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| Best Practices: Financial Advisors |
Finding the Perfect Fit
Sara Hamilton
12/01/2004
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After interviewing a few select firms, he chose TAG Associates,
a New York-based multifamily office. Part of the attraction was the firm’s open
architecture investing approach. “I think big investment banks peddling
tremendous amounts of product, as well as their advice, have a very hard time
keeping the two separate by definition,” he says. “You want to make sure that
the advisor’s interests are aligned with yours.”
TAG’s expertise and
location, as well as its willingness to work closely with other family members,
were other key factors. “It’s in my nature to be very open with my children
about what the issues are,” he says. “When they are in town for Thanksgiving or
Christmas, I arrange for them to spend some time alone with the TAG people. And
they feel very comfortable with the advice they receive.”
Blending Culture with Performance
More and more, the threshold for private
family office feasibility is moving to $200 million in liquid assets. However,
as two families I know concluded recently, there is more to the decision than
assets. Although they have taken different paths, both families have operated
dedicated family offices for many years, and both have recently found the
multifamily office model to provide a good alternative.
In 2003, the Wyman
family merged its Connecticut-based family office operation, Eagle Capital
International, with Asset Management Advisors (AMA), an affiliate of SunTrust,
in Florida. The decision to find an alliance partner was rooted, in part, in the
desire to add rigor to Eagle Capital’s investment process, in the rising cost of
top-notch talent and in the lack of an acceptable succession plan within the
family, says Juan Meyer, former CEO of Eagle Capital and now executive vice
president of AMA.
“The family council became engaged in the process of
defining which criteria were important,” Meyer explains. “Since investment
expertise was an area where we needed to bulk up, that was high on the list.
Culture was very important and so was chemistry. We didn’t want to get involved
with a large financial institution, and we wanted to retain our existing staff.”
Meyer recalls that, among the alliances his family considered, there was one
family office with excellent chemistry that they liked very much, but it was
five to seven years behind Eagle in sophistication. Another firm offered some
synergy but was looking for an alliance partner that would help build a family
office arm for its investment company. Eagle was not prepared to enter into an
entrepreneurial venture of that sort.
Eventually Eagle found the right blend
of chemistry and shared goals in AMA. The family was initially wary of AMA’s
ties to SunTrust, one of the largest banks in the Southeast, but when it became
clear that the two operated at an arm’s length, that affiliation became a
nonissue. Moreover, the Wymans had a preexisting relationship with AMA’s
founding family, which added a certain level of comfort. Site visits to AMA’s
offices sealed the relationship. “Culture and trust were important deciding
factors,” Meyer says. “They are top advisors in the investment field. They have
open architecture, and that’s compatible with us. But when everything is said
and done, we like and trust each other. At the end of the day, it’s the
nontechnical elements that make the difference.”
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