKEOFF THRUST The G650 has the largest business-jet cabin and provides passengers
16,900 lb with wider seats, more aisle room and the ability to control the cabin
entertainment, temperature and lighting with a smart device, such as
PASSENGERS an iPhone or iPod. The large windows, quiet cabin and low cabin
11 - 18 altitude improve comfort and reduce fatigue. Passengers can work,
connect to the Internet or relax before arriving at their destination. The
G650 features the PlaneView II cockpit, which includes standard state-
of-the-art Enhanced Vision System (EVS) II and the Gulfstream Synthetic
09
GULFSTREAM AEROSPACE
G650 Manufacturing Plant
Vision-Primary Flight Display (SV-PFD). EVS provides pilots
with real-time images of the aircrafts surroundings and
greatly improves situational awareness in low-visibility
conditions. In zero-visibility conditions, pilots can rely on
SV-PFD to understand the position of the aircraft in relation
to the runway, terrain or obstacles. Gulfstream was the first
to implement these safety technologies in business jets.
Gulfstream also recently delivered the first fully outfitted

G650ER business jet to a customer, ahead of the 2015
projected delivery date. Gulfstream announced the G650ER
in May of this year. The aircraft received type certification
from the U.S. Federal Aviation Administration five months
later.
In todays fast-paced world, our customers need to travel

longer legs at faster speeds, said Scott Neal, senior vice
president, Worldwide Sales and Marketing, Gulfstream.
We are proud to be able to offer a product that meets the
needs of our customers. I commend our employees, from
engineering to manufacturing, who have worked to develop
and design such a superior aircraft.
The G650ER travels near the speed of sound with a max

speed of Mach 0.925. At Mach 0.85, it can carry passengers MAX SPEED MACH 0.925
7,500 nautical miles/13,890 kilometers, and at Mach 0.90,
6,400 nm/11,853 km. It connects more international cities
and offers more nonstop destinations, from Hong Kong to
THE G650 ER
RANGE 7,500 NAUTICAL MILES
New York, and Los Angeles to Melbourne, Australia.
Photographs Copyright GulfStream
10
HUNGER
salva magaz
DRIVES THE WOLF

11
BUSINESS STRATEGY
Swiss Private Banking, the balancing Act
by Muriel Dubach - Blue Beta Finance & Entrepreneurs
Emerging from excessive economic time as political interferences as a result of unrestrained risk
diplomacy and short-term bank become even stringent. These management measures. It is
governance of some, repeated transitions will lead to considerable imperative that over-zealous
financial scandals and collapses costs for the Financial Community authorities or political interference
shed light on a page of Private as a whole, including Investors. does not frustrate legitimate
Banking History currently being Regulatory requirements in process business decisions. The sub-prime
written. Impacts on the financial including the famous Dodd-Frank lending crisis, the sovereign debt
sector have forced the Private Wall Street Reform and Consumer crisis, several financial frauds as
Banking Community to comply Protection Act, Basel III and even well as a lack of access for private
with new playing rules, creating a the OECD Global Tax Standards will companies to funding have meant
necessary and growing awareness represent a great deal of money, a reduction in confidence and even
of fiscal, social and ethical leaving the Private Banking sector fear of the future. A return to basics
responsibilities. By highlighting with weakened powers. would be immensely beneficial for
the banking sector deficiencies restoring investor confidence and
in terms of transparency and Compliance with new regulations generating investments. The stakes
governance, and riding on the therefore appears to be the main are high, since private banking
fears and popular misconceptions cost element and focus of the leaders will need to refocus on
against financial mechanisms, industry, pulling back funding their core business lines, while
governments are taking advantages that addresses core business reinventing themselves and
of the financial crisis consequences issues. Decision takers will have preserving traditions and corporate
to offset the massive decrease in to show level headedness to act values. This will be the price to pay
public revenues. wisely and not to fight the wrong for those seeking effective and
battle. In response to the evolving sustainable solutions.
Claiming that structural banking customer needs, they cannot
regulations would ensure better afford to remain complacent. New Needless to say, the pace of change
stability and public confidence in market conditions are crying for in managing the transition will
the financial system, governments innovative thinking and strategy, increase the competition within
are placing more and more necessitating appropriate capital the Private Banking industry.
responsibilities on the shoulders investments in response to As a consequence, the chances
of financial institutions, while emerging issues. Therefore, key of success will vary from one
actually making most of their players must be very conscious of institution to another according to
decisions based on their own the way they are structuring things. their own resources, but also to their
interests regarding fiscal and In order to enhance their efficiency ability to make a real difference.
economic policy. Obviously, an and competitive advantages, In this respect, it would be useful,
uneven playing field between they will have to juggle with even essential to show creativity,
governments due to different quality, performance, innovation, talent and dedication in a way to
degrees of political might does restructuration and ROI, this in increase their attractiveness. These
not allow fairness of treatment order. The question of financial objectives cannot be met without a
for all, increasing considerably asset performance is even more deep understanding of client needs
the competitive gap. Swiss Private pertinent today, but cynically the and to overcome them. Private
Banking is suffering from excessive necessary financial leveraging for bankers will need to stand at the
regulations and will change over a clear differentiation is limited forefront and rethink strategy.
12
In another vein, rapid innovations obviously
demand constant updating of knowledge and
skills. In this respect, high level of services
is a prerequisite. Private Banking leaders
will have to retain qualified employees
and recruit newcomers, highly specialized
and multifaceted, able to effectively and
successfully withstand these challenges. In
order to be adequately outlined, raising the
tone of the debate is direly needed. There is
no room for demotivation or incompetence.
Whistleblowing cases surrounding banking
employees -which is mostly the responsibility
of some financial institutions for their money-
grubbing mentality; cutting wages and high
individual performance expectations must be
balanced with fair compensations.
Now more than ever, employment satisfaction

represents a major strategic stake. The level on
salaries being frozen, employees motivation
and loyalty must be found elsewhere. Business
strategy should be adjusted, taking into
account employee retention and expectations
of the next Gen. Hence the importance of
widely promoting a true corporate spirit and
eradicating employee turnover, so unpopular
with consumers. It would be appropriate to
consider employees as a strategic resource
not a cost. At the same time, private banking
leaders will have to exclude black sheep,
which objectively could be good news for the
entire industry.
Finally, ROI -return on investment will be

definitely played by an open mindedness
from decision makers. Their achievements
will greatly depend on their ongoing ability to
embrace a human dimension in business case
process, to adopt a sustainable development
strategy and to integrate end-user needs
into the decision-making mechanism. Private
banking leaders must be smart enough to strike
an appropriate balance between innovation
and tradition. Despite showing true resilience
in the face of all these challenges, there are
increasing pressures in moving things forward.
It is time to lead.
13
Defensible arguments that machines can accomplish things that resemble thinking
CAN MACHINES THINK?

by Julian Mulla, PEAQ Capital Strategies LLC
This is the question that Alan Turing triangle are equal. The computer Many programs, some freely
proposed in 1950. Given all the proved it by showing that CAB available, read the news and fairly
advances in computer applications and BAC are congruent triangles. accurately determine the sentiment
since then, we are even more The proof was unexpected and level for each paragraph.
interested to know the limitations unknown to the programmers. Mars rover is capable of
of machine thinking. Serious independent navigation and ability
exploration of these limitations to make its own choice on rocks
started during 1940 and 50 by it selects to test and according to
Newell at RAND where Artificial NASA is doing a great job. Mars is
Intelligence was born. millions of miles away, and at the
furthest point from earth it takes
Pros: There are many defensible more than 20 minutes for a round
arguments that machines can trip signal. This delay makes it
accomplish tasks that resemble infeasible to control the rover from
thinking Computers can produce earth.
originality. A classic geometry Computers can learn from
solver was given the task to prove experience; Art Samuel created
that base angles of the isosceles a checkers program that was
15
instructed only about the rules of the game, but not that the computer was only applying a complex
specifically what strategy to follow. The program formula, and thats not thinking.
played continuously with slightly perturbed versions Another test for thinking was proposed by Alan
of itself and was able to defeat Connecticut Checkers Turing which states that if at the end of a teletype is
Champion. Later Improved versions of the program either a human or a machine and an average human
consistently overcome any human. on the other end cannot tell the difference, then this
is proof of thinking. In June 7, 2014, a chatbot, named
Cons: There are also many defensible arguments that Eugene Goostman fooled 33% of the judges into
computers cannot think. thinking that Goostman was a 13-year-old boy. The
The question is can we program the machines to critics claimed the computer used humor to fool the
think? At the present time, we are not able to properly judges and thinking was not adequate.
define thinking and related things like originality,
creativity, meaning, and understanding. A more practical question is: What are the things that
We know that there are frequencies we cannot hear, humans do and machines can do better? Ill skip all
scents we cannot smell, and our vision and sense of the boring stuff on how machines can crunch numbers
touch are limited too. Human thinking can be limited faster, more reliable, cheaper and never get bored.
as well, and its possible well never be able to write Instead, I will point out a significant breakthrough in
down the instructions that will turn the computer in Artificial Intelligence. After a long plateau in the error
a thinking machine. rate of speech recognition applications, something
Thinking and problem-solving requires juggling happened in 2009 that allowed the error rate to
multiple independent parameters at the same time. drop drastically and approach ranges close to human
As such, thinking activity takes place in a higher abilities.
dimensional space. Our intuition fails us in high
dimensions. See the discussion at the end for some That turning point in 2009 has to do with practical
examples. implementations of a new approach in machine
It might be the case that certain things, like learning that was born in 2006 in the University of
programming computers to think, cannot be expressed Toronto called Deep Learning. In other words is the
in words or computer instructions, in the same way ability of the machine to analyze the raw data and
that we cannot describe in words the subtle complexity pick the features that seems important. Before deep
of a wine, the music we hear, or even a fragrance that learning, these elements were carefully designed by
we smell. experts of the field.
In chess, masters will see a significant move that
an intermediate player will miss; the reason behind
such decisions is locked in sub-conscience and cannot
be expressed in words. This is the ability to see the
problem in the right way.
There is no consensus whether computers can think;

among other factors, there are no explicit rules for
defining what constitutes thinking! It appears most
of the time we are concerned with the outcome of
thinking, but as soon as the machine produces that
result, we focus on the how and conclude its not
thinking.
For a long time, it was believed that chess requires
intelligence and the game itself was a test for thinking.
After Deep Blue had beaten Kasparov in May of 1997, Figure-1 NIST Evaluation of Automatic Speech
the question was far from settled and it was claimed Recognition
16
Conclusion: The philosophical question: can computers believes, then this may be a set up for failure and
think, is uncomfortable because it challenges our ego, wasted resources chasing a dream.
and we dislike the possibility that machines can out-
think us. The answer itself is also uncomfortable, as Questions, Comments and Requests for Research
we cannot afford to either disbelieve or believe. If one References to: Frank R. Casey, Managing Partner
doesnt believe, that will limit the scope of computer PEAQ Capital Strategies, LLC Boston, MA USA Email:
applications and might be a bad decision. If one purely frankc@peaqcapital.com; Cell: 617-777-2796
17
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SPEED COSTS
HOW FAST DO YOU WANT TO GO?
FERRARI by David Hardman Team Director Liam Talbot Racing
Theres so much more to motor racing than just being to track me down so they can personally tell me
the worlds fastest billboard. There is also no doubt that how good they are at racing and to ask for my help
speed costs, but there is true value to be found in the because they dont understand why sponsors
seduction of motorsport. It brings together motivated arent lining up to give them money. Ill go on to
and passionate individuals working towards a ask some probing questions about their investment
common goal and with that in mind; it brings together proposition and marketing strategies and to pinpoint
the underlying success in a strong team. It is these exactly what theyre doing to offer these potential
partnerships forged together at the track that create partners a return on their investment. Its usually at
such a substantial commercial advantage, linking this point where 90% of them walk away from the
motorsport and industry in such a unique manner. It conversation (their idea of sponsorship is - give me
is this value that sees so many major international money and Ill put a sticker on the car) they assume
companies tied to motorsport to enhance their that because I dont follow the same principle I
brand. Its a multi-billion dollar global industry that dont understand sponsorship! Theyre right of
unites man and machine. Its a place where deals are course; I dont understand sponsorship; were not
struck, and partnerships are developed. Its also one a charity; however I do understand partnerships,
of the last real gladiatorial sports, built on a business investments and how to create a tangible marketing
model with a very precise performance outcome, an proposition; we are in the business of motor racing!
outcome that gets tested every time you hit the track.
Theres any number of reasons why companies
Let me clear something up right from the start; I initially decide to get involved in motorsport. It could
hate the word sponsorship especially when its be to create a product or market distinction or to
associated with the business of motorsport. We never enhance brand development or recognition (theres
deal in sponsorships; sponsorship by definition is a good reason were racing with Ferrari for example
a gift in kind. Our business is not a charity; its a one of the most iconic brands in history!). There
powerful and highly creative marketing and branding are few better ways to leverage relationships and
tool. At LTR we always work hand in hand with all our introductions. Whenever you step inside a professional
team partners, its a fundamental philosophy! We co- race teams garage you enter another world. Theres
create branding strategies as a credible way to win an energy about it; a buzz; the sights, the sounds, the
more business and market share for them. We work smells, the passion, the technology, its pure theatre
incredibly hard at creating excellence throughout on wheels and once youre on the inside youre taken
all facets of our business and developing powerful to a place that few people outside the sport can
partnerships both at and away from the track. truly understand. Its both addictive and thrilling at
the same time, and it becomes a part of your DNA!
Its amazing how many motorsport people Ive
dealt with over the years that go out of their way Motorsport is about creating optimal performance at
21
the limit, and its also about building a competitive Blancpain Endurance Series. Well be starting the
advantage over the competition. But performance year off with a completely clean slate as this is our
costs money and depending on the level of first ever attempt at a full championship season in
competition that cost could run anything from tens Europe. To maximize our investment weve created
of thousands of dollars right up into the hundreds of a 360 degree holistic approach to the business at
millions at the pinnacle of the sport in Formula One. hand; from introducing new partners to the sport
to working with strategic media outlets worldwide
Theres a number of different revenue streams that to ensure regular team coverage right through to
the teams use these days to create their overall tailoring unique behind the scenes money cant buy
racing budgets for the season. If you look at Formula experiences as a part of our investment package which
One as an example two of their largest revenue will ensure our off track buy-in is just as important
streams come from the back of what is known as the to us as our on-track performance. After all what
Formula One prize fund distribution system. This is a team partner wouldnt like the opportunity to drive
system in which teams receive a slice of the overall a Ferrari race car on one of our drive days or enjoy a
revenue generated by Formula One (believed to be plate of our famous pasta cooked by our Italian chefs
47.5% of the profit generated from event hosting and served in our dedicated Kessel Ferrari hospitality
fees, broadcasting fees, trackside sponsorship plus suite over a race weekend given the chance? How
corporate hospitality is split back amongst the often do you get to experience a field of the worlds
teams); how big a slice they receive is dependent most exotic supercars from Astons to Bentleys,
on their finishing order from the previous season Lamborghinis to Ferraris all battling it out head
along with their perceived status within the sport. to head for ultimate on-track supremacy firsthand!
In addition to the prize fund distribution scheme, all To enhance brand development and recognition - Its
of the front running teams are manufacturer backed human nature to want to be recognized as the very
to some degree. The team itself may be manufacturer best in your field at what you do whether that be
owned such as Ferrari and Mercedes or have their as an individual or as a brand. A correctly executed
power units supplied by a manufacturing partner such motorsport partnership offers you an exciting high-
as Red Bull with Renault and McLaren with Honda end avenue allowing you to step out from the crowd
from 2015. However the current system in Formula and to create a unique point of distinction. To leverage
One is flawed, as has been proven this year with a relationships Sporting events are known to be
number of smaller independent teams folding under fantastic neutralizers when it comes to relationship
the weight of expense and expectation and a number building. Motorsport is a perfect environment in which
of other midfield teams seemingly teetering on the to cultivate partnerships and broker deals whilst
edge of collapse. For those smaller teams without enjoying being a part of a high-octane adventure.
manufacturer backing and investment and having To leverage introductions Motorsport oozes power
to rely on a smaller slice of the overall Formula One not just on the track but off it as well. In the last 12
pie, survival itself is becoming increasingly difficult. months alone, Ive personally met Hollywood A- list
With the massive budgets required just to turn up actors, supermodels, musicians, politicians, world
and an industry that never stops, the small teams champions, sportsmen and any number of business
are in for the battle of their lives in the coming years luminaries from a wide cross section of industry. If
and only the strong will survive. Theres a reason its introductions, youre after its hard to go past an
Formula One was once dubbed The Piranha Club! industry that thrives on the power of networking.
Outside of Formula One there are only a very limited
number of series in the world running a similar profit Motorsport is an incredibly powerful and creative
share model for the teams (albeit on a much smaller tool, if used correctly, it can help you win more
scale). The majority of motorsport series worldwide business and improve your market share. A race team
require the most traditional approach to partnership is the platform that can be used to create a compelling
and investment. As an example here at LTR well brand story. Focus, teamwork, leadership, dedication,
be racing the Kessel Ferrari 458 GT3 in the 2015 innovation, attention to detail, trust, excellence!
22
INVESTING IN THE MOVIES
IS THIS A GOOD ALTERNATIVE?
23
The Following is courtesy of Movie Money
Magazine . These are segments from interviews
with many of the Worlds leading experts in the
Movie Financing and investing in this sector.
www.moviemoneymag.com
THE EXPERTS TALK ABOUT MOVIE INVESTING

Traditional film distribution models are evolving, and tax benefits (such as through Enterprise Investment
DVD sales are falling but exciting opportunities are Scheme and Seed EIS), which are ideal to help offset
being embraced, as well. The greater use of 3G and the the risks associated with film production. Steve Rogers.
rollout of new 4G broadband support an ever-increasing
range of mobile platforms on which to view content. Other Experts
Briefer, overlapping profit exploitation windows create Carey Borth Attorney in the Movie Industry: The
a more intense marketing period. Fortunately, the methods for financing the production of a film include
publics appetite for film is as strong as ever; it is just equity finance, debt finance, private equity and hedge
the way they like to view it that is changing. funds. In the United States and Canada there are tax
incentives in individual states or provinces, tax shelters,
With the possible exception of major studio and government grants to sweeten the pot.
blockbusters, most movies must now make their money
from an increasing range of non-traditional sources Jeanette Buerling - Film Finance Professional: Banks
rather than box office and DVD sales. This is the result come in Last. They fund GAP; The producer should have
of the proliferation of digital distribution channels everything in place: Talent package, equity, tax credit
and the ability of consumers to view content using the estimate and pre-sales. They should also ideally have
latest mobile technology. The uncertainty over future an LOI from a completion bond that pre-approves the
income and sales creates a higher risk perception for budget and schedule of their film.
distributors, investors, and lenders. Coupled with
todays global financial difficulties, there are fewer Vinca Jarrett - Film Finance Expert: Todays independent
lenders of senior debt (secured on pre-sales) and gap feature film investors no longer have to put up one
lenders (secured on unsold territories), and theyre hundred percent of the investment in order to reap
taking a more prudent approach to the amount they are the initially sought benefit of mingling with the stars.
prepared to lend. Investors need to feel they are getting Instead, the smart ones have figured out that twenty
a return appropriate to the risks, and distributors are five to thirty five percent of a films budget may be
generally more cautious. sufficient equity to invest in getting a film made in
todays independent feature film business, and still
Most Governments recognize the many social and maybe hit the lottery with the success that gets them
economic benefits that are delivered by film production. to profit.
Attractive tax credits, therefore, remain available from
many international territories for filmmaking in their Is investing in Movies an
local areas, and many regional grants are available.
In the UK, the government encourages individuals to
interesting alternative?
invest venture capital into new businesses by providing
24
THE US OIL BOOM
IS NOT GOING ANYWHERE FASTRG
Its an exciting time to be part of the fuels consumption met by net
US oil and gas industry and whilst imports, down from 60% in 2005 to
many think the boom is peaking it is 33% in 2013, is expected to fall to
just starting. 22% in 2015, which would be the
lowest since 1970, reported the EIA
Texas is leading the way in the boom in its second quarter 2014 report.
and now produces more barrels of The United States and Canada are
oil annually than the United Arab expected to account for most of
Emirates combined. Thanks to the the worlds projected growth in
Eagle Ford, as well as the Spraberry, production of oil and other liquid
Wolfcamp, and emerging Cline fuel through 2015 while China and
shales in West Texas, the state has less developed countries will drive
doubled its crude output over the most of the growth in consumption,
past two years. The Texas oil market according to the EIAs July forecast.
is exploding year on year with The conflict in Iraq is expected Waylan Johnson
almost 97 million barrels being to limit previously forecasted www.spicewoodenergy.com
produced in July 2014, up from 36 growth in oil exports from that given the privately owned oil
million for the same month four country, says the EIA, adding it will companies like Spicewood Energy
years previously, according to the reduce the surplus oil production Management LLC, a fully integrated
Texas comptrollers office. By the capacity of the Organization of the oil & gas company, the opportunity
end of 2014, the state of Texas is Petroleum Exporting Countries and to capitalize on their niche market
expected to move ahead of the boost average Brent crude oil prices of conventional vertical shallow
countries of Kuwait, Venezuela, through 2015 more than previously drilling. The abundance of oil at
Mexico, and Iraq to become the expected. the shallow levels which are lower
ninth-largest oil producer in the cost to drill and fracking free has
world. The EIA is lowering its forecast for enabled the boutique companies
Iraqs oil production growth by to return significant returns year
U.S. oil production has jumped about 0.3 million barrels per day on year with considerable proven
from 5.0 million barrels per day in in both 2014 and 2015, expecting reserves for future years of oil and
2008 to 7.4 million last year and it will not exceed 3.3 million its revenue flow.
is expected to average 8.5 million average level during the first half
this year and 9.3 million next year, of this year. To offset this dip, it The needs for oil are not diminishing
according to the EIA, the analytical expects Saudi Arabia to maintain despite the current climate for the
arm of the US Department of higher production through 2014. more trendy green energy. Think
Energy. This boom, along with a rise Public oil companies like BP, Shell about the time, manufacturing and
in natural gas liquids production, and Exxon, are heavily entrenched cost of converting everyday items
has dramatically lowered petroleum in the large Texas shale plays like transportation to green energy.
imports. The share of U.S. liquid with extensive fracking. This has Certainly in the coming few decades
25
this will just be a slow transition increase capacity on its existing to cut production to support prices
but oil production will always be pipeline by a factor of 12. Despite and bring the price closer to the $90
taken up. Now, throw in the global the recent lull in oil prices, there is level. The US oil boom is developing
geo-political climate in Russia, an ongoing and future demand for and along with generous tax
Syria and the threat of ISIS and the world oil production. incentives there has been no better
potential blocking of oil exports time than now to put on a pair of
from these sources and suddenly Oil demand has been unrelenting boots and a hard hat and get into
US oil investment looks extremely through recessions, bull markets, the oil patch.
attractive. and bear markets and, according
Commercial UAV Conference & Exhibition

to latest data from the US Energy About the author, Spicewood Energy
The current administration is Information Administration this is Management LLC: Headquartered
40+ Speakers - 60 Exhibitors - 1,000+ Attendees

moving fast towards opening up predicted to continue. A significant in Spicewood, Texas, Spicewood
export channels and decreasing factor for global oil producing Energy Management, LLC (SEM)
dependency upon imports. This countries, both OPEC, and non- is a private equity management
can only lead to one thing.more OPEC, is the price needed for their firm capitalizing on the energy
US oil production with immediate respective fiscal budgets to be sector. Focusing on acquisition and
demand. Skytech
Continuing 2015 UAV Conference
population balanced. The and Exhibition
average price is is financing
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growth in emerging countries, $95. Russia and Saudi Arabia are throughout Texas and across the
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and China, as atheplatform
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largest exporters and ultimately
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for pipelines to the West Coast of production levels, they need a investments through multiple
the US and Canada. The Northern UAVsprice
intoof the
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and $95 respectively
Gateway Pipeline is at final to balance their budgets. It is information please visit www.
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26
the Public Sector.
THE BURGESS SUPERYACHT
INVICTUS
T
he spectacular 66 meter (216.6ft)
Invictus offers incredible volume
over her six spacious decks, easily
giving the impression of a 75 meters
yacht. This highly impressive superyacht
rivals any European build in terms of
outstanding quality and craftsmanship.
The grandeur of her interior volume is
enhanced by exotic woods, rare Italian
marbles, and custom Lalique decorative
touches while large picture windows
throughout afford magnificent vistas.
Expansive accommodation comprises
an opulent master suite with his and
hers bathrooms and private terrace
on the upper deck, six spacious guest
INFO!
Twelve guests in
nine cabins, and
twenty crew
Photos by Jeff Brown
27
cabins on the main deck plus two further cabins. Both indoors
and on deck, wonderful areas abound for lounging, dining and
socializing for either formal or casual occasions, not least on the
sundeck complete with jacuzzi, sun loungers, barbecue, and bar.
The yacht offers fabulous indoor-outdoor areas for socializing and
entertaining, both on a grand scale and for more intimate groups.
Leisure activities are also superbly well catered for on Invictus,
and she comes with a gym, cinema, state-of-the-art entertainment
system, beach club and a vast inventory of tenders and water toys.
Sophisticated yet family-friendly, grand yet relaxing, Invictus is one
of the most significant superyacht deliveries of the last 12 months.
Fabulous indoor-outdoor areas

for socializing and entertaining
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Cruising
speed
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Summer 2014: Mediterranean charter rate: from Euros 511,000 per week
Winter 2014 Caribbean /Bahamas charter rate: US$511,000 per week
Length overall: 66m (216.6ft)

Cruising speed: 15 knots
Guests: 12 in 9 cabins - Crew 20
INVICTUS is offered for charter by Burgess as Worldwide Central Agents
and is also under operational management with Burgess.
Photos by Jim McHugh
2815
SPORT OF KINGS
HORSE RACINGG
Richard Knight - Bloodstock Agent
There is no greater thrill in horse-racing and no greater and in this time he has proved himself to be a successful
place to be than the winners enclosure at Royal Ascot bloodstock agent with numerous victories by the horses
when your horse has just won I can assure you of that hes selected. Richard had no less than four 2-year-old
having been a small part of it myself this year. The Wow runners at Royal Ascot in 2014 which by any Bloodstock
Signal, who I selected as a horse-in-training on behalf Agents reckoning is impressive let alone someone who
of Al Shaqab Racing Ltd, won Royal Ascots premier setup so recently.
2-year-old race, The Coventry Stakes. It was the most
incredible moment and a moment I will never forget Richards other successes include 2013 Gr.2 winner
says Richard Knight. & Gr.1 placed performer Garswood, and Gr.2 Winner
& Gr.1 placed Up In Time. Richard has also enjoyed
Richard Knight is a Bloodstock Agent or Racehorse considerable success in the foal pinhooking market
buyer and has spent 12 years working for many of the where he purchases foals on behalf of clients to re-
Worlds leading bloodstock organisations including sell for profit as yearlings. Pinhooking results have
John Magniers Coolmore Stud, Sheikh Mohammeds seen the sales prices turn from 42,000 into 130,000,
Darley Stud & Prince Khalid Abdullahs Juddmonte 42,000gns into 110,000gns, 110,000gns into
Farms. Richard set out as a Bloodstock Agent in 2012 220,000gns, 48,000 into 80,000gns, 40,000 into
29
80,000, 55,000 into 90,000 to name just a few. what age of horse to purchase. You could buy a yearling,
a one-year-old horse that is unbroken and could be the
But how do you become involved? The first piece of next Frankel. Or, you could buy a horse-in-training who
advice I would give anyone interested in becoming is either progressive or has already achieved a level
involved in the thoroughbred horse-racing, and of form that will take you to the races in the shortest
Breeding Industry is to get the right advice. You need amount of time. These are the questions that you and
to develop a relationship with a bloodstock agent who your Agent need to discuss; there is no right or wrong
you like and trust, someone who will go through the answer there are benefits to both.
1000s of horses at a sale to highlight the right ones
for you. You need someone ambitious, someone who If you decide that you want to see a return from your
will take as much enjoyment out of the horse winning investment then, trading bloodstock is probably the
as you will. A good bloodstock agent will not only see answer. Pinhooking foals to sell as yearlings is one
the faults with the horses, but they will know about the option, breeding foals using commercial stallions from
horse breeding farms and breeders, the approximate mares purchased is another. Other options include
value of the horse, the distance the horse is likely to run purchasing and running a commercial Stud Farm, buying
over, the horses pedigree and/or family tree and most yearlings to sell as breeze-up horses or buying fillies &
importantly the traits which set the horse in question mares, putting them in-foal and selling them on. These
out to becoming a top racehorse. are just some of the options that must be considered.
Richard continues Once you are happy with the advice Anyone considering becoming involved in the horse
you are receiving, then you need to think about what racing industry but does not have the time for the day-to-
you want to achieve. Do you want to race for pleasure or day issues such as horses in training and/or broodmares
do you want to trade bloodstock for profit? If its about on a Stud farm then will need a professional to deal with
enjoyment then, you need to decide with your Agent all of this for you, leaving you to enjoy your racehorse.
30
CHANGING THE TOOLS
OF THE TRADE
80% of clients are dissatisfied with their advisor
doing their job. Clients have lost understanding the problems, and
confidence and trust in what their quite possibly, trying to sell
advisors are selling. We think solutions to problems before the
there are two central issues here: client understands the deeper
implications to the problem itself,
The first example of this is let alone appreciate solutions.
by looking at the staggering
percentage of clients, as reported To begin, we need to understand
by the same Moss Adams study, that this is not about the money, its
feel they have been underserved about whats important to the
by their advisors in terms of client, and why. Oftentimes,
performance, transparency of the client is not clear on what is
fees and overall deliverables their important to them, let alone why.
advisors have failed to produce. We need to do a better job assisting
Frederick V. McDonald For evidence of this, we can look them in their discovery. For some
President, US Advisory Group to the largest trading firms selling advisors, this is not breaking news.
mortgage-backed securities to Others will understand the value of
What is it about our profession that customers while selling short the deeper relationships with clients
has made many clients tired and product for the benefit of the firm but lack the tools to create that
fed up with their advisors? The oft- or firms. That puts a price tag on kind of conversation. Here is a
cited Moss Adams study suggests trust, a la the Madoffs out there. couple of thoughts that may assist
more than 80% of clients are not those seeking the new tools.
satisfied with their relationship The second issue is how we show
with their advisor. Interestingly, up and how we listen. How we Advisors need to bring to bear the
in our experience, few are making assist the client in understanding Human element of a successful
changes. Why, in the face of who they are, how their values result in talking to our clients.
frustration, are clients reluctant to dictate their goals, and ultimately, The formula is: H x 2T = DR,
move their money and seek better how satisfied they are in the pursuit where Human Capital multiplied
alternatives? of their lifes goals particularly in by the tandem of Technical and
these nervous times. Transactional expertise defines
In its most simple form, clients Desired Results. In helping our
want to be inspired, but right Relationships are breaking clients discover what truly inspires
now, if measured by clients voting down because advisors are them, as well as why, and where,
with their feet, advisors arent trying to sell solutions without we, as active participants in that
31
discovery, also understand the a structure that defines our needs to be our clients confidants, not
purposefulness of our clients. In and allows for personal growth. salesmen. Dont be mistaken, these
turn, we can better deploy the Most all our needs are organised in debriefings are not only about
financial as well as human capital in this manner. It is written in our DNA. the advisor getting a feel for what
a manner best suited for the client, the client seeks in life; it is of far
instead of trying to sell them on First is about You (and your spouse). greater value that your client gets
packaged strategies that, frankly, --Food, shelter, clothing. Secondly a sense of what he or she wants to
they have come to reject all too is about love. Being loved. Getting achieve in life.
often. Our highest calling is to help love in return. This is typically
our client enjoy a more fulfilled life manifested in our relationship with We capture these conversations
and help him, or her understand our family members. Third is about on paper, on recording, and through
with clarity the defining moments being immortal. How do we leave exercises and share them with
of a life well-lived. So we need to the world in which we live in a better other family members. While it is
learn and have a better tool box. place for us having lived there? crucial for you as an advisor to get a
This often is about community, shared understanding of what your
We need to get our clients in spirituality and philanthropy in a client wants, it is equally essential
tune with their values. Values manner that uniquely works for the that all persons involved begin to
authenticate the true goals that individual. communicate and work towards the
matter to us. Values are not familys goals.
taught, nor redefined. They are So lets look at our core values and
experiential, and already deep see how they are structured. We Gone is the day of a canned,
within us. Getting our clients to overlay the values pyramid on the number-crunched financial plan
look back at themselves, through values Staircase to finely tune our where the advisor tells the client
stories or guided questions reveal understanding of what is important how to manage their wealth.
these values. Once revealed, we and why it is important. In addition, Canned software packages that
need to organize and authenticate we also can begin to construct a worked in the 90s will not work
the goals that truly matter to the priority of action when these goals going forward. This is a great
person and build strategies around are articulated, measured, and disconnect in client satisfaction.
these goals.. appropriate strategies constructed When presentation commences,
to attain and maintain these goals revelation ceases. Clients are
The Values Staircase Conversation. that define our highest aspirations. seeking inspiration, and thats what
Through guided conversations, the they expect to get. Building a strong
client talks about what is important We help our clients by adhering to bond with our clients is what we
about money, family, and the what they want, and by assisting strive to achieve, and that is how
meaning of success. Beginning at them in deploying financial we deliver purposeful results.
the bottom of the stairwell, allow resources in a way best suited
the client to look deeper into each to attain and maintain those Frederick V. McDonald is
value, and build a rich tapestry of aspirations. Furthermore, by President of US Advisory
who they are and what matters to documenting these processes Group, Inc. (www.usadvisory.
them. Our values, our personal we can help them document and com), a wealth advisory firm
goals, and much of what is at the share their wisdom as well as their north of Boston. Ricks work
core importance to us, as a human, financial resources with family has appeared in numerous
is hierarchal. Maslov postulated members at a time appropriate publications, including the
there is a hierarchy of needs in his to their liking. This is the way Wall Street Journal and
theory of self-actualization. There is we need to show up. We need Barrons.
32
33
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advanced aluminium spaceframe
I think Charles Rolls would have loved
this vehicle. He would have been fully in
tune with Sir Malcolm Campbells spirit
of endeavour. Giles Taylor, Director of
Design, Rolls-Royce Motor Cars.
34
ROLLS-ROYCE
DROPHEAD COUPE WATERSPEED COLLECTION
PHANTOM
The perfect platform for Waterspeed
FAMILY OFFICE ELITE MAGAZINE SPECIAL
SPECIAL PERMISSIONS FOR RE-DISTRIBUTING THIS ARTICLE, CONTACT US
PHANTOM The power of nature and the power created by man lie at the heart
of Rolls-Royce Motor Cars inspiration for Waterspeed. The calm sur-
DATA face and blue waters of the 42 mile long Lake Maggiore the second
largest lake in Italy belie the power that created this Alpine fissure,
6.75-LITRE ENGINE
whilst the legendary 2,300bhp 36.5-litre V12 Rolls-Royce R aero en-
Ample power is supplied
gine that rent its surface as Sir Malcolm set his water-speed record
by a 6.75-litre, V12 engine.
were the designers key influences. The final piece of the puzzle was
Developing 453bhp / 338kW
the original concept for the Phantom Drophead Coup to bring
and 720Nm / 531lb ft of torque
the outside in by creating a social space enabling occupants to em-
at 3500rpm
brace the elements using sumptuous and relevant materials. Wa-
terspeed is the most radical interpretation of this approach to date.
ALUMINIUM SPACEFRAME
The Phantom Drophead
The Maggiore Blue colour scheme, specially created by Rolls-Royces
Coups advanced aluminium
Bespoke team, flows like water over all the surfaces of Waterspeed,
spaceframe is Lightweight and
outside and in. It adorns the boat-like lines of the Phantom Drophead
exceptionally strong, it impacts
Coups exterior the closest of any car design to the classic Riva
positively on ride, comfort and
speedboats influenced by Pietro Rivas earliest designs, themselves cre-
safety.
ated in the Italian Lakes and extends to the blue highlights on the
21-inch alloy wheels. A new imagining of a Bluebird logo has also been
INTERIOR
designed by the Bespoke team at Goodwood and becomes part of the
The all-weather surfaces of the
coachline that adorns the sides of Waterspeed in a contrasting blue.
interior have been designed
to take everything that nature
Maggiore Blue also permeates the interior of Waterspeed. Rolls-
can throw at them. To this end,
Royce Motor Cars first ever two-tone steering wheel is enrobed in
a number of notable features
the blue leather, as are highlights around the cabin such as the piping
can be seen throughout the
on the seats, dashboard top, cup holder surround and door accents.
interior. For example, in place
of traditional floor mats, wholly
In addition, Maggiore Blue also brings a new twist to the famous
more practical saddle leather
power reserve gauge, another of those trademark Rolls-Royce de-
and metal mats are used on
sign cues that raises a smile as it casually reveals the enormous
Waterspeed.
power potential at a drivers disposal. Blue accents on Waterspeeds
power reserve gauge invite the driver to go into the blue as Sir Mal-
colm Campbell did many times in pursuit of his world speed records.
35
In the same way the Bluebird team used
the most modern materials available to
them, weve done the same thing
But this unique colour treatment also creates the pice de la

rsistance of Waterspeed, as it envelops its 453bhp 6.75-li-
tre V12 engine a first for Rolls-Royce. This echoes how
Campbells engineers always painted Bluebirds legend-
ary 2,300bhp 36.5-litre V12 Rolls-Royce R aero engine that
smashed all those records on air, land and, of course, water.
Contrasting the water-like flow of this vivid blue hue around

the car is the viscous ebb of metal surfaces. Brushed steel bon-
net, windscreen A-frame, cockpit surround and rear deck, as
well as interior features, evoke both the sometimes steel grey
skies over Lake Maggiore experienced by Campbells crew in
those September days on the eve of war, but also the shocking
modernity a craft such as K3 brought to the early 20th century.
Steel was itself used extensively on these groundbreaking

craft so we wanted metal to be the dominant application, com-
ments Alex Innes, Bespoke Designer at Rolls-Royce Motor Cars.
Inside Phantom Drophead Coup Waterspeed, the alumin-

ium dashboard fascia, laser-etched door armrest cappings,
aluminium transmission tunnel and centre console, Wind- Rolls-Royces Bespoke team has, in the
chill Grey leather upholstery and polished aluminium cup- grand tradition of Sir Henry Royce and
holders evoke the modernity of this endeavour and further indeed Sir Malcolm Campbell, gone
highlight the capabilities of the Bespoke team at the Home
many extra miles.
of Rolls-Royce in Goodwood. Finally, bookmatched Abachi
wood veneer beneath the fascia on the dashboard evokes
the sense of a boat effortlessly gliding through water at pace.
36
37
SCIENTIFIC DETECTION
OF FORGED PAINTINGS
The forgeries were discovered in brush technique. The art historian
2008 after a buyer bought what may also opt to make a Morellian
was deemed to be a Campendonk analysis of the painting, a technique
and had the work scientifically introduced by the physician/
tested. The tests showed that the art collector Giovanni Morellian.
painting contained a pigment that Morellian analysis is based on the
had not been invented when the creation and mapping of formulae
artist was supposed to have painted describing repeated stylistic details
it. Such events underscore the in the artwork and reflecting the
importance of modern science in particular approach of the artist
lifting the lid and revealing some of in creating small features such as
the misconceptions of the past ears, eyes, and collars. This analysis
generally focuses on the artists
The Detection of Forgeries technique in applying the paint
The curator and the art historian and on his workmanship in large and
play a crucial role at the outset small brush strokes. These formulas
in the evaluation of a painting are then matched with those that
purported to belong to a famous are known to belong uniquely to
JEHANE RAGAI artist. It is the responsibility of the artist, and that are, irrespective
Department of Chemistry the curator to study the works of his own stylistic development,
American University in Cairo provenance by determining a generally maintained throughout
sequence of ownership all the way his life. The Rembrandt Research
In June 2010, the National Gallery, back to the artist who painted it. Project, which was founded in 1969,
London put on an exhibition Forgers generally invent a story of has used Morellian analysis to
entitled Close Examination: a destitute family that has owned distinguish between authentic and
Fakes, Mistakes and Discoveries, this painting for many generations forged Rembrandts.
which explored the art of forgery and now needs to sell it while
in paintings that had originally wishing to remain anonymous. What would the scientist look for?
fooled their experts and have In the last few decades, a wide
been identified by the Gallerys A price that is too good to be spectrum of scientific techniques
scientific department. Close to true might arouse the curators have been developed and adapted
one year later, in October 2011, suspicion. The art historian on the to help unravel forgeries in paintings.
Wolfgang Beltrahi and three other hand needs to make a stylistic The London National Gallerys
other forgers were sentenced, analysis to determine whether the state- of-the-art laboratory uses
in Germanys biggest art forgery style and brushwork match that of some of these modern techniques,
scandal, to several years in prison the artist to whom the artwork has which are wonderfully described in
for forging a large collection of been attributed. A clever forger Marjorie Wiesemans book A Closer
paintings attributed to Max Ernst, will adequately grasp the artists Look: Deceptions and Discoveries
Fernand Lger, and other famous style and know how properly to
masters. emulate the painters or the periods Technical analysis of a painting
38
principally entails a) the surface examination of the a photographic plate is generally placed in contact with
painting, b) the analysis of its background or the so- the paintings surface, and X-rays, in the wave- length
called underpainting, and c) a close examination of its range used in medical radiography, are made to impinge
body using a few selected techniques from the wide behind the canvas support. In infrared reflectography,
range of tools available for that purpose. infrared rays penetrate the surface of the painting and
are reflected back into a specially designed sensitive
For the surface examination, optical microscopy and camera, which reveals details of the underdrawings.
UV light have been widely used. The optical microscope This technique is particularly valuable in showing under
(magnifying from five to fifty times) allows the art sketches drawn in carbon black or charcoal. An under
historian as well as the scientist to determine drawing may reveal a painting that is anachronistic
whether or not the craquelure (the network of fine with the artists own stylistic development, may show
cracks appearing after the passage of time) is genuine. a painting attributed to an artist who belonged to a
The forger endeavours to mimic these fine cracks either period after the purported painters death, or may even
by adding solvents to the painting, thus accelerating give details on the materials used to prepare it. A cubist
the drying process, or by drawing fine black lines on its work observed under a painting belonging to Picassos
surface. blue or pink period would certainly suggest a forgery!
A fascinating case in point here was the display side by Analysis carried out at the National Gallery laboratory
side, at the 2010 National Gallerys exhibition, of two on the 1924 version of The Virgin and the Child with
identical versions of The Virgin and the Child with an an Angel revealed an under drawing made of graphite,
Angel by Francesco Francia (14501517) . One version a material used for drawing only since the sixteenth
was acquired in 1924 by the Gallery as a bequest from century.4 This was not observed in the 1954 version of
Ludwig Mond (18391909), a wealthy businessman the painting, strongly suggesting that the 1924 version
who had allegedly bought it from a Roman dealer, is a forgery.
its earlier provenance being unknown. The second
version appeared in a London auction in 1954 and The body of the painting can be tested with a wide
belonged to the art dealer Leonard Koetser. Optical spectrum of tools. They range, to name a few, from X-ray
microscopy revealed painted cracks on the surface of diffraction (XRD), Raman spectroscopy, high performance
the 1924 version as well as fine pencil lines in some of liquid chromatography (HPLC), scanning electron
the detailed areas. The latter technique is inconsistent microscopy, energy dispersive X-ray fluorescence (SEM/
with Renaissance paintings, suggesting that the 1924 EDX), pyrolysis-gas chromatographymass spectrometry
version might be a forgery. (PyGCMS) to laser desorption ionization-time of
flight-mass spectroscopy (LDITOFMS) and gamma-ray
Paintings can also be examined by impinging UV light spectroscopy.
on their surface. If the painting is old, the natural
varnish layers will fluoresce strongly, whereas areas of When Van Meegeren, the notorious Vermeer forger, made
retouches in an original old painting will fluoresce very his first attempt at forging The Laughing Cavalier by Frans
weakly or may not fluoresce at all. A famous painting Hals (15801666), X-ray diffraction (a technique reliant
by Rubens, The Gerbier Family, indicated, upon the on the scattering of incident X- rays by a crystalline
analysis of certain areas, varnishes that contained the pigment producing a characteristic diffraction pat- tern)
anachronistic synthetic blue ultramarine. Examination revealed that the collar was painted with zinc oxide and
by UV light showed that these regions fluoresced the coat in synthetic ultramarine, which were discovered
much less than the rest of the painting and therefore only in 1782 and 1828, respectively.
indicated later retouches.
Today molecular Raman spectroscopy (an in situ tool
Master artists have often used their canvases many times that makes use of the inelastically scattered light from
over, with sometimes more than two paintings on top a laser beam that strikes the surface of the painting)
of each other. The scientist using either the techniques is preferred to X-ray diffraction because of its totally
of X-ray radiography or infrared reflectography can non-destructive nature. The data obtained are generally
penetrate the surface of the painting and observe some of compared with reference spectra, allowing the
these underdrawings, which occur both in forgeries and identification of organic and inorganic pigments, as well
in authentic paintings. In the case of X-ray radiography as binding media.
39
Scientific Detec-
tion
Pyrolysisgas chromatographymass spectrometry evidence (which was not observed in the 1954 version),
(PyGCMS) is particularly useful in the analysis the scientist would certainly rule that the 1924 version
of the paint-binding medium. Through pyrolysis, is a forgery.
large molecules are broken down and separated
by gas chromatography. In the gas chromatograph, A new technique, which is outlined below, was
different components of a mixture are carried by an developed in 2008 by Russian scientists and could
inert gas through a column coated with a stationary be applied to any artwork purported to have been
phase where they are separated. Each compound painted prior to 1945. This novel approach tests for the
is then eliminated or eluted at a different time presence of the radioactive isotopes Cs137 and Sr90
referred to as the retention time. Information from (not formed naturally) that were released from the
the mass spectrometer, which is attached to the gas 1945 bombings of Hiroshima and Nagasaki as well as
chromatograph, as well as from the retention times, is from the nuclear tests that followed. According to
crucial in the identification of the components of the the Russian scientists, Cs137 and Sr90 when released
mixture. in the environment permeated soil and plant life and
ended up in all post-war paintings through natural oils
Laser desorption ionization-time of flight-mass used as binding agents for paints. Their presence,
spectroscopy (LDITOFMS) identifies molecular as determined by gamma-ray spectroscopy, would
species and elements in samples based on their indicate a forgery in any artwork.
fragmentation patterns and on their mass. These are
then compared with standard spectra. This technique could be ideally applied to the painting
entitled The Girl with Green Eyes attributed to the
In 2005, when Alex Matter, the son of Herbert Matter, famous Egyptian painter Mahmoud Said. In October
who was a close friend of Jackson Pollock, discovered 2007 this artwork, which was painted in 1932 and
in his parents attic thirty- two works allegedly painted sold to the Egyptian government in 1950, appeared in
by Pollock, he asked Harvard Universitys Centre for the Dubai at a Christies auction. The Girl with Green Eyes
Technical Study of Modern Art to analyze three of the was originally hanging in the Egyptian embassy in
works. The Harvard research team reported in 2007 Washington and was moved to the residence of the
that analysis by Raman spectroscopy, SEM/EDX LDI Egyptian ambassador to the United Nations in New
TOFMS, and PyGCMS indicated three post-dated York. Having heard of the sale, the alarmed Egyptian
pigments, some in the binding media, that were not government contacted Interpol and the sale was
available during Pollocks lifetime (19121956). cancelled. Questions were raised and are still on-going
with regard to the authenticity of this painting.
High performance liquid chromatography (HPLC) is
another chromatographic technique used to separate Today a clever forger will anticipate scientific analysis
a mixture of compounds and is particularly useful in and endeavour to avoid all the possible mistakes
the identification of organic dyes, whereas scanning that would lead to the discovery of his forgery. Han
electron microscopy (SEM) coupled with energy Van Meegeren, the notorious art forger, after his
dispersive X- ray fluorescence (EDX)14 can yield initial blunder with Fans Halss Laughing Cavalier,
information on the samples topography and elemental meticulously carried out his plan of ridiculing the
composition. In SEM, images of the surface of the sample Dutch art establishment by producing a quasi-perfect
are produced by scanning it with a high-intensity beam forged Vermeer. He had been embittered by what he
of electrons. These in turn cause the emission of X-rays perceived as the unfair evaluation of his own art and
that characterize the elements present (EDX). wanted to prove to the world the ignorance of the
Dutch art critics.
Going back to Francias Virgin and the Child with an
Angel, HPLC revealed on a sample from the red After four years of arduous experimentation, Van
curtain an anachronistic red lake pigment based on Meegeren was successful in developing a technique that
madder, whereas the SEM/EDX analysis suggested would produce a perfect craquelure. He familiarized
that the green lining of the Virgins robe contained a himself with Vermeers palette and embarked on the
green copper resonate which was mixed with brown clever creation of a new Vermeer that would fit all
and black to darken the colour, a technique never the predictions of Bredius, the most important art critic
observed in Francias time. In assessing all this of the time. Bredius had predicted that there were still
40
some undiscovered Vermeers, that these would probably much in keeping with the other Vermeer forgeries.
have some religious connotations, and that they would Having fooled the Nazis, restituted four hundred Dutch
be influenced by Italian art. Van Meegeren went so far paintings, and made fun of the art establishment, Van
as to travel to Italy to closely study Caravaggios art Meegeren gained immediate notoriety and support,
and compositions. He then created his first Vermeer becoming a sort of folk heroand was sentenced to
forgery, Christ and the Disciples at Emmaeus which only one year in prison for having forged a signature
was received and authenticated enthusiastically by . He did not serve his prison term as he died of
Bredius, who wrote in the Burlington Magazine, It is sudden cardiac arrest. Peter Landesman in the New York
a wonderful moment in the life of a lover of art when Times may help us understand Van Meegerens actions:
he finds himself suddenly confronted with a hitherto A forgers chief motivation is typically intellectual
unknown painting by a great master, untouched, on the gamesmanship. Embittered by the spurning of his own
original canvas, and without any restoration, just as it work, he takes satisfaction in suckering the entire art
left the painters studio! And what a picture! Neither world en masse, then pulling aside the curtain, exposing
the beautiful signature I. V. Meer (I.V.M. in monogram) himself as a renegade genius and the art experts as the
nor the pointill on the bread which Christ is blessing, frauds and fools.
is necessary to convince us that - we have here a I am
inclined to say - the masterpiece of Johannes Vermeer Recently, in one of the greatest art scandals in Germany,
of Delft, and, moreover, one of his largest works (1.29 m. Wolfgang Beltrachi surpassed Van Meegerens
by 1.17 m.), quite different from all his other paintings notoriety both in the faultless execution of his forged
and yet every inch a Vermeer. paintings of twentieth-century artists and in the
scope of his forgeries. From provenance to production
As a result of such an important authentication Van of the artwork, the whole scheme was executed with
Meegeren sold the Emmaeus for an impressive price, Mozartian perfection.
reconsidered his scheme of ridiculing the whole
art establishment, and subsequently forged several Provenance, he claimed, could be traced back to
Vermeers, six in all. the wealthy industrialist Werner Yaeger, who died in
1992. Yaeger had allegedly bought the artworks at
In creating his forgeries Van Meegeren was meticulously a bargain price from the famous Jewish art dealer
cautious; he used badger brushes instead of bristle Alfred Flechtheim, who had fled the Nazis in 1933
ones,22 worked so secretly that he avoided life models, and lived in exile in Paris. The story was credible as
and in some cases copied photographic and painting two of Beltrachis female collaborators were Yaegers
models. (One of his faces bore a strong resemblance granddaughters, who claimed they had inherited the
to Greta Garbo, another was reminiscent of the face of collection from their grandfather. Further credibility
Vermeers Girl with the Pearl Earring.) was gained when the famous art expert Werner Spies
issued certificates of authenticity for a large number of
In spite of his technical dexterity, Van Meegeren made the forgeries, having also been fooled by the story of
the fatal mistake of giving one of his forgeries, The the two sisters and by the fraudulent Flechtheim labels
Adulteress, to Hermann Goering, Hitlers close associate on the back of the paintings. This lent great legitimacy to
and commander-in-chief of the Luftwaffe, in exchange the artwork and made it easier for Beltrachi to produce
for four hundred Dutch paintings that had been taken by further forgeries.
the Germans during the war. Goering committed suicide
after World War II, having been sentenced to death by To capture the essence of the art piece, Beltrachi, who
hanging at the Nuremberg trials, and the Allies got hold admitted forging more than fifty paintings, meticulously
of all the artwork he had collected. The Adulteress was studied the artist he intended to forge. He went to
traced back to Van Meegeren, who was accused of high museums where the artwork was displayed, got to know
treason for collaborating with the Nazis, a crime that how much time it took the painter to complete a
would result in the death penalty. work, visited the place where he lived, and tried to feel
the atmosphere surrounding him. In an interview, he
To save his neck, Van Meegeren admitted to the lesser explained that he tried to observe with the artists
crime of forgery and offered to create another Vermeer eyes and to penetrate his creative soul so that he could
under close supervision. The result was Young Christ identify with him. He even claimed that he did not only
Teaching in the Temple, the style of which was very copy or emulate the style of an artist but wanted to
41
Scientific Detec-
tion
add to it and improve it. He arrogantly exclaimed that this rationale that humans are natural essentialists
nothing was easier than to forge a Pollock, which led and that our simplest pleasures depend on our belief
some critics to refer to his vanity and egomania. in them: We dont just respond to things as we see
them, or feel them, or hear them. Rather, our response
In spite of a forgers painstaking efforts at producing is conditioned by our beliefs, about what they really are,
the perfect forgery, a time always comes when one where they came from, what theyre made of, what their
single fatal mistake is made. Beltrachi was familiar with hidden nature is.31
the palette of Campendonk and chose zinc oxide as a
white pigment in one of his forged paintings, but he was Conclusion
totally oblivious to the fact that the zinc oxide was The foregoing examples culminating in the Van
contaminated with traces of titanium dioxide, a pigment Meegeren and Beltrachi experiences demonstrate
that had not been invented when Campendonk was the synergistic approach between the curator, the art
supposed to have created the art piece. His oversight historian, and the scientist that is required in the
unveiled the whole scam. Beltrachis chief motivation to authentication of a work of art. The connoisseurship
carry out such actions, apart from financial gain, was and years of experience of the art experts and curators
to punish what he perceived as the greed and vanity are necessary but not sufficient conditions for the
of the art market. He wanted to expose the arrogance fulfilment of this task. The role of the scientist will be
of the art world, which, according to him, did not really more one of falsification as opposed to authentication.
understand the meaning of true art, and made decisions His approach will be to focus on finding the one or two
in an arbitrary manner as to which painting was worth fatal mistakes that will unravel the forgery.
millions and which one was worthless.
First Appeared June 2013 Proceedings of the American
The light sentences, that Van Meegeren and Beltrachi Philosophical, Vol 157, No 2.
received for their crimes, seem somewhat astonishing
at the outset. Van Meegeren, as mentioned earlier, was Jehane has a forthcoming book on the subject, to be
sentenced to only one year for having forged a signature, published in Autumn 2015 by Imperial College Press.
whereas Beltrachi and his wife, in spite of the very
large number of forgeries carried out and the number
of collectors they defrauded, including the actor Steve
Martin, were respectively sentenced to only six and four
years in a German open prison: that is, they are both
allowed to hold a daytime job and can expect their
sentences to be further reduced as first-time offenders.
The notoriety of the two cases, and the success of the
perpetrators at ridiculing the art world, might have
subconsciously influenced the judges. Wasnt Van
Meegeren perceived as a hero to the Dutch people, a
man who had fooled the Nazis and ridiculed the art
establishment, and hadnt Beltrachi been portrayed by
the German media as a modern Robin Hood and rogue
genius? The Van Meegeren and Beltrachi sagas, as well
as all other notorious forgeries, feed into the on-going
debate as to what the public most values in art. Once
again, we pose the crucial question: Is a work of art
praised for its intrinsic aesthetic value or because it is
perceived to be the work of a famous artist?
According to the philosopher Denis Dutton, art

appreciation is a matter of experiencing a new vision
of a familiar subject provided by a painter, i.e., a
perception of a new creative approach to the artistic
endeavour. The psychologist Paul Bloom would add to
42
BUSINESS SUCCESSION AND
CONTINUATION PLANNING
Are You Prepared for the Next Chapter?
from the beginning. Such pre- key areas of business succession
launch advance planning would and continuation planning:
be beneficial since the decisions stakeholder goals, business needs,
made at the start of a business will strategy, the personal side of
inherently impact the business retirement and estate planning,
owners ultimate succession and and plan execution. The objective
business continuation options. is to ensure a smooth, efficient
Succession forethought inevitably and value-maximized transition
makes later decisions easier to for all stakeholders in the business
follow and helps focus the business through important early stage
plan from inception. discussions with ones business
and financial advisors, as well as
However, the reality for most with family.
business owners is that they
Rick Kollauf tend to be consumed with Stakeholder Goals
Estate Planning Manager, developing and implementing the Assessment of a business owners
BMO Private Bank business plan. Choice of entity goals typically starts with questions
and jurisdiction, organizational of how to maximize the exit value
In a perfect world, business owners documentation, hiring personnel, of the business to the owner. This
would begin planning for the creating distribution and marketing assessment should include an in-
succession and continuation of channels are time consuming depth look at the goals of other
their business from the beginning. and can dominate ones focus. stakeholders. Family members, for
Though business succession Business succession planning is example, may rely on the earnings
forethought inevitably makes rarely given its due until a business of the business either indirectly
later decisions easier to follow, owner begins contemplating a or as workers or partners in the
in reality, this happens very personal exit strategy. This rushed business. Also, for many business
seldom. This article examines five approach can cause unnecessary owners, retaining key employees
key areas of business succession challenges for an otherwise may be critical. Without these
and continuation planning to smooth continuation of the stakeholders, there would be no
help ensure a smooth, efficient business operation, transition to business. During this stakeholder
transition. In a perfect world, new ownership, and even the value assessment phase, it is imperative
business owners would begin of the business in the eyes of any to determine the business core
planning for the succession and successor. value.
continuation of their business In this article, we will examine five What do I want my business life to
43
stand for? What will be my legacy? early to avoid misinterpretation, owners overvalue their businesses,
After my exit, do I want the business bad planning, or worse. Also, while others undervalue their true
to continue to reflect these values? business owners need to ensure worth. The bottom line is that no
Is it important that my family the family members have the business owner should attempt
stays involved in the business? right abilities to run the business. to move through the succession
Additionally, the assessment If the family members skill sets and continuation planning process
should consider current versus arent compatible with the long- without an objective and detailed
future business needs. term success of the business, business analysis.
a contingency plan should be
Family Considerations considered. Business Needs Analysis SWOT
Often a business owner may assume The Goals & Abilities of A SWOT (strengths, weaknesses,
the business is a family asset to be Management and Employees opportunities and threats) analysis
willed down to future generations. Another critical conversation, is a highly effective method of
However, the business may not which often gets neglected, objectively examining a business
meet the needs of the existing involves managers and key attributes. This analysis can
family or future generations. To employees. If management and key help identify business growth
the extent the goals of the owner employees are important to the opportunities while also helping
and the family differ, the owner ongoing success of the business, a business owner plan for
may need to reconsider end goals. they need to understand that the succession. A well-executed SWOT
If the family is not interested business succession will keep them analysis will include actionable
in taking over the business, but in mind. This is a prudent strategy recommendations for increasing
would rather sell it, the owner must to avoid losing these essential the value of the business.
recognize this reality. Without the staff members. It is not easy for a
engagement of family members in business to continue operating on Strategy
the business, a re-evaluation of the solid and stable footing when key After assessing the goals and needs
succession plan may be required. employees become leery about of the stakeholders and studying
This exposes the greatest challenge the future. By being open and the business and its environment,
faced by many business owners. direct with these employees about business owners and their
They may demonstrate great the succession plan, they will feel professional advisors are now well-
competence and expertise in more valued and secure about their positioned to plot a strategy and
regard to the business, but may ongoing role with the company. set a course that will meet business
overlook communicating their In addition, employee ownership is succession and continuation
succession plan with their family an alternative succession strategy if planning objectives. Well address
members. Making presumptions family succession is not an option. the personal side of a business
about family desires rather than In order to consider this path, exit as it relates to retirement and
actually conducting a family needs the owner needs to know three estate planning in the next section,
assessment can severely damage things: the employees desire to but generally speaking, a business
family relationships and have a take on ownership of the business, owners exit and the continued
negative impact on the future of their abilities to take on greater operation of the business can fall
the business. leadership, and the financial only into the hands of one of three
Too often, a business owner will capacity of the employees seeking groups.
think I built this business so that leadership or ownership roles.
my children can run it when I am Objective Business Analysis is a Key Family
done. But it is critical to ask family Part of Succession Planning This assumes that family members
members what they want. They indicate both interest and sufficient
may not share the same desire to While stakeholder goals are being skills. This exit strategy ensures
run or build the business. Family assessed, the business must also be ones legacy will continue and
communication must happen studied objectively. Many business the gratification that the business
44
Internal Environment External Environment
Strengths Weaknesses Opportunities Threats
Financial Inventory A line of business similar to Competition
Cash flow obsolete current core business offerings, lowering price to
Receivables (perhaps sell at a but reticent to act on. gain short-term
Collectability discount to market share
generate After studying existing
Operational cash flow) Capacity
Robust sales Team skill sets
pipeline? Management Market penetration capability
Niche leader? team young and determination made there is no
Ability to charge inexperienced time like the present to move
a premium? (consider forward.
mentoring
or outside This additional business segment
training) could be horizontal or vertical to
current business and may add
value in the eyes of anyone
interested in acquiring or
continuing the operation.
will provide financial support and stability for future standard agreement in place, and negotiating one in mid-
Strategy
generations. Owners will likely not receive the highest business lifecycle amongst relevant parties is not easy.
financial value for the business, as they may not be Moreover, even fewer have actually sought out funding
inclined to charge full
After assessing theprice to their
goals andfamily. mechanisms
needs of the stakeholders andforstudying
the various event-driven
the business forms of owner
and its
environment, business owners and their professional advisors are now well-positioned to
exit. As a business grows and morphs organizationally,
plot a strategy and set a course that will meet business
Inside succession
the mechanisms and continuation
for funding need to be monitored and
Ifplanning
family isobjectives. Wellitaddress
not an option, the personal
is possible that key side of atobusiness
updated exit as it relates to
ensure sufficiency.
retirement
employees haveand
theestate planning
desire, drive in the next
and financial meanssection,
to but generally speaking, a business
owners exit and the continued operation of the business
purchase the business. Again, business owners may find Employee Stock can fall only into
Ownership Planthe hands
(ESOP) of one
Transactions
of three
reward groups. the legacy to people who have ESOPs have become the option of choice for many
in transferring
an understanding of the business, but it is possible that businesses. The retiring owner, other large stakeholders
Family
they will need some assistance in securing financing to and the company may receive tax benefits as a result of
purchase the business. This may be in the form of seller an ESOP. Further, ESOPs can bolster employee morale
This assumes that family members indicate both interest and sufficient skills. This exit
financing,
strategywhich doesnt
ensures come
ones without
legacy risk.
will continue and the and gratification
help attract andthat
retain
theemployee
businesstalent.
will
Both the family and inside options can occur in several
provide financial support and stability for future generations. Owners will likely not receive
different forms.financial
the highest Below arevalue
two options.
for the business, as they Outside
may not be inclined to charge full price
to their family. Typically, selling the business to an outside party will
Buy/Sell Agreements yield the highest price. The highest sale price is often
Inside
It is prudent to have one in place, whether or not family generated when competitive bidding ensues between
is in the business. It may provide pre-determined exit multiple potential purchasers.
If familyThis
pathways. is not an option,
generally providesit formulaic
is possible that key employees have the desire, drive and
calculations
byfinancial means
way of price andtopayment
purchase termsthewhen
business. Again,Potential
one owner businessbuyers
owners mayinclude
could find reward in
companies looking
transferring the legacy to people who have an understanding of the business, but it is
becomes disabled, wants to retire, or otherwise exits the to expand their portfolio of businesses, to expand
possible that they will need some assistance in securing financing to purchase the business.
business. geographically or looking to acquire for vertical
This may be in the form of seller financing, which doesnt come without risk.
Both the family and inside options can occur in several or horizontal integration
different to augment
forms. Below are twotheir current
NOTE:
options.Many businesses do not have this type of a business. Alternatively, the business needs analysis may
Buy/Sell Agreements
46
identify attractive opportunities for further growth to build the business to a higher valuation level, or
that are worth pursuing to increase the value of the scale back retirement goals.
business before implementing any exit strategy. To
that end, one may consider adding a financial partner If, on the other hand, there will be an excess of capital,
to help support those efforts. Once one has weighed business owners need to define their investment
the options, an independent valuation of the business structure and wealth plan prior to exiting their
is imperative. As referenced above, this value may be business. This will ensure a smooth transition from
a full market valuation or a discounted pricing option wealth accumulation to asset protection. Developing a
being considered for friends & family. The business wealth management plan with a financial advisor, much
value will help determine the timing of any exit, the like any business plan, will be the logical next step.
potential pool of buyers, and how the transaction might
be structured. Personal Goals
While it is certainly true that not everything is about
The Personal Side of Retirement and Estate Planning money, it would be difficult to get an accurate read on
For business owners in particular, retirement planning financial security goals without coordinating personal
can be complicated. Issues and concerns are often goals with the anticipated costs of seeing them
compounded by the transition from running the through. Where one wants to live in retirement is often
business to ownership succession and changing goals a key decision for retirees. Many opt to retire to the
and lifestyle. Lets look at three key considerations: sunshine state, while others decide to be snowbirds
who typically maintain a home near family and also
Financial Security acquire a home in a warm weather destination. One
Financing retirement is paramount. Until now, the thing to consider before moving is the cost-of-living in
business was likely the largest asset on ones balance the new location, including property and income taxes.
sheet and the driver of cash flow. In order to assess
whether the calculated business valuation and How to retire is another personal decision that can
succession plan strategy will be sufficient (i.e., family, greatly impact finances and thus retirement planning
ESOP, or an outside buyer) business owners should in general. One may become more frugal or may decide
establish their lifestyle expectations post-retirement. to travel extensively thus increasing annual expenses.
One may also choose to become more philanthropic in
Usually, retirement brings some expenses not fully retirement, causing charitable expenses to impact cash
transparent in the years preceding retirement. These flows. Additional retirement considerations include:
might include supporting college-age and young
adult children, as well as caring for elderly parents. Will you continue to be involved in business
With individuals living longer, this can be more time- opportunities? Will you support other businesses by
consuming and financially straining than one may angel investing? Will you become the grandparent who
realize. Moreover, inflation needs to be factored into helps with family expenses such as home purchases or
the equation as it can affect the purchasing power of college tuition?
ones nest egg.
New Lifestyle
Having a budget and financial plan in retirement is Business owners likely devoted many hours each day,
even more important than during business owners week, and year to the running of the business. After so
working years. Regular spending habits should be many years of hard work, it is common to have difficulty
fully examined, and any large acquisitions considered transitioning to retirement. Spare time needs to be
(such as purchasing a new home or a boat to enjoy in considered pre-retirement. In some instances, by the
retirement). time a business owner retires, many friends and family
may have passed, or the relationships may not be strong.
If the business valuation does not support desired For this reason, it is important for business owners to
retirement financial goals, they may need to continue have fulfilling personal as well as professional lives
47
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No business
hobbies, succession
activities, and closeplan should
personal be considered
relationships withouttransfer
minimize integrating
taxes abetween
well-defined
generations. Judge
retirement plan and a comprehensive
so when retirement comes, there will truly be a estate plan.
Learned Hand wrote long ago thatworking
Imagine a business owner anyone may arrange
tirelessly for many years to build a successful business and accumulate wealth in the
harvesting what you have sowed. their affairs to keep their taxes as low as possible,
process, only to have the government take a large chunk of it because the owner did not do
Even things as simple as personal health care should and no one owes a duty to pay more tax than the
everything legally available to minimize transfer taxes between generations.
be considered as current health coverage will not law demands. Proper succession planning needs to
beJudge
available
Learned Hand wrote long ago that anyone integrate
in retirement. Further, Medicare does may arrangeboth retirement andto
their affairs estate
keepplanning.
their Estate
not take as
taxes effect
low until age 65, and
as possible, andsupplemental
no one owes and planning
a duty to payismore
generally
tax meant to accomplish
than the two things:
law demands.
Proper succession
prescription planning
drug coverages needneeds
to be to integrate both retirement and estate planning. Estate
considered.
Noplanning
business issuccession
generallyplanmeant to accomplish
should two things:
be considered Estate Maximization ensures that the estate is as large
without integrating a well-defined retirement plan and as possible to support retirement years and to pass on
Estate Maximization ensures that the
a comprehensive estate plan. Imagine a business owner estate aisfinancial
as large as possible
legacy to desiredtoheirs.
support
retirement years and to pass on a financial
working tirelessly for many years to build a successful
legacy to desired heirs.
business and accumulate wealth in the process, only to Estate Conservation ensures the value of the estate is
Estate Conservation ensures the value of the estate is not eroded by taxes, probate
have the government take a large chunk of it because
fees, administrative costs, market loss and inflation. not eroded by taxes, probate fees, administrative costs,
the owner did not do everything legally available to market loss and inflation.
The following chart illustrates some fundamental elements of an effective estate plan that
business owners and financial advisors need to consider:
Assets and Develop a proper investment policy statement and asset

Investments allocation strategy to maximize the estate.
Establish a family values statement or family constitution to
embody the family philosophies and values and to define the
roles other family members might play in managing post-
retirement wealth.
Consider how assets are titled to assist in minimizing probate
and estate taxes/costs.
Beneficiaries Consider the people who should receive assets and how the
dispositions should be handled. For instance, outright versus in
trust.
Estate Determine who should administer the estate and any trusts
Administration after death.
Surviving spouse, family, and friends are alternatives usually
initially considered, but thought should be given to professional
administration an entity with the proper experience and
financial support to provide a smooth transition.
Particularly for large and/or complex estates, fiduciary liability
can be a daunting responsibility and should not be thrust on
inexperienced individuals.
Needs of If there are special needs, for example, certain types of
Surviving Family bequests in trust with special language should be considered to
protect and preserve rights to governmental assistance.
Consider asset protection for the next generation to protect
against potential creditors and negative situations with spouses
of your children.
Plan Execution
Once a business owner assesses, studies, weighs options, values the business and works
through integrated retirement and estate planning, it is time to implement the chosen
strategy.
49
The following chart illustrates some fundamental considered in net-present value in order to have an
elements of an effective estate plan that business apples-to-apples comparison.
owners and financial advisors need to consider:
Close
Plan Execution Professionals, such as attorneys, accountants, business
Once a business owner assesses, studies, weighs advisors and financial and estate planners (preferably
options, values the business and works through those previously involved in the business), should help
integrated retirement and estate planning, it is time to structure the most tax efficient process for transferring
implement the chosen strategy. ownership. Proper structuring will help set up the
buyer or successor for continued successful operation
Things to consider along the way: of the business. Working with a wealth management
Preparation professional to properly structure a post-business
Before selling the business, or other transitional wealth management, and estate plan will be a critical
launching pad, weaknesses found in the SWOT analysis part of enjoying retirement.
need to be addressed to ensure the maximum value
for the business. This preparatory phase might include Conclusion
implementing retention bonuses for key employees When it comes to business succession and continuation
that any new owner would want in place for continuity planning, and the interrelated nature of retirement
in transition. Securing business value and avoiding an and estate planning, one piece of wealth management
unwanted wave of key employee exits is paramount. advice may be most important:
Marketing Have ongoing meaningful dialog with family members.

If an outside buyer is the best option, a business owner Regardless of their level of involvement with running
will want to find several qualified buyers to facilitate the business, today or post-succession, taking into
competitive bidding. This will likely require assistance account all relevant short- and long term family needs
from a business broker, investment banker or other and concerns will lay the groundwork for a much more
professional who knows how to showcase businesses satisfying next chapter.
that are for sale and what entities are in the market for
an acquisition. This communication and open dialog imperative also
holds true for key employees to reassure them of their
Due Diligence current and future value to the business, as well as a
Finding a qualified buyer assumes the business owner smooth, efficient and successful continuation of the
is prepared to perform due diligence on potential business.
buyers. Remember, the due diligence period is not all
about potential buyers digging through the business. And remember, it is to a business owners advantage
It is very much a two-way street. to begin the succession and continuation planning
journey well in advance of any such transition. When
Offers the time comes, the right strategic pieces should be in
Once offers have narrowed to ones that are most place, and it is then their chance to make the most of
consistent with the business goals, the transaction the next chapter.
details need to be analyzed. Differences can be
distinct; they can also be inconspicuous. An earn-out
provision makes the ultimate sale price less clear,
while a fixed price contract may provide what seems
like fewer total dollars but is actually higher than
an earn-out in net present dollars. All options need
to be weighed carefully short- and long-term and
50
2015Lineup Announced
McLaren Honda
Fernando Alonso and Jenson Button
McLaren-Honda announce re- new ground in the 1980s by MP4/4, which was driven to
cently its new driver lineup creating a turbocharged en- victory by Ayrton Senna and
for 2015: Fernando Alonso gine that was unparalleled Alain Prost in an amazing
and Jenson Button. Kevin in both its output and its ef- 15 of the seasons 16 grands
Magnussen will remain an ficiency, and, between 1988 prix. The lure presented by
important part of the team, and 1992, McLaren-Honda those same goals has once
as test and reserve driver. All won eight world champion- again brought the legendary
three men will play crucial ships and 44 grands prix, and Japanese corporation back to
roles in re-establishing the took 53 pole positions and set the pinnacle of global motor
ascendancy of one of global 30 fastest laps, all in just 80 racing; and, again, that com-
sports most iconic unions, for grands prix. In 1988, the part- pany, Honda, is developing
McLaren and Honda have al- nership created arguably the its revolutionary new turbo-
ready formed one of the most single most successful For- charged engine at its all-new
dominant partnerships in mo- mula 1 car of all time: the all- purpose-built state-of-the-art
torsport history: Honda broke conquering McLaren-Honda motorsport facility in Sakura,
McLaren and Honda committed to rebuilding the strongest possible partnership in Formula 1...
51
said: I have never hidden my deep admiration for Ayrton
Senna, my favorite driver, my idol on track, my reference.
I still remember, as a kid, the posters in my wardrobe, my
toy cars in which I dreamed I would one day emulate Ay-
rton, and the kart that my father built for my older sister,
and that I ended up falling in love with. That kart had the
livery of one of the most legendary partnerships in the
history of Formula 1, McLaren-Honda, the car that Ayrton
drove, the same partnership to which I am now honoured
to join, to take part in the next Formula 1 world champi-
onship.
I am joining this project with enormous enthusiasm and

determination, knowing that it may require some time to
achieve the results we are aiming for, which is no prob-
lem for me.
Ron Dennis (Chairman & Chief Executive Officer, McLaren)

said: I am absolutely delighted to be on the threshold of
leading McLaren-Honda to a new era of partnership, and
I speak on behalf of all at McLaren when I say that. I am
equally confident that our colleagues at Honda share that
determination and passion to win.
Yasuhisa Arai (Senior Managing Officer, Honda R&D Co

Ltd; Chief Officer of Motorsport, Honda) said: Our part-
nership with McLaren goes from strength to strength, and
I am very excited to welcome as part of our Formula 1
team two great world champions, Fernando and Jenson.
Yet the magnitude of the announcement is quickly bring-
ing me back down to earth to focus harder and stronger
Japan. It is against that backdrop that McLaren and Honda
on the seasons ahead.
committed to rebuilding the strongest possible partner-
ship in Formula 1. The aforementioned Ayrton Senna, in
Kevin has shown remarkable growth in the 2014 sea-
the opinion of many the greatest driver in the history of
son, and we are delighted to continue working with him
our sport, won 30 of the 44 grands prix that McLaren and
throughout 2015 and beyond; we are certain there is
Honda annexed together between 1988 and 1992. Ayr-
much more to come. Honda is dedicated to speeding up
ton once said: We do not need myths. We need exam-
the development of the power unit based on the learn-
ples to be followed examples of courage, determination
ings of the recent Abu
and hope. We need to believe it is possible to win, and it
Dhabi test.
is our duty to pursue that belief.
Working together with these very experienced drivers,

Everyone at McLaren, and at Honda, agrees with every
we will fine-tune and complete the power units to com-
word of that inspirational remark, starting with our newly
petitive perfection towards the new season.
re-recruited driver, Fernando Alonso. Fernando Alonso
52
THE NATALIA GONCHAROVA
ART SCANDAL
by James Butterwick - representing ICAAD
1 2 3
Natalia Goncharova was born in Russia on June 4, their reproduction in two monographs on the artist
1881 and died in France on October 17th, 1962. She by Western scholars and the authors subsequent
was a Russian avant-garde artist and painter. In 2007, protection by a UK based convention of long since
Goncharovas 1909 painting Picking Apples was discredited historians of Russian Art.
auctioned at Christies for $9.8 million, setting a record
for any female artist and her paintings still command Imagine. In Moscow, a monograph is written on William
huge sums. Turner by a Russian art historian and within its pages
are reproduced many new works that were previously
Fast forward to June 2013, German police break up a unknown both to a wider public and to specialists of
major forgery ring and seized almost 1,000 paintings the great painter. There would be a flurry by English
purported to be painted by major Russian artists, these museums to be first in the queue to buy these paintings,
included paintings alleged to have been painted by (assuming they were real!) A sensation. Andrei
Natalia Goncharova. One year later a court case began Sarabianov, The Alternative Goncharova. Artchronika
in Wiesbaden. magazine No. 2011
To protect the Natalia Goncharova legacy, The Background.

International Confederation of Antique & Art Dealers Natalia Goncharova was the worlds most expensive
of Russian and the CIS (ICAAD) together with leading female artist with prices up to $10,000,000 at auction.
Russian specialists, museum directors and collectors In October 2010 and March 2011, two illustrated
brought this to the attention of the wider public in monographs about Goncharova were published in the
what they believe was the systematic forgery of works West, the first by Anthony Parton, the second by Denise
by Goncharova. With a major retrospective of the artist Bazetoux. In these books, hundreds of previously
in Moscow, the time was right to close the debate once unknown paintings appeared for the first time. These
and for all regarding the hundreds of new paintings works have astounded Russian Art experts, collectors
by Goncharova appearing seemingly overnight. The and connoisseurs of Goncharovas work alike. These
paintings were given credence and authenticity with discoveries have been found alongside works by
53
ESPAGNOLE PICKING APPLES
Fetched 6,425,250 Price Realised 4,948,000
It was a record for a painting by a female Estimate
artist sold at auction and it held that record 1,000,000 - 1,500,000
for several years ($1,981,000 - $2,971,500)
4 5 6
Goncharova within the period of paintings that have objects should appear especially when compared with
achieved the highest value at auction. We are not its original in Figure 3.
talking about one or two new discoveries that could
potentially be explained by mistaken attribution or Negative certificates of expertise.
lack of provenance but 150 new paintings that have Specialists from the Tretyakov Gallery, which holds
appeared within a very short period of time that lack the largest collection of works by the artist and her
either credible provenance or exhibition history. archives travelled to Europe to view both the paintings
Still life with a coffee pot and fan (illustrated in figure
In Denise Bazetouxs book about 430 oils by 1) and Still life with sunflowers (figure 6). The museum
Goncharova painted before 1915 are reproduced. Of promptly gave both paintings negative certificates of
these, 148 works are from museums, and another 130 authenticity. However, despite this, the paintings still
have a detailed provenance and exhibition history. appear in Anthony Partons book as genuine. We would
Although its well known that Goncharova painted ask, how could Mr. Parton authenticate these paintings
about 300 oils pre1915, only 22 are unaccounted for. as genuine? By doing so, his certificates, and those of
It begs the question, how could Bazetoux come to the Denise Bazetoux are being used as selling aids on the
figure of 430 paintings? European art market?
Stylistic comparisons. We would also ask, how many paintings by Goncharova

Any experienced art dealer or historian would have have these authors physically inspected? It would
little difficulty spotting which painting have dubious seem that neither author have viewed the Goncharova
authenticity. When, these paintings are analyzed archives at the Tretyakov Gallery.
deeper; their absurdity and that of the other 150
paintings becomes clearer. The peacock in figure Pre-1915 paintings by Natalia Goncharova.
4 is closer to a bizarre pheasant and shows a lack of While it could be argued that it is possible that original
confidence on behalf of the author, unsure how the works by Goncharova created before 1915 with
54
obscure provenance do exist, it is unlikely. This period is quite simpl y not good enough as a provenance for
of the artists work has been very well documented by a seemingly important futurist painting of the 1910s.
contemporary art historians as her work was actively If we take into account the numerous exhibitions
exhibited and recorded in catalogues. There is a of Goncharovas other works, how could such an
comprehensive, authorized list of works by Goncharova important painting have never before been exhibited?
published in the brochure by Eli Eganbyuri in 1913 and In addition, how could it be possible that none of the
a further list of works made by N.D. Vinogradov. The other 150 paintings have ever been displayed publicly?
fate of the artists works that remained in Russia after What possible set of circumstances could explain this?
her emigration to France with Larionov is also well The mystery deepens as the authors of the books and
known. INCORM have refused to answer any questions since
2011.
The total absence of any provenance with these
paintings is another part of the mystery. Most dealers When we look at the descriptions of the Wrestlers
or experts working in any field of the arts will tell you (figure 8) and Cyclist (figure 7) reproduced in these
that such miracles just do not happen or, if they do, two books, it beggars belief, not just stylistically, to
its very rare. Yet, here we have 150 miracles and see that a third version of Wrestlers as being painted
the authors of these books and the organisation that by Goncharova in Anthony Partons book. With no
represents them, INCORM, maintain that the paintings provenance or exhibition history, this wooden, colour
are genuine. free version becomes a veritable pastiche when set
alongside the detail of a 1910 photograph that some
Let us examine one painting and compare it with a believe may have been its inspiration. A photograph
painting held by a museum that is beyond dispute. (fig 9) that seems to have been cut, pasted and
With the painting in figure 4 on page 54, a Western art transferred onto canvas.
historian has used two words, private collection. This
7 8
55
The artist ridiculed Director of the Tretyakov Gallery and Pyotr Aven, a
Her contemporaries were struck by the diversity of her major collector and specialist on Goncharova voiced
work, the richness of fantasy. She hardly ever repeated their accusations openly. In reply, the authors were
a composition Irina Vakar, Tretyakov Gallery, Moscow defended by INCORM whose President, Patricia Railing,
is herself an art historian and has just written a book
Figure 7 on the opposite page is another piece of on Malevich with similar discoveries within its pages.
damning evidence. It is a known fact that Goncharova This reply was ambiguous and at no point answered
hardly ever repeated a composition and yet here we the hard questions posed at the news conference nor
have seven versions on a theme. We have a series those that have subsequently been broadcast on the
of bicycles going in a different direction from the artInvestment.ru site.
original, various automobiles going from right to left
on a variety of backgrounds and, absurdly, what is ICAAD made a request to have these paintings
probably the first representation of the pushbike in chemically analyzed to remove all doubt as to
Western Art History. It will most likely not come as a authenticity, we also offered to pay all costs, Mrs. Railing
surprise that all seven have the same non-provenance, replied that these paintings have technological
private collection, and none of these miracles were expertise accompanying them by known and reputable
exhibited in Goncharovas lifetime. Are Western Art scientists which reveal without a shadow of a doubt
historians really so naive as to believe that an artist as that the works were not painted in our time but were
revolutionary as Goncharova created seven paintings executed at least 60 years ago. These certificates to
on the same theme in the space of a couple of years? which Mrs Railing refers were, in the main, written by
Erhardt and Elizabeth Jagers and yet we know that,
Signatures according to the Press, German police have questioned
A signature is a major rarity for works by Natalia the former who states in the Russian language version
Goncharova of her Russian period Had the authors of the Art Newspaper from the September 2013 issue,
investigated the pre 1915 work of Natalia Goncharova that if these (dubious paintings) were fakes, they were
in any detail, they would have discovered that a done extremely well.
signature on her work pre 1915 is a major rarity. It
almost goes without saying that of the 10 dubious A solution offered.
paintings shown in this document; every single one is In November 2013, the Executive Board of ICAAD
signed or monogrammed. sought a final resolution and officially invited Mrs
Railing, Anthony Parton and Denise Bazetoux on all-
Selling aids and price expenses-paid visit to see the Goncharova personal
Should the authors doubt that these books and their exhibition at the Tretyakov Gallery in Moscow.
certificates of expertise that proliferate on the Western
Art market are used as selling aids, a glance at auctions It goes without saying that no reply was received.
in Germany over the last 10 years, or France will confirm
the facts. It is instructive to note that the estimates for ICAAD believes that the time for answers has now
these paintings is a fraction (20%) of what it would come. The Art world at large needs to know the harm
have been had the picture been genuine. Coupled to such books can do to the reputation of a great artist.
this is the fact that the major London auction houses, ICAAD have requested that all copies of these books
the center of the Russian Art market, have long ago be withdrawn from circulation and have reminded
rejected certificates from these two authors as well as Anthony Parton, Denise Bazetoux and Patricia Railing
other members of INCORM. Why? of their responsibilities as art historians. They have also
been asked to cease writing certificates for paintings
Denouement. that, on our evidence alone, cannot have been painted
In a May 2011 news conference, leading figures in by the hand of Natalia Goncharova.
the world of Russian Art including Irina Lebedeva,
56
Is digital communications print undergoing a renaissance?
The Print Renaissance

Far from being pushed aside by digital communications
print is undergoing something of a renaissance, serving
as a key element in sophisticated multi-channel
marketing campaigns. Yolanda Noble, Managing
Director of Millnet Document Solutions, explains how
print is dovetailing expertly with digital campaigns to
drive engagement and boost response in the arts and
entertainment sector.
Tablets, smartphones, social media, web the number

of ways of reaching customers and prospects seems to
grow year on year. But while arts and entertainment
organisations of every size wrestle with harnessing the
potential of these digital communication opportunities,
one very traditional media is undergoing a revolution
that is making consumers sit-up and take notice.
The print and production industry has been furiously

innovating, driving printed output that forms the eye-
catching cornerstone of the very latest multi-channel
campaigns. Some marketing analysts have equated Yolanda Noble, MD Millnet Document Solutions
the latest focus on print with that of the upsurge in
sales of vinyl records a reaction to a saturated digital Once prepared, data can be put to work across any
market and a nostalgic nod to the past. But this is a channel. Highly personalised letters, emails, direct
false comparison. Far from competing against the latest mail communications and brochures can be used in
digital upstarts for marketers affections and budget, any combination with the personalisation factor
print is being used in tandem with digital marketing to proven to improve conversion (or engagement)
powerful effect. rates by up to 25%. New innovations in print
enable such personalisation to extend cost-
A recent finding from the Direct Marketing Association effectively to hard-copy marketing materials. High
reveals that 74% of consumers are happy to receive quality, full colour digital printing allows text
direct marketing if the approach is relevant. Clearly, and image data to be swapped out and adapted
data plays a critical role in achieving this relevancy and to segment the creative to an individual level,
leading players in the charity sector are working with presenting the recipient with a tactile, highly-
specialists to achieve the desired level of data hygiene. personalised mailpiece.
An in-depth data analysis can cleanse, enhance and de-
dupe data, enabling recipients to be categorised and The tangibility of print - having something to
targeted with messages that are directly relevant. hold and read at leisure is regarded by many
57
PHILANTHROPIC CAUSES
entertainment industry commentators as a definite plus

UNIVERSAL FILM AND
amidst the digital deluge. The latest print technology is
able to efficiently process a huge variety of paper-stocks, FESTIVAL ORGANISATION
and the choice of paper and the chosen finish can play a
huge part in brand perception and conveying brand values.
This is certainly recognised in the retail sector particularly
amongst fashion brands where catalogues and look-books
are printed on tactile papers with specialist finishes. Whilst
the arts and entertainment sector is different, many are
recognising that the quality of printed output can influence The Universal Film & Festival Organisation
factors such as how long a campaign mail-out is retained (UFFO) was founded to support and
and resulting response rates. Whatever combination of implement best business code of practice
print and digital is used to convey the campaign message for film festivals throughout the world. It is
it is vital to capture subsequent response and to use this now dubbed FEST-COP and its logo is now
information to inform future campaigns. Again, arts and a common sight at many film festivals. The
entertainment organisations are working with specialist UFFO is a global not-for-profit voluntary
document solutions providers to capture and convert organization, and it created its remit of best
business code of practices for film festivals
campaign interaction and feedback. Activity can be
to combat the high level of corruption that
monitored and recorded, providing valuable insight into
blights the industry.
the targeted market and the preferred method or methods
of communication. Its president is legendary actress Maureen
OHara and the organization now has at least
Often, the printed element of a campaign will include a 225 film festival members.
call-to-action that drives the recipient to a website and
encourages an online response. This digital interaction UFFOs FEST-COP is completely voluntary,
should be measured, and the best partners will make free and easy to implement. In addition, it is
such tracking easy and instant allowing real-time a blueprint for filmmakers in deciding which
analysis of online responses via a personalised online film festivals to do business with. Only film
dashboard, offering variable statistics and live reporting festivals, which have subscribed to the UFFO
on a campaigns performance. In a digital age, some arts best business code of practice, are entitled
to use the UFFO logo.
organisations may be under the misconception that print
is an inflexible and outdated means of reaching out to
The organization is now seeking a benefactor
stakeholders. In fact, the very opposite is true. Used in
to help it move forward with it plans to further
conjunction with digital communications, todays print its remit and to create an online porthole
options provide these organisations with a powerful payment system to ensure filmmakers can
means of delivering eye-catching, highly personalised deal with film festivals via a trusted source.
campaigns that speak directly and convincingly to the The porthole will also act as a distribution
audience. platform and as an online TV channel.
Competition for funding has never been tighter, and it In addition, UFFO is planning the Best of
will be increasingly difficult to generate income without Festivals event and bringing the member
stand-out marketing. Increasingly, the sector is waking festivals, their best films, actors, directors
up to print being a key element of this multi-channel and producers to one event that will rival the
biggest events in the world.
conversation.
Email info@uffo.org. - www.uffo.org
58
Is The Time Now Right For Investment Opportunities in
MINERAL DEVELOPMENT?
Is this an excellent time for seriously considering mineral development opportunities
TIMING IS EVERYTHING
by Zig Lambo - Resource Capital Consultants
substantially from their highs of production. There are certainly

the past several years. Meanwhile, risks involved at both ends of the
general demand continues to spectrum. As large companies
grow with expanding global grow, it becomes more difficult
economies. Besides precious to sustain that growth without
metals (gold, silver, platinum, making ever larger investments
palladium, rhodium), there are also in projects that can sometimes
the rare earth elements (REE), base run into problems. As with other
metals (copper, lead, zinc, nickel, industries, when companies
molybdenum, manganese) and reach a certain size, the most
other minerals such as tungsten, advantageous means to significant
lithium, graphite and potash. Each growth is through acquisition of
has its own applications, markets other companies in the industry.
and price cycles. Gold and silver This is taking place now with
Timing is everything is a saying act more as economic and financial bargain hunting acquirers taking
that is often forgotten in making hedges than simple commodities advantage of low stock prices, as
investment decisions. Its not so and both are currently trading near the market bottoms in this industry.
much what you buy or sell, but their lows of the past five years. One important point to consider
when. One area, which is probably This is taking place in spite of regarding mineral development is
being overlooked at this time by geopolitical factors that, in the past, that the process involved in going
many private investment funds, would have been causing them to from discovery and development to
is mineral resource development. hit new highs. Apparently investors actual production on an individual
This includes precious and base are more focused on economics project takes anywhere from five
metals, as well as other commodity than politics at this point, and feel to 10 or 15 years. In that respect,
minerals essential to the world more comfortable in the stock its much like the development and
economy. market. That could change quickly approval process for a new drug.
if stock markets retreat further, and Most investors are not interested
So why is this an excellent time another financial crisis become in waiting around that long to see if
for seriously considering mineral evident. their investment bears fruit. So its
development opportunities? important to map out an investment
Probably the best reason is that So how can private capital invest strategy at the start that defines
many undervalued situations now in this sector? The most obvious objectives, time parameters and
exist due to the cyclical nature of answer is through the stocks exit strategies. f all you plan to do is
the business. As the U.S. and most of companies already involved buy publicly traded mining stocks,
other major stock market indexes in mineral development and the process is much the same as
recently hit new highs and have mining. These range from the buying other types of equities. If
started retreating, prices of most huge multinationals down to the plan is to get involved more
metals and minerals are down small companies still working on directly in individual projects, or
developing projects to put into with companies on a joint venture
59
basis, the factors involved are more ventures on certain parts, possibly company by providing financing to
complicated. This should obviously selling the whole project at some advance an existing project. Further
be offset by significantly higher stage of development, or taking down the liquidity ladder, with
potential returns. In some cases, the whole project to completion. greater upside potential, would be
these returns can turn out to be There are entry and exit points to provide funding for exploration/
10:1, 20:1 or even 50:1. There is throughout this whole process for development on a project with the
also a downside. Things rarely go investors, depending upon their idea of bringing it to a point where
according to plan, so the investor goals and financial capabilities. The a larger JV partner would come in to
must be prepared for unexpected same approach can be taken with take over further development and
delays, disappointments and cost- mineral resource development, ultimately, production. Still another
overruns. (Just like most things in except that sometimes, a relatively option would be to create a fund to
life.) small investment at a critical stage invest in a number of developing
in the process can multiply the companies or projects which would
An exit strategy should be defined value many times over; like buying provide more diversification and
by the stage at which the investor a distressed property and doing spread risk.
decides to enter a project, and how some minimal work for a quick flip.
far they wish to participate in terms Investment methods outside of We have just barely scratched
of time, investment and milestones straight purchases of publicly the surface on all the types of
achieved. This could be compared to traded stocks can take several opportunities now available in
something like a land development forms. The best short-term metals and minerals investments.
project. Depending on the size liquidity would come from private In subsequent articles, we will go
and type of development, it would placement purchasers of common into more detail on what to look
start with acquisition of land, stock in small to medium-sized for, and the various considerations
progressing through planning, companies that are already in involved in making intelligent
parcelling out various sections production or advancing projects investment decisions. Suffice it to
for specific purposes, possibly to near-term production. Another say that now is an excellent time
selling some or all the parcels to option is to enter into a joint to seriously investigate this greatly
other entities, perhaps doing joint venture with an established undervalued investment sector.
t: +44 1223 881691 e: sales@1066pianos.com www.1066pianos.com
INTE RNATIONAL
DE LIVE RY
S E L F P L AY I N G
S Y S T E M S AVA I L A B L E
PLEASE CONTACT US FOR FURTHER DETAILS ON THESE EXCEPTIONAL INSTRUMENTS FROM THE 1066 PIANO COLLECTION
60
HONDA
JET
61
Honda Aviation and the
HONDA-JET
1986: Honda begins research in Japan on both small aircraft and jet engines.
The first Honda-Jet achieved its initial flight 2014.
SPECIAL PERMISSIONS FOR RE-DISTRIBUTING THIS ARTICLE ARE NEEDED,
The Honda-Jet is an advanced light using a patented integral co-curing and most of Europe. The HondaJet
jet with revolutionary technology process, reduces weight for optimal is offered in a seven-seat executive
and design attributes that help it performance and payload capacity, configuration, including enclosed
achieve far better fuel efficiency, while also reducing manufacturing lavatory, for US $4.5 million with
more available cabin and luggage complexity. The state-of-the-art FAA certification. The first flight of
space, and higher cruise speed than glass cockpit includes the latest the first FAA-conforming HondaJet
conventional aircraft in its class. version of the Garmin G3000 took place Dec. 20, 2010, On March
avionics platform with features and 11, 2011, the first conforming
A patented Over-The-Wing Engine capabilities unique to the HondaJet. HondaJet achieved a maximum
Mount (OTWEM) configuration The HondaJet features a 40/60 speed of 425KTAS (489 mph)
was developed using advanced display configuration on both of at 30,000 feet and Mach 0.72
concepts in aerodynamics and the G3000 Primary Flight Displays above 30,000 feet and surpassed
design simulation. The OTW EM (PFDs). This 40/60 enhancement the companys performance
configuration eliminates the carry- provides an easier visual scan for commitment of 420KTAS for the
through structure of conventional pilots and contributes to improved production aircraft. The aircraft also
fuselage-mount designs, allowing situational awareness and safety achieved its maximum operating
for greater use of fuselage space for by allowing the pilot or co-pilot altitude of 43,000 feet on April 27,
the cabin and external cargo areas. to select and show additional 2011. On Nov. 18, 2011, the third
The configuration is also designed to information within a customizable FAA-conforming aircraft made its
reduce cabin noise. By optimization tile that consumes approximately first flight. On May 4, 2012, the
of the design and placement of 40 percent of the width of each 14- fourth FAA-conforming jet achieved
the engine nacelles, the HondaJet inch wide, high- resolution displays. its first flight.
OTWEM configuration actually
exhibits less drag at high speeds Milestone Achievements: The Honda Aircraft Companys second
than conventional clean wing HondaJet was designed and FAA-conforming aircraft completed
designs, contributing significantly to developed by Honda engineers its series of ground-based structural
the aircrafts superior performance working in the U.S. and Japan. testing in early 2012, with
and efficiency. Honda Aircraft Company, based in additional structural test aircraft
Greensboro, North Carolina, USA, in production. in the second half
A natural laminar flow (NLF) wing was established in August 2006 to of 2012, Honda Aircraft Company
and fuselage nose were developed oversee certification, production moved into aircraft production.
through extensive analyses and and sales of HondaJet. The proof- On May 16, 2013, the fifth FAA-
wind-tunnel testing. These designs of-concept (POC) HondaJet made its conforming HondaJet made its first
help achieve lower aerodynamic first flight on Dec. 3, 2003. Pplication flight. On Dec. 20, 2013, the FAA
drag at high speeds together with for FAA type certification was made issued the first Type Inspection
a high lift coefficient. An advanced, on Oct. 11, 2006. European EASA Authorization certificate for the
composite fuselage structure, certification is being pursued HondaJet. On June 27, 2014, the
consisting of a unique combination concurrently with FAA certification. first production HondaJet achieved
of honeycomb sandwich and The HondaJet is currently offered its first flight.
stiffened panel structures joined for sale in the U.S., Canada, Mexico,
62
Michimasa
Fujino
President and Chief Executive Officer, Honda Aircraft Company
Michimasa President and Fascinated by flight at an engineering ranks to become
Chief Executive Officer, Hon- early age, Fujino has been a vice president with Honda
da Aircraft Company Michi- passionately devoted to R&D Americas Inc., and named
masa Fujino is the founding fulfilling Hondas dream the large project leader for
president and CEO of Honda to take personal mobility the HondaJet. In this capacity,
Aircraft Company. At Honda skyward. Not only did he he led all engineering
Aircraft, he is responsible for design, build and sell his tasks from design through
Hondas overall aircraft busi- concept for the HondaJet, experimental verification and
ness strategy, and the fur- Fujino has been a driving flight testing of the proof-of-
ther development, marketing, force behind the formation concept HondaJet. Fujinos
sales and production of the and continued growth of clean sheet design for an
innovative HondaJet. Since Honda Aircraft Company. advanced light jet that could
2009, he has also concurrent- Prior to becoming president achieve both high speed and
ly served as an operating of- and CEO of Honda Aircraft, high fuel efficiency led to the
ficer of Honda Motor Co., Ltd. Fujino rose through the development of key Honda
Fujino has received international recognition...
63
contributions to aeronautical research and
design. He has been the recipient of numerous
international awards and distinctions, including
the SAE International Clarence L. (Kelly) Johnson
Aerospace Vehicle Design and Development
Award (2014), International Council of the
Aeronautical Sciences Innovation Award (2014),
American Institute of Aeronautics and Astronautics
(AIAA) prestigious Aircraft Design Award (2012),
Japan Industrial Designers Association Design
Museum Award (2011), and Aviation Week and
Technologys Vision Award (2008). His extensive
research and theories on aircraft configuration
design, advanced aerodynamics and aeroelasticity
have been published in numerous technical and
academic journals, and he holds several patents
for aircraft design. Fujino joined Honda R&D
Co. Ltd. in Japan in 1984 after graduating from
Tokyo University with a degree in aeronautical
engineering. He resides with his wife and three
children in Greensboro, North Carolina.
Professional Record:
1995. Chief Engineer, Honda R&D Co., Ltd.
1997. Large Project Leader, Honda R&D Co.
2005. Vice President, Honda R&D Americas

technologies and concepts. Fujino discovered
the optimum location for the HondaJet Over- 2006 Present. President, CEO and Chief
The-Wing Engine Mount configuration. This Engineer, Honda Aircraft Company.
aeronautical breakthrough was proven to
2009 Present. Operating Officer, Honda
dramatically enhance aircraft performance,
Motor Co., Ltd.
fuel efficiency and passenger comfort. He also
developed a new natural laminar flow (NLF)
Educational Background:
wing and fuselage nose for the light jet and new 1984. Tokyo University (Japan). Bachelor of
application concepts in composite structures Science, Aeronautical Engineering
contributed to a lighter airframe. These three
innovations combined allow the HondaJet to 2014. Tokyo University (Japan). Doctorate, En-
achieve highest speed, superior fuel efficiency gineering
and the most cabin and luggage space over
other light jets in its class. Fujino has received
international recognition for his pioneering
64
TRUSTED FAMILY
The Value of a Family Portal for Multi- Generational Business Families and Family Offices
Edouard Thijssen: Head of Americas Karl Malmstrm: Head of EMEA
Most family business and family office professionals are It is estimated that only 10% of business families
familiar with the statement Once you have seen one manage to keep the family business and/or the family
family office, you have seen one family office. Even wealth together for more than 3 generations which
if its true that every family is unique, most business highlights that many families underinvest in the
families around the world face similar challenges. management of the family, versus in the management
of their business(es) or investments.
As a family moves from one generation to another: Researchers Williams and Pressier have shown that
The family gets bigger In 60% of the cases this is due to lack of
Family members spread out across different communication in the family
cities, sometimes even countries In 25% of the cases this is due to lack of education
Fewer family members have an active role in the and preparation of the next generation
original business that created the family wealth
The next generation grows up with different Many families facing the above challenges have
educational backgrounds, skills and interests migrated to new technologies and implemented secure
Ownership stakes start to vary (usually from family portals as a way to facilitate communication and
the 3rd generation) education, thereby creating the conditions to keep the
family together. This article highlights the value family
The more the family advances through the generations, portals can bring to multi- generational business
the more difficult it becomes to manage. families and to the family offices that represent them.
65
The 6 activities that you can enhance family boards, investment committees, and working
through a family portal groups, in order to facilitate better governance.
Family portals are typically used to achieve one or more Family portals can enable each of these groups to:
of the following 6 goals :
Schedule and arrange meetings
1. Communication - Given that communication is key Share minutes of meetings
for long-term family, family business and family office Collaborate online on working documents, to-do
success, family portals are a great way to facilitate: lists, etc.
Archive the key decisions that they take
Family to family communication
Shareholder communication from the family 4. Education - With a larger shareholder base or an
business(es) to the family upcoming next generation, shareholder education
Client communication between family office and next generation training becomes increasingly
staff and family members important. Bringing everyone together in one room
can often be challenging, certainly if certain next
Family portals, when setup correctly, offer greater generation members study abroad or if the family
security than other communication channels such as is geographically dispersed. Families can reinforce and
email. In addition, they allow for more transparency in complement their in-person education initiatives by
communication, the ability to archive and track setting up a portal to:
communication, and to organize in a more structured
way. Post regular training and educational videos that
people can watch remotely
2. Document management and archiving - In todays Organize virtual training sessions
complex and global world, the number of documents through webinar technologies and post
family members and family office or family business recordings on their portal
staff members need to manage increases every day. Build an online education library with key
resources and materials that family members can
Family portals can help to: access at any time to develop their knowledge
and skills
Make documents available to the right people at
the right time, through flexible permission systems 5. Family legacy, cohesion and history - Many families
Share sensitive documents more securely than struggle to keep family members interested in the
through email business or close to other family members. Another key
Organize and archive documents in shared challenge is to maintain family values over generations,
folders, so that authorized people have access to and to build cohesion while respecting family diversity.
the latest version of important files
Systemize document retention and record- Family portals can be used to:
keeping for the long term, so that it is possible to Share and document family history and values
go back in history to know what was decided when Maintain a live and interactive family tree so
Create private vaults for each family member that family members can more easily connect to
to store and share their individual data and the family and understand its structure
information Create interaction between family members who
may not necessarily know one another very well
3. Governance - As families grow from one generation or at all
to another, many families set up family councils,
66
The Value of a Family Portal for Multi- generational Business Families and Family
6. Administrative automation & reporting - Most The number of family office staff or advisors
families or family offices often appoint one or more The day to day family involvement in the core
individuals as to maintain the family member database business activities
or to organize family meetings. As the family grows, Conclusion
this can become increasingly time-consuming. In todays globalized and increasingly mobile world,
family portals have the potential to become virtual
Family portals can automate repetitive tasks and help information and coordination hubs for business
to: families and family offices around the world.
Automate event scheduling and organization
with online invitations and reply forms About TrustedFamily
Centralize the family member database and TrustedFamilys two multi-generational Belgian
enable family members to update their data families, behind Solvay Group and Aliaxis group
immediately
Transform your lifestyle. respectively, realized that their families were facing
the challenges highlighted in this article, and thought
In addition, portals can also offer detailed metrics on that in todays world, the most effective way
family members on- portal activity and engagement, to communicate and educate the family was by
which is an invaluable source of feedback for the leveraging technology. They built a secure family
family council or board. portal solution for their own use, and realized many
other families around the world shared the same
The six criteria to evaluate your needs. They founded TrustedFamily in
familys need for a portal 2007, and decided to share this platform with the wider
The need for a family portal will vary from one family to family business community.
another, but will in most cases increase along with the
following drivers: TrustedFamily has offices in Brussels, New York
and Seattle, and currently works with over 80
The number of family members / shareholders business families, family-owned companies, family
older than 18 foundations, single family offices and multi- family
The number of entities offices in over 22 countries.
The number of governance bodies or workgroups
The geographical spread of the family
Transform your lifestyle.
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Impacts on the asset prices and real economy
QUANTITATIVE EASING
Quantitative easing used by central banks to stimulate the economy
Georgios Mavraganis is a Senior Personal Banker at Piraeus Bank
SPECIAL PERMISSIONS FOR RE-DISTRIBUTING THIS ARTICLE ARE NEEDED,
Quantitative easing (QE) is an the mechanism of quantitative amount of open-ended purchases

unconventional monetary policy easing. On November 25, 2008 from $40 billion to $85 billion
used by central banks to stimulate the Fed announced 600 billion per month. On 19 June 2013, Ben
the economy when standard quantitative easing program dollars Bernanke announced a tapering
monetary policy has become of mortgage securities and bonds. of some of the Feds QE policies
ineffective. The program then expanded to 1.15 contingent upon continued positive
The central banks buy bonds and trillion dollars. In 2007, the Fed rate economic data.
other bank assets and thereby was 5.25%. In the next seventeen
increase the prices of bonds and months decreased the interest United Kingdom
assets. Mario Draghi recently rates to 0.25% and the overnight During its QE program, the Bank of
surprised the markets, and the ECB reached 0%. In November 2010, England bought gilts from financial
announced purchase program of the Fed announced a second institutions, along with a smaller
covered bonds and asset backed round of quantitative easing, amount of relatively high-quality
securities that are essentially loans. buying $600 billion of Treasuries debt issued by private companies.
The ECB announced quantitative by the end of the second quarter The Central Bank had purchased
easing program, which may reach of 2011. The expression QE2 around 165 billion in assets as
500 - 625 billion Euros. Citigroup became a nickname in 2010, used of September 2009 and around
has estimated that it may be up to to refer to this second round of 175 billion in assets by the end of
one trillion euros. quantitative easing by US central October 2010.
bank. Retrospectively, the round of
Japan quantitative easing preceding QE2 How do asset purchases work?
The QE was first used by the Bank was called QE1. The aim of quantitative easing is to
of Japan in 2000 in order to fight inject money into the economy in
deflation. However, the policy of A third round of quantitative easing, order to revive nominal spending.
quantitative easing did not work as QE3, was announced on 13 The Bank is doing that by purchasing
expected. The BOJ increased the September 2012. In an 111 vote, financial assets from the private
commercial bank current account the Federal Reserve decided to sector. When it pays for those assets
balance from 5 trillion to 35 launch a new $40 billion per month, with new central bank money, in
trillion (approximately US$300 open-ended bond purchasing addition to boosting the amount of
billion) over a four-year period program of agency mortgage- central bank money held by banks,
starting in March 2001. The BOJ also backed securities. Additionally, the it is also likely to boost the amount
tripled the quantity of long-term Federal Open Market Committee of deposits held by firms and
Japan government bonds it could (FOMC) announced that it would households. This additional money
purchase on a monthly basis. likely maintain the federal funds then works through a number of
rate near zero at least through channels to increase spending.
United States 2015. On 12 December, 2012, the
In 2008, the Fed decided to use FOMC announced an increase in the This is the fundamental mechanism
69
through which such a monetary expansion influences quantitative easing programs contribute to systemic
spending and hence inflation. Money is highly liquid stability. Furthermore, quantitative easing programs
because it can easily be used to buy goods and services contributed to the large increase in stock prices, leading
or other assets. The increase in the private sector to increased consumption, may not be a panacea to
liquidity will depend on the liquidity of the assets that economic problems. For example, if banks have excess
are being exchanged for money. liquidity, do not lend to businesses and households,
the positive effects of the quantitative easing programs
Impact on the asset prices are mitigated. The large increase in the money supply
By definition, quantitative easing is an unconventional also has advantages and disadvantages, especially in
method of monetary policy pursued by central banks. Europe, where countries follow austerity programs.
Banks will dramatically increase liquidity, and this Generally, the country implementing quantitative
will lead to rally stock markets, banking shares and easing, depreciates its currency making it more
will generally cause artificial euphoria in the markets appealing to domestic investors due to lower interest
riveting nadir bond yields. It is no coincidence that rates. In addition, more money is in circulation which
the German bonds from 1 to 3 years showed negative will probably be invested elsewhere, causing foreign
returns means that anyone, who invests in short-term trade to increase.
German bonds, is losing capital. The bond market in
Europe continues to rally prices rise, yields decline and On the other hand, if the central bank does try to avert
all because of expectation - confirmed - that there will higher inflation and interest rates when the economy
be quantitative easing by the ECB. starts growing again, it has to drain the money it has
pumped into the banks before. The more money was
The three quantitative easing programs greatly helped printed, the more money has to be withdrawn from the
the U.S. stock market. The barometer index S&P 500 system. This will lead to more downward pressure on
at end of October 2008 was 900 units, and in late asset prices if the central bank reverses this process.
2011 had reached the 1280 points. By late August
2014, S&P 500 has climbed the wall at 2000 units or Georgios Mavraganis is a Senior Personal
122% increase in six years. Impacts on real economy Banker at Piraeus Bank Greece servicing High
IMF economists agree that in times of great crises Net Worth Clients.
70
competitive edge. For family offices built around
exceptional investment management services, a
more robust specialty services platform promotes
healthier client relationship, says Rick Flynn,
managing partner of Flynn Family Office, a premier
family office and business management company
serving ultra-wealthy individuals, families and their
advisors. Ultra-wealthy families will generally
not hesitate to replace a manager that fails to beat
benchmarks. If that professional is also overseeing
personal security, or facilitating concierge healthcare
for the family, investment performance becomes
only part of the equation.
As Russ Alan Prince, executive director of Private

Wealth magazine, wrote in his Serious Money
column on Forbes.com, Strategic outsourcing, in
effect, is an extremely powerful and ubiquitous trend
in the family office universe. The issue is to engage
in strategic outsourcing wisely. Flynn agrees.
Phil Family offices should understand that the overall
Bolsta relationship will be judged not on the best, but
rather on the weakest service experience provided,
he says. Its wise to develop specialty provider
relationships over time and engage select firms only
FAMILY OFFICES after exhaustive vetting.
OUTSOURCING One specialty service frequently mentioned

in the pages of Private Wealth magazine is the
documentation and cataloging of tangible and digital
SPECIALITY SERVICES assets. As Flynn noted, two of the most popular
outsourced services are concierge medicine and
by Phil Bolsta
personal security. The benefits of these services are
Family offices are under siege. Rising costs, talent manifold, as evidenced by the following provider
migration, competitive pressures and ever-increasing profiles.
client demands are straining resources and eroding
profits. As this Darwinian perfect storm intensifies, the Archival Property Solutions
fittest family offices are differentiating themselves by Archival Property Solutions (APS) documents and
outsourcing specialty services to trusted providers. catalogs the nonfinancial assets of UHNW individuals
Its much more efficient and effective to offer these and families for support of family office and wealth
services through third-party sources that specialize in management activities. This documentation keeps
those respective areas than try to bring the resource in- family offices and owner-authorized users updated
house on a full-time basis, says Linda Mack, president and informed, allowing them to better manage their
of Mack International, which provides executive search client relationships.
and consulting solutions to family offices. Indeed,
offering top-tier clients an a la carte menu of specialty APS will keep the clients digital catalog current,
services that are beyond the scope of a family offices organized and offsite in the cloud. A family office
core competencies can give the family office a distinct can access and leverage this private, secure catalog
71
of images and information (including scans of embezzlement, investment schemes and related
confidential documents and data) as a resource for matters. Of course, the best risk management
a variety of services and activities, from tax strategy solutions are those that anticipate, neutralize and
and estate planning to wealth management and prevent threats from ever materializing.
personal- and business-related legal work. The family
office can also help clients determine whether their WorldClinic
insurance coverage is suitableas well as furnish WorldClinic, a global leader in concierge healthcare,
proof of ownership and valueshould these assets provides premium medical care, diagnosis and
be lost, stolen, damaged or destroyed. Whats more, treatment to ultra-high-net-worth clients on
owners can view their nonfinancial assets (including an anytime, anywhere basis. WorldClinics staff
medical records and healthcare directives in case of of full-time, part-time and on-call physicians,
emergency) at any time on any connected device. surgical specialists and board-certified emergency
physicians, as well as its referral relationships with
A digital catalog allows the family office to be in dozens of major metropolitan medical centers
full command of crucial details of a clients tangible around the world, enables the company to connect
personal and business assets, rather than proceed their physicians to a client via phone or video within
with partial, undocumented, uncertain or unknown 30 seconds.
information that may result in some assets being
undervalued or overlooked altogether. Customized care plans are based on a review of
the patients medical records and lifestyle issues.
Kroll WorldClinics continuous care offering includes a
Kroll, a leading global risk management firm, provides calendared action plan for personal longevity and
services to high-net-worth individuals, family offices wellness coupled with an immediate telemedical
and businesses of all sizes, including Fortune 500 diagnosis. The firm leverages smartphones to
global companies. Through its more than 50 offices connect with clients via video, check their vital signs
across 26 countries, Kroll seamlessly integrates its and monitor their conditions from afar.
private client services into clients lifestyles. Krolls
multidisciplinary team includes experts in the areas Through its due diligence, WorldClinic has identified
of intelligence, information technology, finance and the best hospitals in every major city in the world
accounting, law enforcement, cyber security and for critical procedures and specialist care, and can
other sectors to ensure that clients and their assets deliver medical records on demand to wherever they
are optimally protected. are needed, along with local translators if necessary.
Krolls private client services fall into five broad Clients traveling to remote areas are assured of
categories: around-the-clock connectivity through whatever
personal and business protection security needs, technological means are necessary. When called for,
including threat and vulnerability assessments, the company will deploy a paramedic or doctor to
training and education and travel-related risk accompany a client or traveling companion to ensure
assessments and protection; their well-being.
investigative and financial due diligence on
potential advisors, investments and joint venture Conclusion (to be set off graphically from the profile
opportunities; above) Ultimately, outsourcing specialty services
cyber security threat assessments, including ensures that the various needs of family office clients
vulnerability of personal data, ID theft and providing can be satisfied with quality results from reliable, on-
remedies; demand sources in a timely and professional manner.
fraud risk assessments, operational and compliance
risk management, and IP theft detection;
internal investigation of financial fraud,
72
BRITISH POLO DAY CHINA
Jeremy Hackett joins Chinese society and business moguls
POLO DAY IN CHINA

by Sophie Edwards
The Tang Polo Club, Beijing
British Polo Day China was
presented by Land Rover
and entertained over 800
guests and VIPs at Beijings
prestigious Tang Polo Club.
The event was hosted by Mr
Shilai Liu, British Polo Day
Chinas fast-paced polo and
glamor proved to be a fitting
prelude to the upcoming
China Open Polo Tournament.
The Land Rover Trophy took

place between the Pond
Mobile British Schools and
Royal Salute Tang Polo Club
teams.
73
SATO CONSULTANTS
REPUTATION & MEDIA CRISIS MANAGEMENT
RIGHT TO BE FORGOTTEN SERVICE - MEDIA CRISIS PLANNING AND
POLICIES - PUBLIC RELATIONS - REPUTATION & MEDIA MANAGEMENT
SATO Consultants is a specialized consultancy firm to Family Offices and UHNWIs.

Our primary objective is protecting the reputations of our clients
Tel: +44 (0) 20 7193 8870 - www.satoconsultants.com - info@satoconsultants.com

Skype: satoconsultants - Follow us on twitter @satoconsultants
74
FAMILYOFFICES
The Greater China Region
Eve Law
In this months issue, we are interviewing Ms. Eva investment management, risk management, asset
Law about the PWM industry. Ms. Law established & liability management, product development and
the Association of Private Bankers in Greater audit committees. Eva has a wealth of management
China Region in 2010 which set out to promote experience; she has won the Best Master Trust Award,
industry development, offer professional training to Wealth Management High-Flyer Award and various
practitioners, foster knowledge and launch a service Fund Performer Awards from Lipper and Morning Star
portal designated for market participants. In 2013, for her served companies. She studies MBA and Master
Eva also set up the Association of Family Offices in of Science with the University of Iowa and Edinburgh
Asia targeting to support ultra-affluence and industry Napier University. She is a Chartered Family Office
practitioners who have intimate relationship with Specialist and has awarded FLMI certificate, Bachelor
ultra wealthy to establish and manage their family of Art (Hon) and several professional diplomas in
councils, single or independent family offices and investment banking, mergers & acquisition and asset
to administer the familys wealth succession and management professions.
strategic philanthropy.
FOE: Eva, Can you briefly account the current industry
Eva has served the industry for seventeen years. competitive landscape of Private Wealth Management
Before setting up the Association, she worked in in Asia?
the head office of top-rated Chinese bank, and was
responsible for the strategic development and Eva: I think the industry is passing through a
the P&L performance of private banking & cross- consolidation and is now facing keener competition.
border financial services. She has worked with a
Chinese boutique investment banking firm, through Many wealth managers are citing the rising costs
leveraging Swiss EAM private banking platform and of compliance as a major impediment to their
arranging direct investment to serve the Ultra HNW business growth. Not only are regulations
clients in great China region. Eva also served a becoming stricter in terms of approving
number of Fortune 500 companies, including global a new client account, existing
bank, pension fund, asset manager and insurer, taking clients are also subject to more
leadership positions and sitting in board of directors, pervasive surveillance
75
on their trading activities and banking transactions. wealthy to those in the West, they are less experienced
Concurrently, the industry is undergoing massive in utilizing the full suite of wealth management
changes since the global financial crisis. Consolidation services which often encompass financial planning,
is happening rapidly, and there have been significant investments, trust services, tax planning across several
merger and acquisition activities among the key jurisdictions, inter-generational wealth transfer and
players over the last two years. philanthropy.
The number of international names in Asias Many Asian clients derive their wealth from their
private banking arena has reduced lately with the business ventures and in every conversation they have
disappearance of names such as Merrill Lynch, ING, with their advisor, their business issues inevitably
Clariden Leu, BSI, Societe Generale and Fortis. come into the picture. In fact, so intertwined are their
business and personal wealth needs that a number of
On the surface, it looks like the competitive landscape wealth managers are realigning their business banking
has grew milder with fewer players but on closer and private wealth solutions to better cater to the
scrutiny, the level of competition has actually grown needs of these business owners and entrepreneurs.
keener with the emergence and rise of the independent The level of sophistication and competence of the
asset managers and family offices. private banker, therefore, has a strong influence on
client experience.
Global financial institutions such as investment
banks and fund managers which traditionally arent Profile of AFO & APB
strong players in the wealth management space are Association of Family Offices in Asia (AFO) is a
also jumping on the bandwagon on the promise of professional society in Asia distinctively gathers
the creation of new wealth and the huge potential principals and senior practitioners in single and
opportunity in Asia. It is no surprise that clients in Asia multi family offices in the region. AFO offers a range
are baffled by these recent developments. of consultancy services and organizes activities to
facilitate collaboration and co-investment among the
FOE: So in general what is the banking experience of circle.
the Wealthy Families in Asia?
Eva: Many of Asias wealthy families are finding it hard

to discern among the various service providers, let
alone understand how relevant their service would
be for them. With the financial crisis still fresh in their
minds, many are still cautious about getting into a new
banking relationship as they have seen how even well-
established names have faltered during the crisis.
However, managing their own money is a difficult and Association of Private Bankers in Greater China Region
time-consuming task, and Asian clients know that if is the first professional society in North Asia which
they want to enjoy their wealth and be able to sleep gathers and trains private bankers and specialists
well at night, they need professional help. working within family offices, independent asset
managers as well as boutique investment houses.
That professional help comes in the form of the private APB offers professional training, organizes activities
banker or a trusted advisor someone whom clients to foster knowledge exchange, promotes long-term
expect to be fully conversant with the latest financial industry development, supports collaboration among
products in town and can depend on for strategic practitioners and delivers a range of professional
advice on their financial matters. Comparing Asians services to wealth owners.
76
Charlie Bravo Aviation
PRIVATE JET
By Ren Banglesdorf
Influence is the most powerful force in the world interpersonal communication, most people still
today. A good look at current events and pop prefer face-to-face communications. Accessibility
culture proves this beyond a shadow of a doubt. has allowed technology, medicine, education and
Without influence, commerce slows, resources commerce to flourish. And non-scheduled air travel
stagnate, people languish, and the world is largely has given North America and Europe a competitive
unchanged. With this great force, nations prosper, advantage for years. Now, as international
people rally and things evolve more rapidly than businesses grow, airspace regulations loosen,
ever before in history. Private aviation gives and diplomats and celebrities take a bigger world
leaders unprecedented access to the world on stage, demand for private aviation around the
both a local and global level. This nimble and globe builds. And while many people see the need
convenient way, to travel, helps business people to charter, lease or purchase aircraft, there are few
and thought leaders reach out-of-the-way places, standards to protect the consumer. The selection of
move easily between continents, and make the an inappropriate aircraft can become a safety and
most of their time while traveling. In short, private financial nightmare. Therefore, it is very important
aviation expands influence exponentially. In a for buyers to obtain sound counsel about the type
time when social media and email dominate our of aircraft they purchase, the conditions under
77
which it is bought and how much it is truly worth aircraft are more suited to high altitudes, extreme
in todays market and when theyre ready to resell. weather conditions, and shorter runways. This is
Obtaining this kind of counsel before purchasing an a very important consideration that many people
aircraft helps eliminate costly mistakes and keeps overlook.
the market from becoming inflated with a plethora
of brokers vying for the same buyers business. How much do you or will you use the aircraft? As
Aviation consultants and aircraft brokers are not a general rule, if an entity flies less than 50 hours
required to have any formal training or licensing per year, aircraft charter may be the best use of
and are not held to any code of ethics. A reputable funds. For use between 50 and 150 hours per year,
broker or consultant will provide references and partnership or fractional ownership is appropriate.
be well-respected among his or her competitors. More than 150 hours of usage in an average year
Once you have professional representation, signals a need for a dedicated aircraft.
consider the mission that the aircraft will perform
a majority of the time. Once you have professional How important is security? If it is necessary to
representation, consider the mission that the store the aircraft in a controlled environment
aircraft will perform a majority of the time. when it is not in use, have a consistent crew or land
in a restricted area, aircraft ownership may be the
How far do you fly 80 percent of the time? If most answer no matter the usage amounts. Once a buyer
of your flights are in the same region, but you leave has determined the appropriate mission profile,
the continent once or twice a year, you may not he or she should consider the budget. There are a
need a transcontinental-type aircraft. A shorter- number of factors that can greatly impact what an
range, lower-cost plane can be supplemented with aircraft costs.
charter for those atypical situations. How many
people usually need to fly together? Different size Ren Banglesdorf is founder and CEO of
aircraft can be configured to accommodate more Charlie Bravo Aviation, which buys, sells
passengers or those with special needs.
Where do you typically land and take off? Some
and leases aircraft all over the world.
78
Regulatory Changes to Money Market Funds
WHAT SHOULD A FAMILY OFFICE
DO WITH THEIR CASH
Securities and Exchange Commissions decision to tighten regulations on money market funds
TWO YEARS TO IMPLEMENT CHANGES
by Michael Kastner - Halyard Asset Management LLC
required to allow the NAV to float. the massive, highly liquid Treasury
In addition, all fund companies, bill market, such a gate is not likely
individual as well as institutional, to be needed. However, simply
will be allowed to temporarily the possibility of an exodus may
block investor redemptions, also be enough to discourage investors
known as gating, and impose a from using government MMFs
redemption fee of as much as 2% funds. One only needs to look
in the event of a mass exodus of back two years for such a risk, as
investors. Such an exodus would Congress threatened to default on
be defined as a 10% fall in assets maturing Treasury securities. While
under management over the course they avoided default, had they not,
of one week. When investors come its likely there would have been a
to understand that a 200 basis mass exodus out of Treasury paper
point fee could be imposed on a and a flight from government
Recently, the Wall Street Journal money market fund thats paying MMFs.
reported that U.S. regulators them no more than a handful of
approved rules intended to prevent basis points, theyre likely to look The catalyst for the added
a repeat of an investor exodus out for an alternative. regulation is that despite the
of money market funds during presumption of being safe, stable
the financial crisis, referring The likely alternative to Prime investments, some MMFs are not
to the Securities and Exchange funds would be U.S. government always very well managed. Based
Commissions decision to tighten MMFs, funds that invest only in U.S. upon SEC rule 2a-7, the funds are
regulations on money market Government debt. Those funds will allowed to hold up to 5% of a single
funds (MMFs). We believe the rule be required to hold at least 99.5% issue and up to 10% exposure to
changes do the exact opposite and of their assets in government paper, a single guarantor, an intolerably
will likely worsen an exodus, and thats an increase from the current high level of concentration for
perhaps even hasten one. The minimum of 80%. Additionally, a fixed income portfolio. In an
commission gave fund managers U.S. government MMFs will not attempt to understand the riskiness
two years to implement the be subject to the mandatory of MMFs, we analyzed a number
changes. redemption gate or fee imposed of the largest funds. We were
on Prime MMFs. That is unless the shocked by the composition of one
The most significant change, at board of the fund decides that a of the top 5 household name
least initially, is that Institutional gate or a redemption fee is needed, funds. The top 10 holdings of the
Prime MMFs will no longer be in which case they can apply either fund totaled 49% of the portfolio,
allowed to maintain a stable Net or both. Given that U.S. government with 15% of the fund invested in
Asset Value and will, instead, be MMFs invest almost exclusively in Japanese banks (including 7.1%
79
invested in the bank of Mitsui carry high cash balances in MMFs would cap maximum maturity at
Sumitomo alone), 20% invested to meet cash flow needs and as two years, establish a minimum
in 10 different European banks, dry powder for unexpected weighted average credit rating
and 10% invested in Canadian investment opportunities. Such of A, and maximum holding per
and Australian banks. When the an arrangement may no longer be position of 2.5%. By moving cash
next financial crisis hits, its highly feasible given the potential for lock to a separately managed account,
likely that the 20% allocation to up and fee imposition. That could the family office immunizes itself
European banks will weigh on the be a blessing in disguise given the from both the risk of having their

NAV of that fund. Similarly, should high concentration risk and lack of cash gated and the detrimental
the Japanese stimulus program fail diversification discussed above. effect on return when the MMF
and bank defaults rise, the large Instead, family offices should manager is forced to sell securities
Sumitomo position may impact adopt a cash management strategy in a falling market to meet
the fund negatively. That, and a similar to that of many Fortune redemptions. While its possible
number of other possible scenarios, 500 corporations. The CFOs of that the separate account may incur
are likely to test the resolve of the those corporations hire third-party a mark-to-market loss during such a
Skytechto2015
fund management UAV Conference
maintain managers and workandwithExhibition
them to is a the
run, one-day
managerevent
may not be forced
liquidity and resist the temptation establish a separately managed to sell into a falling market and if
serving as a platformaccount
to impose a 2% redemption fee.
to define, understand and ultimately integrate
of fixed income securities the manager holds the securities
UAVs into the
governed by commercial sector.
a strict investment to maturity, would incur no loss at
With the coming regulatory policy statement. all. In effect, the family office gains
changes toThe event
money marketwillfunds,
explore current capabilities and future applications
full transparency and decision-
what should a family office do with A typical cash management making over their cash assets while
for UAVs,
their cash? Family officesbringing together 60policy
typically investment exhibitors and broadening
statement in excess the of 1000
diversification of
attendees.
the Public Sector.
REGISTER FOR FREE EXHIBITION TICKETS AT

WWW.SKYTECHEVENTCOM
Business Design Centre
London
Skytech 2015 UAV Conference and Exhibition is a one-day event
serving as a platform to define, understand and ultimately integrate
WWW.SKYTECHEVENT.COM | WWW.TWITTERCOM/SKYTECHEVENT
UAVs into the commercial sector.
+44 (0) 203 131 0048
for UAVs, bringing together 60 exhibitors and in excess of 1000
attendees.
The event includes a free exhibition and four conferences: 80
TBLI
CONFERENCE
EUROPE 2015
Nov 19 - 20
Zrich
The largest forum on

Sustainable Investing
Thu 9am - Fri 2.30pm
TBLI
CONFERENCE
EUROPE 2015
Gottlieb Duttweiler
Institute
Zurich, Switzerland
http://bit.ly/1CGy8rg
HEDGE FUNDS
The Many Faces of Hedge Funds
includes the closet long-only leveraging of conviction
into illiquid securities, carry, as well as the selling of
volatility. These contaminants often present themselves
rather subtlety and in stealth form such as implicit carry,
market neutrality, mean reversion, spreads, or implicitly
through the replication of option pay-off profiles. This is
where the investor requires astute qualitative research
and screening capabilities to avoid the pitfalls. The
Alpha-Focused managers offer investors access to unique
risk and return factors, but bundled within an effective
risk mitigation framework to suppress the impacts of
unwanted risk assumed. Some managers aim to generate
returns, or Alpha, from both sides of the portfolio. This is
where your managers will tend to outperform markets in
benign environments and be able to lose less than the
market in times of dislocations and stress periods.
Rene Levesque
Absolute Return managers represent a much unique and
Hedge Funds are merely legal and fee structures, smaller share of the Hedge Fund universe. They tend to
but the strategies executed within are considerably be deployed among the most liquid spectrum of tradable
heterogeneous in nature. This diversity, in terms of securities. Risk is actively and dynamically managed.
style and asset classes, also incorporates intended Portfolio inclusion and position sizing is contingent on
performance objectives as well as the more subtle the confirmation and degree of market receptiveness.
features that suggest the prospective return profiles. The managers dwell on an active and disciplined risk
Failure to recognize these subtle qualitative features management framework rather than a risk mitigation
ultimately leads to disastrous outcomes. Consequently, overlay. Discipline pertains to the suppression of two
the universe can also be classified among three broad destructive behavioral biases, i.e. overconfidence and the
groups where much of the peculiarities relate on how disposition effect (subject of another article). Portfolios
the Hedge Fund tool box is actually deployed in the constantly maintain an explicit and/or implicit long
management of the strategy. They are: Absolute volatility (Vega) and gap-risk (Gamma) posture to benefit
Return, Alpha-Focused, and Contamination. The from stress episodes and broad market drawdowns, i.e.
latter bears much of the responsibility for the damaging when the rest of your portfolio is bleeding. This is where
headlines and failed expectations. With respect to your managers will capture opportunities in all market
the first and second, you cannot have both in a single environments: bullish or bear market trends, volatility
offering; its one or the other, because the quest for spikes and dislocations, as well as flight to liquidity
one comes at the expense of the other. Unfortunately, events.
the Hedge Fund universe is contaminated. This
82
THE EGO 45 - UNCONVENTIONAL LUXURY
EGO 45
ELEMENTS MADE WITH 3D PRINTING TECHNOLOGY
The Ego45 is a revolution in the concept of luxury: a unique version of
the Italian electric superbike celebrating the 45th anniversary of its
manufacturer, CRP Group.
The numbered edition has carbon fiber fairings and a special shape featuring elements
made with 3D printing technology and Windform materials, covered with a ceramic finish
by English company Zircotec. Luxury and high-tech are brought together in the Ego 45:
numbered series, top of the line components, unique performance in its kind, machining
and design elements borrowed from the aerospace industry or major international
motorsports, like Formula 1. Ego45 Unconventional Luxury: the Superbike masterpiece
you have been waiting for. The exclusive Ego45 will be available as a numbered edition
to special order (a maximum of 45 will be built).
The Electronics includes A Vehicle Control Unit implementing a multi-map adaptive

energy and power management algorithm manages the vehicle. During drive, system
carefully monitors and adjusts 100 times per second the motors power, starting
from; throttle command; chosen engine map; battery status and speed. System also
handles regenerative engine braking and regenerative electrical brake, interfacing
with the ABS unit. This allows for a superb efficiency in battery energy management
and a great drive performance and experience. It constantly monitors batteries,
even in key off position in order to ensure battery protection even in long winter
storage. Vehicle Control Unit is based on a redundant architecture in order to
grant the state of the art of safety and performance.
All the parts made in Carbon Fiber are accurately manufactured by the best
sector specialists. Each component mounted on the Ego45 is made from
a double layer Carbon Fiber, three layers for specifically reinforced parts,
autoclaved.
WINDFORM is a unique composite material within the 3D Printing sector
which allows the creation of perfectly functional parts for more multiple
applications. Designed for F1.
ZIRCOTEC produces ultra high-performance ceramic coatings specifically
designed to resist to extreme environmental conditions. Designed for F1.
MOTOR TYPE PERMANENT MAGNET AC (PMAC), OIL COOLED

PERFORMANCE MAX SPEED LIMITED AT 240 km/h
TORQUE 195 Nm FROM 0 TO 4700 rpm
83
EL
EC
TR
IC
SU
PE
R
B
IK
E
The Bike is equipped with a communication platform based on the Bluetooth and UMTS I GPRSll Standards
84
WALL
STREET
DISAPORA
SEEKS
NEW
David Drake Chairman, LDJ Capital
FAMILIES
Theres a growing trend on Wall still struggling to rebound from the My decades of experience in the
Street thats keeping everyone on widespread criticism and negative financial sector tells me the exodus
edge: an exodus of talent. public image the recession left from Wall Street is about personal
with big banks and financial firms. exploration. More than money,
For better than a century, those Hatred has a long shelf life. theyre seeking the satisfaction that
with dreams of working in the only comes from personal growth.
worlds most massive, dynamic The working atmosphere at many Some of the most successful
market have flocked to Wall Street. Wall Street firms only adds insult ventures today are those that have
But in the last decade, the standard to injury. The young talent that Wall found a way to offer both -- and
compensation package at most Street attracts -- aggressive and they are a magnet for the flow of
firms -- 20 years of 100 hour weeks driven -- wont stick around long talent leaving Wall Street.
in exchange for increasingly large for redundantly routine work. If
bonuses -- has lost its appeal. theyre miserable, they wont stay. Mark Dimont, for instance, left
Not surprisingly, many of Wall his Wall Street career with an
For the last few years, Wall Street Streets best and brightest investment bank a few years ago
has watched helplessly as some are leaving for startups. They to join tech-startup, Dataminr.
of its finest people have packed promise excitement in the form When Chelsea Clinton realized that
up and left. All estimates say Wall of innovation and constant risk. Wall Street wasnt giving her the
Street is still running strong, but And they pay. Success at a startup motivation she was looking for, she
losing valuable human resources to means more money in the pockets moved decidedly into a spot with
other ventures greatly weakens its of innovators and less going to NBC News as a commentator.
standing. So what gives? The recent maintain a corporate hierarchy. And
recession hit some big businesses then theres the fame. Successful Oddly, one of the biggest
hard, including banks. Even now startups make the front page news destinations for the Wall Street
that we appear to have weathered in every media venue from the Wall diaspora is one of oldest and most
the financial crisis, Wall Street is Street Journal to the tiniest blog. traditional - the Family Office. Since
85
the 1800s, family offices have taken Candice Beaumont, who spent years professionals. It is the perfect recipe
care of the wealthiest individuals with Merrill Lynch, now runs the for excellence. Family offices are
and their families. Think Rockefeller, single family office L Investments attracting Wall Streets most dynamic
Kennedy, Roosevelt. as Managing Director. Candice is a talent - from traditional consultants
recipient of the Young Global Leader to cutting edge technologists. Wall
Family offices have experienced a Award from the World Economic Street is indeed losing, and losing
resurgence in importance after the Forum in 2014. Shiraz Poonevala big. Wall Street should take note. A
recession. Many wealthy families was head of Investment of Seamico routine environment, which impedes
felt equally burned by less than Securities Plc before joining GP individual growth and breeds
scrupulous behavior from Wall Group, a single family office, as conformity and compliance, will
Street firms. They turned to smaller, Director of investments. only continue the current exodus.
private firms focused entirely on If the biggest players on Wall Street
one family. Family offices represent The names go on and on. These dont change their tune, they could
the best of both worlds to many talented individuals bring with them easily find themselves bereft of the
recent refugees from Wall Street -- a wealth of work experience that was constant flow of new, dedicated
large and complex financial flows previously confined to a small field talent that has driven their success
requiring real skills combined with with limited potential. Working for a for so many years. Wall Street
attractive compensation packages, family office opens up possibilities refugees are steadily leaving for the
but without the Draconian working for personal exploration and growth. fresh air of startups and family firms.
atmosphere. It gives them the chance to have a Unless Wall Street firms consider big
The list of those who left Wall Street sense of authority and confidence, change from the inside out, its best
poster2 v3.jpg
to for a Family Office shows just how https://docs.google.com/a/private-bankers.net/file/d/0B-yV-E0vHlMu..
which in turns encourages them and brightest may start leaving by
deep a void the talent drain has left. to expand their reach as financial the boatload.
86
1 of 1 WWW.FAMILYOFFICEELITE.COM 10/10/2014 19:28
A long-recurrent debate in the field of investment management
MAN - VS - MACHINE
The arms race of machines has already come a very long way
WHO WILL WIN OUT IN THE END?
by Con Keating
and the long term with economic and trend-following strategies,

performance, and the degree to where machines reign supreme.
which the companies, in which we Markets are mixed games; partly
have invested, participate in that exogenous, against nature, but
performance. predominantly endogenous,
against others. The game against
It is amazing how few fund managers others is a strategic game; it is zero-
consider the development of the sum in the sense that my gains are
labour versus capital share of someone elses losses. The game
national output when discussing is concerned with predicting the
long-term prospects, the most behaviour of others. This aspect
fundamental division of the is the subject of intense research
cake, but that is getting ahead of by the computer scientists, with
ourselves. The properties of long- natural language interpretation
term investment differ profoundly and sentiment analysis as poster
from the short-term. In the short children.
This is a long-recurrent debate term, returns are dominated by
in the field of investment changes in the prices of assets but There is little doubt that these
management. To open this issue in the long-term, income dominates techniques will advance greatly,
up in a meaningful way and avoid returns, and asset prices are almost and perhaps even to the point
confusions, it becomes necessary irrelevant. of passing the Turing test of
to consider differences in time indistinguishability from human
scale. This is the short-term versus The exponential comes into its own, interaction. This is an arms race,
long-term question. The difference and the power of compounding ever more powerful; ever faster
between weather forecasting and reigns supreme. The market machines are needed. The strategic
climatology is a very useful analogy. adage, that time in the market is game of development drives even
In the field of weather forecasting, more important than the timing of more development in an unlimited
we use some of the largest and markets, remains sound. In the short process of infinite regress, where
fastest computers in the world, term, market returns are negatively the only limitation is one of cost
but we cannot forecast accurately correlated with economic output, at some point the investment cost
beyond a few days weather but in the long-term, returns are is not justified by the potential
forecasting is fundamentally strongly correlated with long- reward. In the long-term, volatility,
short-term. Climatology is very term economic growth. In the is broadly in line with the volatility
different; we can rely on it being short-term equities and bonds are of national output. Rather than
warm in summer and cold in winter; highly volatile; this arises from the being some unexplained property of
monsoons, snow and floods are endogenous game between market mean reversion, this is convergence
highly predictable. The investment participants and speculators. This to economic reality. While this is
counterparts are that the short term is the world of hyperactive trading, not always immediately apparent
is concerned with market behaviour and information-free momentum in the patterns of seemingly
87
chaotic securities prices over time, it problem is simple; for decades, new
is more clearly demonstrated in the housing construction has languished
foreign exchange markets, where at around 50% of new household
a relatively small stock is turned formation. The remedy is far more
over manically. The result is a difficult, politically; when more than
short-term series totally dominated 50% of voters are house-owners,
by noise, but where, in the much they are most unlikely elect any
longer term, basic macroeconomic party that does not serve their
pressures prevail. In the long-term interest.
diversification is concerned with the
number of effectively independent Surveys have asked fund managers
sources of income, while in the short what they consider the long-term
term it is all about the happenstance to be, and the most common answer
diversity of periodic returns, and received has been 3-5 years. When
relative price performance. we look at fund managers turnover
in active portfolios, it is clear that, in
The arms race of machines has fact, the overwhelming majority are
already come a very long way, to operating to a timescale of between
the point of flash crashes and the a few months and two years. If we
inexplicable behaviour of the ten- take the long-term for investment
year US Treasury bond on October to be that term beyond which
15. The domination of financial non-market sources of cash flow
markets by short-term speculation dominate returns, then we see that
is not benign. Volatility is, as Black the long-term over the history since
Scholes formalised for us, the 1900 of the London Stock Exchange
speculators friend; it drives up has been a little over thirteen years.
premiums or prices. The problem Prospectively, the lower income
with these higher prices is that this yields prevailing today imply that
lowers the income yield available the long-term now is a little over
to investors. The higher volatility twenty-five years.
will also drive a wedge between the
annual returns of the short-term and The most important facet of our
the compound geometric returns long-term future is that it is largely
of interest to long-term investors; the product of our own decisions
twenty percent price volatility and actions, where the socio-
lowers long-term returns by 2% per political aspect can dominate
annum. Short-term speculation is the technological or economic
more than a beggar-my-neighbour dimensions. The choice of man
game, it literally steals from the versus machine is really no choice;
future. every day, we decide to take an
umbrella or not depending upon the
To make these points a little more weather forecast, but we book our
concrete, consider the UK housing holidays based on the climate. Of
market. For several decades, course, the weather forecast does
we have seen ever-increasing not affect the climate, but short-
house prices, greatly assisted by term speculation most definitely
munificent mortgage leverage, and does affect long-term investment
now our children cannot afford to performance.
buy anything. The diagnosis of the
88
Art Finance & Law
Art Law Foundation Conference Series by Anne Laure Bandle & Sandrine Giroud
Anne Laure Bandle Sandrine Giroud
The practice of art financing and between art funds and hedge funds, to other asset classes such as gold,
investment is representative of the peculiarities of portfolio and equities, and wine. She chaired the
the development of the art market fund management, the different first round table discussion which
over the past decades. Its no types of loans against art collateral, explored whether the Art market
longer exclusive to a small group and the risks and rules for art needed more regulation. David
of players and has grown in size, investments. The series is organised Arendt, Managing Director at the
scope and figures. The market has in partnership with Falcon Fine Luxembourg Freeport and Philip
also transformed the purpose of Art, Sothebys, LALIVE, borro and Hoffman, Founder and CEO at the
buying and holding art. Generations Oblyon. Fine Art Fund stated that they
ago, collectors owned masterpieces welcome existing regulation, as it
like treasures; they bought what The first conference of the made the Art market more efficient.
they liked. Today, as art prices have series was held in London at the Karen Sanig, Head of Art Law at
soared, art buyers can consider a Institute of Contemporary Art and Mishcon de Reya, stressed the
profit as part of their decision. attracted a wide range of industry difficulty of finding a consensus and
professionals, media and students. creating a law. She warned that the
Last November, Geneva-based Several experts demonstrated to law is not always suited to govern
Art Law Foundation launched a what extent they can foresee and Art related issues, particularly
conference series on Art Finance & reduce the risks in art investment with regard to authenticity
Law: Risk, Rules and Opportunities and why Art as an asset class is disputes. Instead, the art market
in Art Investment. This aims to particularly challenging when has begun to regulate itself. The
examine the growing practice of compared to other types of assets. speakers seemed to agree that
art investments and the use of art overregulation might kill the Art
as an investment asset. With the Melanie Gerlis, Art market editor market. An example was provided
help of many renowned speakers at The Art Newspaper and author by Marco Mercanti and Stefanie
from academia and practice, the of the book Art as an investment?, Berloffa-Spadafora CEO and Head
series explores securitisation of art warned of the risks that art of Legal at Oblyon. They showed
as an asset class, the differences investment entails by comparing Art how applicable export laws in Italy
89
made art business difficult, thereby of such businesses shows the Top legal experts such as Luc
causing a lack of growth in Italys markets thirst for liquidity. Thvenoz and Xavier Oberson
Art market. The afternoon session of the University of Geneva, and
on art lending was introduced The second conference of the James Carleton of Farrer & Co LLP
by Anna Dempster, Associate series will take place in Geneva on will also share their expertise on
Professor at the Sothebys Institute 26 January 2015. Jointly organised the issues of banking, finance and
and editor of the book Risk & by the Art Law Foundation and tax law related to art investment .
Uncertainty in the Art World. She the Centre for Banking and
underlined the limits of traditional Financial Law of the University of These experts will, in particular,
economic models when applied Geneva, it will approach the topic look at issues of compliance in the
to the art market. The markets of art finance and law from the art market: banking compliance,
idiosyncrasies, including factors perspective of players of the local provenance, authentication and,
which cannot be calculated, such market such as Frdric Dawance against the background of an ever
as emotions, call for expert advice of Banque Lombard Odier & Cie SA, attractive art market, discuss the
in order to successfully manage the Manuela de Kerchove of Schroders, recurring question of a need for
risks tied to art transactions. During Yann Walther of the Fine Arts Expert more regulation.
a roundtable discussion, various Institute and Yves Bouvier of Natural
players in Art lending explained Le Coultre. Other international As Andy Warhol once said Making
their model and due diligence on experts, including Jan Prasens of money is art and working is art
an art assets title, authenticity Sothebys Financial Services in New and good business is the best art.
and quality. Further legal issues in York and Fabian Bocart of Tutela This conference series will be an
art lending were enumerated by Capital in Luxembourg will provide opportunity to have a sense of
Amanda Gray, Associate at Mishcon their view on the evolution of art our time and examine whether art
de Reya. Overall, the expansion in as an asset class and the risks and investment has become an art in
art lending models and the growth opportunities in art investment. itself.
Cornhill_A4.indd 1 25/07/2013 19:34
90
Congratulations to the 2014 Winners
Launched in 2014, the premier edition of the Global Fine Art Awards recognized 62 nominees from 18
countries, 36 cities and 5 continents.
BEST Contemporary or Post-War exhibition:

Permission to be Global/Practicas Globales: Ella Fontanals-Cisneros Collection, Museum of Fine Art,
Boston
BEST Impressionist or Modern Art exhibition:

Paris 1900: The City of Entertainment, Le Petit Palais, Paris, France
BEST Renaissance, Baroque, Old Masters or Dynasties exhibition:

Treasures from Korea: Arts and Culture of the Joseon Dynasty, 1392-1910, Philadelphia Museum of
Art and National Museum of Korea
BEST Ancient Art exhibition:

Pompeii: Life on the Volcano, Kunsthalle, Munich, Germany
BEST Public or Outdoor Installation:

Kara Walker: A Subtlety, or the Marvelous Sugar Baby, Creative Time/Domino Sugar Factory, NYC
YOUniversal Award:
David Hockney: A Bigger Exhibition, de Young, Fine Arts Museums, San Francisco
HONORABLE MENTION Contemporary or Post-War exhibition:

David Hockney: A Bigger Exhibition, de Young, Fine Arts Museums, San Francisco
HONORABLE MENTION Impressionist or Modern Art exhibition:

The Scandalous Art of James Ensor, Getty Museum, Los Angeles
91
Daniel Christensen
GLOBAL FINE ART AWARDS 2015

GFAA is the first annual award program that recognizes and promotes the best curated
art and design exhibitions and installations around the world. The judging criteria is
based on innovation in design, historical context, educational value, and public appeal
You are invited to attend the most exciting art event this yearand stay for Art Basel Miami Beach.
Who will the winners be? Find out live
Monday, November 30, 2015
Miami, Florida
Corporate Sponsorships from $10,000 - Gala Tickets from $500

For more information, contact:
Judy Holm: President and CEO, Global Fine Art Awards
Tel: +1.917.589.0247 - judyh@aspirationspr.com - www.globalfineartawards.org
92
SPECIAL GUEST PRESENTATIONS
Thomas Frey
Futurist, Executive Director,
The DaVinci Institute
and Author, Communicating
with the Future
As the Executive Director and Senior Futurist
at the DaVinci Institute, he works closely
with the Institutes Senior Fellows and Board of Visionaries to
develop original research studies, which enables him to speak
on unusual topics, translating trends into unique opportunities.
As part of the celebrity speaking circuit, Tom continually pushes
the envelope of understanding, headlining events with some of
todays most recognizable figures: Tom Peters, Nobel Peace
Prize winner Mohammad Yunus; former CEO of General
Electric, Jack Welch; former New York City Mayor Rudy Giulliani;
Former President of Colombia, Andrs Pastrana; Prime Minister
of Spain, Felipe Gonzlez Mrquez; Nobel Prize winning
economist Joseph Stiglitz; Saudi Prince Turki Al-Faisal; and
former World Bank President James Wolfensohn. His keynote
talks on futurist topics have captivated people ranging from
high level government officials to executives in Fortune 500
companies including NASA, IBM, AT&T, GE, Hewlett-Packard,
Lucent Technologies, First Data, Boeing, Capital One, Bell
Canada, Visa, Ford Motor Company, Qwest, Allied Signal, Hunter
Institutional Investor is proud to present the 12th Annual Family Office Wealth Conference: Douglas, Direct TV, International Council of Shopping Centers,
Keeping it in the Family: Preserving and Growing Wealth for Generations. The conference will bring National Association of Federal Credit Unions, Times of India,
together representatives of the nations wealthiest families to explore a wide-range of topics Leaders in Dubai, HSM ExpoManagement, and many more.
and trends to stimulate thoughts and ideas aimed at addressing issues considered essential for Because of his work inspiring inventors and other revolutionary
families as well as provide solutions to consider. thinkers, the Boulder Daily Camera has referred to him as the
Father of Invention. The Denver Post and Seattle Post
More than 90% of the audience and sponsors rated the conference as one of the BEST
Intelligencer have referred to him as the Dean of Futurists.
they have ever attended. This, along with a well-conceived agenda created foremost with
the audiences needs in mind, makes it an ideal setting for family office directors and family
members to share information and ideas with colleagues.
As the premier event for family office and high-net-worth individuals, Family Office Wealth Steve Schmidt
Conference seeks to continue setting the highest standard in providing affluent family members Political Analyst, MSNBC
with a unique, exclusive experience. and Renowned Political Strategist
This years conference will cover a wide-range of topics that include: Combining expertise, passion and a laser
Building Wealth as an Entrepreneur and Preserving the Wealth Thereafter focus, Steve Schmidt provides audiences
Creating a Family Constitution: Preparing for a Family Transition with a candid insiders perspective of todays
State of the Global Economy political headlines. Schmidt served as senior
strategist for Senator John McCains 2008 presidential
Asset Allocation Priorities and Pitfalls: What Does it Look Like Now?
campaign and is featured and played by Woody Harrelson in
The DNA of an Investment Deal the HBO movie Game Change, adapted from the best-selling
Seeking Yield: Income Returning Investments book by the same name chronicling the campaign. Prior to
Building an Effective, Resilient Portfolio of Alternative Investments: Key Components and serving as campaign manager for the re-election of California
Challenges Governor Arnold Schwarzenegger in 2006, Schmidt was a
Energy Investments member of the White House senior staff as deputy assistant to
the President and counselor to the Vice President. In that
Identifying, Understanding and Managing the Full Spectrum of Risks Facing Your Portfolio
position, he advised on a wide range of issues, working at the
Preserving Wealth Across Generations: Investment, Education and Risks intersection of public communications, policy development,
Data Privacy and Cyber Security legislative advocacy and political strategy. During his tenure at
The Forecast for U.S. Tax Policy and Consequences for Your Wealth the White House, Schmidt directed strategic communications
A Deeper Dive into Philanthropy: Configuring and Executing a Viable Strategy for the nomination of Chief Justice John Roberts as well as the
team to nominate Justice Samuel Alito. Schmidt also served as
PLUS The Family Office Think Tank: Two Interactive Sessions for Peer-to-Peer Advice open
one of the top strategists on President George W. Bushs 2004
only to family office executives and family members
re-election and was a member of the senior planning group
that directed the campaign. Today, he serves as a political
analyst for MSNBC and is Vice Chairman for Public Affairs for
Edelman, the worlds largest independent public relations firm.
2015 SPONSORS
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EY BUILDING A BETTER WORKING
EY FAMILY OFFICE
By Peter Brock: Executive Director

Leiter EY Family Office Services
PATHWAY TO SUCCESSFUL FAMILY AND WEALTH MANAGEMENT

Family Office Elite Magazine would like to express it thanks to ZY, Credit Swisse and University
of St. Gallen for their hard work in researching and creating this informative article.
As concerns about wealth preservation and succession Governance and management structure - A family
planning within family businesses continue to rise, office can provide governance and management
wealthy families are increasingly evaluating the structures that can deal with the complexities
benefits of setting up a family office. of the familys wealth transparently, helping the
family to avoid future conflicts. At the same time,
The reasons why - There are many reasons why confidentiality is ensured under the family office
setting up a family office makes sense, but at structure, as wealth management and other advisory
the root of these is the desire to ensure smooth services for the family members are under a single
intergenerational transfer of wealth and reduce entity owned by the family.
intrafamily disputes. This desire inevitably increases
from one generation to the next, as the complexity of Alignment of interest - A family office structure also
managing the familys wealth grows. Without being ensures that there is a better alignment of interest
exhaustive, the following points set out the reasons between financial advisors and the family. Such an
why a family office makes sense: alignment is questionable in a non-family office
structure where multiple advisers work with multiple
A Little about EY family members.
Global Family Business Center of Excellence
Potential higher returns - Through the centralization
EY is a market leader in advising, guiding and
and professionalization of asset management
recognizing family businesses. With almost a
activities, family offices may be more likely to achieve
century of experience supporting the worlds most
higher returns, or lower risk, from their investment
entrepreneurial and innovative family firms, we
decisions. Family offices can also help formalize
understand the unique challenges they face and
the investment process, and maximize investment
how to address them
returns for all family members
95
Separation - Family offices allow for separation, or at dedicated family office setup.
least a distinction, between the family business and
the familys wealth or surplus holdings. When considering establishing a family office, some
can see potential positives as negatives. This tends to
Centralization of risk - Family offices allow for be particularly prevalent in the following areas:
operational consolidation of risk, performance
management and reporting. This helps the adviser and The preference for privacy - Some families may be
principals to make more effective decisions to meet hesitant about consolidating their wealth information
the familys investment objectives. through a centralized family office structure.
Centralization of other services - Family offices can Trust of external managers - Setting up a family office
also coordinate other professional services, including is typically contingent on the level of trust and comfort
philanthropy, tax and estate planning, family families have with external asset managers. However,
governance, communications, and education, to meet trust typically stems from long-standing relationships
the familys mission and goals. with external managers.
Why might there be doubts about setting up a family Expectations on returns - Ultimately, family offices
office? rely on their longevity through ensuring wealth
preservation. This difficulty of securing market returns
The establishment of a family office is a big undertaking, in recent years has led to some tension in this respect.
and there have been cases when family offices have not Furthermore, during generational transitions, family
met the familys expectations. Some of the potential office structures are tested, often to the point of
doubts and concerns about setting up a family office destruction, as the next generation presses for different
are: goals and objectives to manage the familys wealth.
Cost - The cost of regulatory and compliance reporting Family office services
remains high, which means that the level of assets
under management that At the heart of any family office is investment
a family office needs to underpin needs to be high in management, but a fully developed family office can
order to offset its fixed costs. provide a number of other services, ranging from
training and education to ensuring that best practice
Market, legal and tax infrastructures - Family offices is followed in family governance. This section looks at
function better when operating from centers where the full range of services a mature family office could
there are sophisticated markets and legal and tax potentially provide. These include:
structures. The absence of these in emerging markets
has undermined the development of family offices Financial planning
there. This has often meant that there has been little
connection between the huge level of wealth in Investment management services
some emerging markets and the number of family Typically, this will be the main reason for setting
offices. Much of the wealth in emerging markets is up a family office, as it is central to ensuring wealth
still controlled by the first generation. This has also preservation. These services will include:
inhibited the growth of family offices, because many
are launched during a wealth transition from one Evaluation of the overall financial situation
generation to the next. Determining the investment objectives and
philosophy of the family
The multi family office offering - To address the Determining risk profiles and investment
problem of the high operating costs of a family office, horizons
families often set up multi family offices (MFOs), in Asset allocation determining mix between
which several families pool their wealth together. capital market and non-capital market investing
Often these MFOs will be directed by the lead family Supporting banking relationships
that initiated the office. In MFOs, all assets are managed Managing liquidity for the family
under one umbrella. But MFOs typically cater for a Providing due diligence on investments and
range of family size, wealth and maturity levels. This external managers
means that families can run the risk of not receiving
the personalized advice that they would have done in a
96
Philanthropic management - An increasingly Professional guidance regarding wealth transfer to
important part of the role of a family office is succeeding generations
managing its philanthropic efforts. This will include
the establishment and management of a foundation, Training and education
and advice on donating to charitable causes. These Much of this revolves around the education of the next
services would typically involve: generation on issues such as wealth management and
financial literacy, as well as wider economic matters.
Philanthropic planning These services will include:
Assistance with establishment and administration of Organizing family meetings

charitable institutions Ensuring family education commitments
Coordination of generational education with
Guidance in planning a donation strategy outside advisers
Advice on technical and operational management
of charities Governance
Formation of grant-making foundations and trusts Reporting and record keeping - The maintenance of
Organizing charitable activities and related due records and ensuring there is a strong reporting culture
diligence is another core part of a family offices services. Key to
these services is:
Life management and budgeting - Some of these
services are typically defined as concierge in nature, Consolidating and reporting all family assets
but they are broader in scope, inasmuch as they Consolidating performance reporting
also include budgeting services. Services under this Benchmark analysis
heading will include: Annual performance reporting
Maintaining an online reporting system
Club (golf, private, etc.) memberships Tax preparation and reporting
Management of holiday properties, private jets
and yachts Administrative services
Budget services, including wealth reviews, analysis Administrative services, or back-office services, are
of short- and medium-term liquidity requirements essential to the smooth running of a family office.
and long-term objectives These services will include:

Strategy Support on general legal issues
Business and financial advisory -Beyond the asset Payment of invoices and taxes, and arranging tax
management advisory, family offices will also provide compliance
advisory services on financing and business promotion. Bill payment and review of expenses for
These will include: authorization
Debt syndication Opening bank accounts
Promoter financing Bank statement reconciliation
Bridge financing Employee management and benefits
Structured financing Legal referrals and management of legal firms
Private equity Public relations referrals and management
Mergers and acquisitions technology systems referrals and management of
Management buyouts these vendors
Business development Compliance and control management
Estate and wealth transfer Succession planning

Family offices will be involved in business succession Ensuring a smooth succession and planning for future
and legacy planning, enabling the transfer of wealth to generations is integral to the long-term viability of the
the next generation. These services will include: family office and the family it serves. These services
will include:
Wealth protection, transfer analysis and planning
related to management of all types of assets and Continuity planning relating to unanticipated
income sources disruptions in client leadership
Customized services for estate settlement and evaluation of the strengths, weaknesses,
administration opportunities and threats (SWOT analysis) of senior
Professional guidance on family governance executives both within and outside the family
97
Re-evaluation of family board regarding roles of Risk analysis, measurement and reporting
non-family directors structuring of corporate Assessment of insurance requirements, policy
social responsibility platforms and programs acquisition and monitoring
Development of formal knowledge sharing and Evaluation of existing policies and titling of assets
training programs Evaluation of security options for clients and
Implementation of intergenerational estate property
transfer plans Formulation of disaster recovery options and plans
Adoption of a family charter or constitution, Protection of assets, which could involve the use
specifically aiming to: of offshore accounts
1. Formalize the agreed structure and mission of the Development of strategies to ensure hedging of
family business concentrated investment positions
2. Define roles and responsibilities of family and Physical security of the family
non-family members Data security and confidentiality
3. Develop policies and procedures in line with Review of social media policy and development of
family values and goals reputation management strategy
4. Determine process to resolve critical business-
related family disputes
Determining servicing priorities: the
Advisory
Tax and legal advisory - Tax, in particular, has become a make-or-buy dilemma
much more important issue for family offices in recent
years and as such has assumed a more important part Even the largest family office in terms of assets under
of the functions of a family office. Legal matters are management will need to assess whether or not to
also important. A family office will typically employ outsource services. Outsourcing certain services can
a general counsel and/or a chartered or certified be beneficial from a cost- efficiency and know-how
accountant, or several accountants and tax experts. perspective, offering advantages to family offices that
These professionals usually provide the following include:
services:
Reduced costs and overheads, and improved staff
Construct a tax plan to best suit the family productivity
Design investment and estate planning strategies Economies of scale, particularly for high-value
that take into account both investment and professional services, thus enabling lower prices
non-investment income sources and their tax for related services
implications The benefits of objective advice from experienced
Ensure all parts of the family office are tax professionals who possess specialized skills
compliant Help with defending the family offices regulatory
independence when outsourcing investment
Compliance and regulatory assistance - Family offices management, by allowing investment decisions to
need to ensure strict compliance with regulations be made by external providers
pertaining to investments, assets, and business Due diligence and continuous monitoring can be
operations. These services will include: carried out by the directors of the family office to
ensure performance and security against risk
Providing auditing services for internal issues
Establishing a corporate governance mechanism On the other hand, a number of key services are usually
Ensuring a high level of staff hiring kept in- house. The advantages of this are mostly
Group performance monitoring and compliance related to confidentiality and the independence of the
Offering recommendations on independent and family office, and include:
board advisory formation
Strengthening the regulatory investment process Higher levels of confidentiality and privacy
Assurance of independent and trusted advice
Risk management and insurance services Consolidated management of family wealth
This is a service that has assumed a more important Development of skills specifically tailored to the
role in recent years because of the financial crisis of familys needs
200809 and the subsequent fallout. It will be a crucial Greater and more direct family control over its
service for family offices in the future as well. These wealth
services will include: Keeping investment knowledge within the family
Assurance of optimal goal agreement, along with
98
the avoidance of conflicts of interest with external Key determinants of the make-or-buy decision
providers
Cost and budget - Escalating costs can pose a serious
Given these considerations, it is crucial to obtain the challenge to family offices. Clearly, it is unreasonable
right balance and to identify those services best suited to insource the whole range of potential services
for management in-house. Many factors involved in the without considering the economic benefits. Appointing
make-or-buy decision are specific to the setup chosen an outside provider can ensure quality, and possibly
for the family office, in particular: cost savings, as the family office would benefit from
economies of scale.
The size of the family and how many family
members want to use the family office Expertise - The priority services as defined by the family
The net worth and complexity of the family wealth will most likely be covered in-house in order to ensure
The familys geographical spread independent expert advice to the family. However, the
The variety of assets, both liquid and illiquid, under family office will gain from outsourcing certain selected
management services that require specific expertise.
The existence of a family business and the link
between this and private wealth management Regulatory restrictions - A family office should consider
The skills and qualifications of family members all regulations, depending on its distinct legal structure.
The importance of confidentiality and privacy In the absence of professional management, a family
The consideration of whether the family office office runs the risk of serious fallout from negative
should be a cost or a profit center publicity. Legal action could also be costly and harmful
to reputations.
This variety of factors highlights how vitally important
it is for the family to clearly determine its expectations Technology and infrastructure - The technology
and address key questions prior to creating the business employed by an external provider can serve the family
plan for the family office. These include priorities setting office effectively. Buying in these services has become
and scope definition for the services to be offered from even more of a priority as financial operations become
the family office: more complex.
Who should be the beneficiaries of the family office
and what is the overall strategy of the family to Complexity - If the familys assets are substantial and
secure and expand its wealth over generations? complex, the family office will have to hire more staff
Is the familys priority traditional asset management or outsource services. At the same time, the in-house
of liquid funds, with or without a portfolio of direct decisions on all matters have to be final so internal
entrepreneurial investments? And where does staff have to maintain the ultimate overview and
philanthropy fit into the mix, if at all? decision-making process.
Should the family office act as the asset manager
for all family members, or should it just be an Data confidentiality - If confidentiality is a prerequisite,
adviser for some specific services to selected family then services where this is a priority should be brought
members? in-house. Non-critical systems and infrastructure can
Is the family offices core task that of a financial be outsourced.
adviser, or more that of an educational facilitator
for the next generation of family members? Peter Brock: Executive Director
Leiter EY Family Office Services
Although the make-or-buy decision must be based on peter.brock@de.ey.com
the specific setup of the family office, some general
considerations can help to determine the optimal
solution. Best practice is based on the goal of obtaining
the most effective services in an efficient way and
avoiding potential operational risks.
99
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