With a Singular Focus
In the ongoing process of evaluating our business strategy, we constantly ask ourselves the question, "What would the head of a very wealthy family need and want in a family office today?" From our experience and discussions with our clients and prospective clients, we conclude that there are six basic but all-important concepts that are absolute requirements in the structuring of a family office to serve multiple families while retaining the feel and focus of an office that serves only one family:
Independence. The office needs to be a stand-alone business with no conflicts - no products to sell, no commissions, no referral fees, no "affiliated" businesses and no distractions. The family office must be loyal only to the interests of the family.
Alignment of Ownership. The majority of the business should be owned by its clients to assure that the clients’ long-term interests are protected, but with significant management ownership to provide an incentive to attract and keep the best people.
Staffed by Experts. Hire the best people and have them focus all of their efforts on one type of client, families of very substantial means. In addition to expertise in the obvious areas of investments, personal finance, and taxation, it would be even better if there are people with real credentials and experience in business and corporate finance too. And treat the firm's employees very well to minimize dreaded turnover.
Transparency, Safety and Permanence. Use third-party custodians, have an independent board of directors and be a regulated trust company.
Access to Best Practices and Products. A certain scale is required to gain access to the best thinkers, advisors and investment managers. That means having enough clients with sophisticated advisors to create a valuable network of thought leaders and enough buying power to appeal to important vendors and merit favorable pricing.
Be Available. Keep it Personal. Don't get too big. Have the fewest clients per employee of any firm in the industry so that having time for a client is never an issue.
We designed our firm with one very specific type of client in mind and we maintain a singular focus on them. Today we have about forty client families across the U.S. who have decided that The St. Louis Trust Company meets the requirements for their family office. They enjoy "the best of both worlds", a very substantial firm that acts and feels like it is their own.