The 21st Century Family Investment Office

Written by John Osbon on October 10, 2014

If you are not getting the Family Investment Office treatment perhaps it’s time for a change.  Many people want FIO-level professionalism and end up trying to do it themselves at great expense, time, and risk.  Ask yourself the question, “What would I do if I put few extra ‘zeros’ on the end of my accounts?”.

The New Family Investment Office

It may be time for you to take control of your investments by using a Family Investment Office (FIO).  Changes in technology, regulation and sourcing now put the FIO within reach of many investors.  No, you don’t need $100 million to start reaping the benefits….

What is an FIO?

Simply stated, a Family Investment Office works just for you with no conflict of interest from financial product sales or broker commissions. An FIO manages liquid investments, takes a fee-only approach for its service, and acts as the center of information and advice for investments.New Broad Room View

What’s changed?

In the 20th Century, it used to be that it took at least $100 million or more in personal assets to fund the costs associated with setting up an FIO.  And it also used to be that you accepted what was offered to you instead of asking for what you wanted.  No more.  Welcome to the 21st Century FIO.  Osbon Capital was established in 2005 as a Family Investment Office for us and for others.

What you get

The benefits of an FIO are what attract families in the first place:

  • Focus on you – By definition an FIO must be customized to the individual and staffed and constructed for personal service and continuity.  Experience matters most here.
  • Transparency – We think you should understand exactly how your money is being invested. You should receive income statements, before and after fees, consolidated performance reports, and a detailed look into where taxes drag on your performance. We consider clear communication in performance reporting to be a fundamental requirement in investment management.
  • Precision and Order – The ability to know precisely the facts and figures supporting your investment house.  Precise information matters.
  • Expertise – Use of only the best and most experienced professionals to execute your investment plan over time. By experience, we know the questions to ask if you’re not sure where to start.
  • Coordination – Communication among your professionals – investment, tax, legal and insurance – to enable best results.

Raise your expectations

It’s easiest to describe the modern Family Investment Office by the services it provides.  At the center is the family’s investment capital, since keeping and growing family wealth is what drives all needs and wants.  Here’s a summary list:

  • Investment management of liquid assets
  • Performance reporting on ALL investment accounts regardless of location or custodian (401ks, 403bs, multiple managers and locations, and so on). Fully comprehensive reporting should be your baseline standard for any investment manager.
  • After-tax performance management and reporting – Taxes can be a real drain on performance. You should expect a pro-active approach to tax management complete with after-tax reporting.
  • Conflict free – No product sales by your advisor. No commissions, rebates, kickbacks, rakes or credits to your advisor. Conflict-free investing excludes many investment management shops that give preference to their own products for client accounts.
  • Education – Experience shows that families want independent information sources for the education of different generations.
  • Efficiency Cost control and tax efficiency can make a BIG impact on your bottom line. You might be surprised to see how often this aspect is overlooked or even ignored in favor of the pursuit for performance.

Next steps

Any Family Investment Office will document the value added in excess of their fee received.  As part of out reporting, we do, and we look forward to having that conversation with you when you consider Osbon Capital.

John Osbon – josbon@osboncapital.com


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