Family Offices Are Going Back to Basics as Market Events Speed Office

    U.S. Trust/Campden Research Study Finds the Wealthiest of Families Are
    Weighing the Future Viability of Their Family Offices and Focusing on
    Investment Strategies, Risk Management and Staffing Challenges in 2010

<p>NEW YORK, <chron>Dec. 15</chron> /CNW/ -- Ultra-high-net-worth families are taking a long, hard look at the performance of their family offices as events of the last year have laid bare weaknesses and strengths. Many will concentrate on core wealth management functions while considering offering services to outside families, consolidating with other family offices or closing, finds the 2009 U.S. Trust®/Campden Research North American Family Office Survey.</p>

    (Logo: )

<p>Released today as part of a new study entitled Building for the Future, the North American Family Office Survey provides a comprehensive look at the state of the family office, the most pressing issues they face and the road ahead now that market volatility appears to be subsiding. With 81 percent of their investment strategies impacted by the recent credit crisis and market correction, the study provides invaluable insights into how family offices are focusing their resources to concentrate on core mandates, addressing risk and planning for the future. This ground-breaking research includes findings on how owning a family business affects risk tolerance, the wealth management focus and overall services offered by family offices.</p>
<p>The research was conducted between June and <chron>September 2009</chron> by interviews and an online survey with family office executives and family principals from 40 single-family offices and 10 evolving multi-family offices in <location>North America</location>. It captures a complete spectrum of family office models, as family offices transition from closed operations serving only the founding family to operations opening specific investment or advisory services to non-family clients, consolidating into private multi-family offices (MFOs), and becoming full-fledged commercial operations.</p>
<p>"Like most financial services organizations, family offices were not immune to recent market upheavals," said <person>Belinda Sneddon</person>, group executive, U.S. Trust Family Office, part of U.S. Trust, Bank Of America Private Wealth Management.  "Scandals and widespread investment losses have left family offices poised for a period of significant evolution. The family office model is turning back to basics, enhancing risk assessment and focusing on its strengths which lie primarily in wealth management services."</p>

    Key findings include the following:

    Family offices are:

    --  Recruiting in-house research analysts and expanding their interest in
        proprietary research. Twenty-three percent of family offices
        acknowledge financial analyst skill shortages, and 22 percent plan to
        recruit them over the next three years.

    --  Rethinking long-held models with an emphasis on managing liquidity and
        becoming more opportunistic.

    --  Returning to core mandates of consolidated control of wealth
        management. Nearly all SFOs offer financial advisory services (92
        percent offer trust and estate planning, financial planning and tax
        planning) with a significant minority (49 percent) offering life
        management or concierge services.

    --  Heavily weighting features such as the reputations and recommendations
        of financial services providers. On a scale of one to five, with one
        "most important," "confidentiality" (1.58) and "reputation" (2.17)
        ranked among the top criteria for selecting a financial service

    --  Considering opening to non-founding family clients (28 percent). Their
        main motivations are increasing their access to investment
        opportunities by having greater assets under management (54 percent),
        and retaining their top investment professionals by providing more
        opportunities to earn and run more and larger investments (31
        They are focusing on opening an internal hedge fund or private equity
        fund (23 percent) or, to a lesser extent, a private equity or hedge
        fund of funds or diversified investment services (15 percent).

    --  Though expressing no specific plans to close, 31 percent said it was a
        possibility, even if remote.

<p>"The tumultuous economic and market climate of the last thirteen months has exposed the weaknesses and strengths of the family office model, and as a result, we are going to see family offices increasingly concentrating on core competencies and looking to others to provide non-core services," said <person>Mindy Rosenthal</person>, managing director of Campden's North American Business and author of the research. "Now more than ever, family offices will be considering significant organizational changes ranging from consolidation with other family offices, opening services to non-family clients or possible closure."</p>

    The Operating Company Effect
<p>Building for the Future is the first study to examine the differences in approach between families that have operating companies (OC SFOs) and those that do not (non-OC SFOs).</p>

    Key findings include:

    --  OC SFOs often represent families of greater net worth and keep higher
        assets under management (AUM) than non-OC SFOs. Thirty-seven percent
        OC SFOs cater to a founding family with a net worth of $1 billion or
        more, as compared to 14 percent of non-OC SFOs. Additionally,
        of OC SFOs have over $500 million under management, as compared to
        one-fifth of non-OC SFOs.

    --  While OC SFOs tend to be younger and serve fewer generations of the
        founding family, they have larger full-time staffs than non-OC SFOs.
        Thirty percent of OC SFOs have 10 or more full-time staff, compared to
        18 percent of non-OC SFOs.

    --  OC SFOs outsource more investment advisory services
        (accounting/reporting,  asset allocation, risk and investment
        management), and keep more financial advisory services (trust, state,
        tax and financial planning) in house, with 47 percent relying solely
        outsourced providers to perform manager selection and oversight, as
        compared to eight percent of non-OC SFOs. Additionally, 30 percent of
        OC SFOs solely outsource asset allocation, as compared to 14 percent
        non-OC SFOs.

    --  Both OC SFOs and non-OC SFOs are experiencing financial analyst skill
        shortages above all other functions; however, only 14 percent of OC
        SFOs plan to hire financial analysts, while 33 percent of non-OC SFOs

    --  OC SFOs tend to have more aggressive investment strategies and are far
        less affected by the market downturn and credit crisis than non-OC
        SFOs. However, more aggressive does not imply more leverage, as a
        number of OC SFOs fund their investments with the dividends of the
        operating company. Thirty-nine percent of OC SFOs reported that their
        investment strategies weren't affected, compared to six percent of the
        non-OC SFOs.

    --  OC SFOs access private and investment banks to a greater extent than
        non-OC SFOs. Sixty-one percent of OC SFOs and 64 percent of non-OC
        use private banks as a main financial services provider, and 56
        of OC SFOs use investment banks as a main financial services provider,
        compared to just 21 percent of non-OC SFOs.

    About the Building for the Future Study
<p>The U.S. Trust/Campden Research North American Family Office Survey 2009 is the result of exclusive proprietary research conducted between June and <chron>September 2009</chron>. The goal of the research is to shed light on the different forms family offices take and how the sharp market correction, credit crisis, financial scandals and the projected slow growth economy are impacting the evolution of family offices. Office executives and family principals representing 40 single-family and 10 multi-family offices were interviewed and/or completed a survey. About half the survey participants still had family businesses, and a good portion had operations that involved real estate.</p>
<p>The survey looked at four types of family offices: SFOs that serve only one related family; SFOs that primarily serve only one related family but also have an investment or advisory offering that they offer to outside families or institutions; private multi-family offices that serve more than one related family but are not seeking additional clients; and MFOs that started as SFOs or were created to serve more than one related family and are actively seeking to bring on more client families. For more information on the results of Building for the Future study, visit Campden Media at: <a href=""></a></p>

    Campden Media

<p>For almost two decades, Campden has been a unique and indispensable source of information for large, global family businesses and their advisors.  It delivers practical, solution-oriented information through conferences, seminars and a range of focused publications.  Through events such as its exclusive family meetings series and journals such as Families in Business and Private Wealth Management, Campden has become a truly independent and impartial facilitator of dialogue between business and financial families, substantial private investors, executives from private investment and family offices, family businesses and their close advisors.</p>
<p>Campden Research is a business that builds off expertise in the market and supplies market insight on key sector issues for ultra affluent families and their advisors.</p>

    U.S. Trust, Bank of America Private Wealth Management

<p>U.S. Trust, Bank of America Private Wealth Management is a leading private wealth management organization in the <location>United States</location> providing vast resources and customized solutions to help meet clients' wealth structuring, investment management, banking and credit needs.  Clients can also benefit from access to resources available through Bank of America and its affiliates - including capital markets products, large and complex financing solutions, and its extensive retail banking platform.</p>
<p>The U.S. Trust Family Office draws on a powerful array of strengths and global resources to help meet the personal and complex financial needs of individuals and multigenerational families with substantial wealth.</p>
<p>Clients are served by highly experienced advisors who provide a range of specialized family office services, including investments, single-stock management, integrated planning, philanthropic management, succession planning, specialty asset management, financial administration, compliance and family stewardship.</p>

    Bank of America

<p>Bank of America is one of the world's largest financial institutions, serving individual consumers, small- and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the <location>United States</location>, serving approximately 53 million consumer and small business relationships with 6,000 retail banking offices, more than 18,000 ATMs and award-winning online banking with more than 29 million active users. Bank of America is among the world's leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to more than 4 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients in more than 150 countries. Bank of America Corporation stock (NYSE:   BAC) is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange.</p>

<p>U.S. Trust, Bank of America Private Wealth Management operates through Bank of America, N.A., a wholly owned subsidiary of Bank of America Corporation.</p>

    Bank of America, N.A., Member FDIC.


For further information: For further information: Lauren Sambrotto, U.S. Trust, Bank of America Private Wealth Management, +1-212-852-1067,, or Mindy Rosenthal, Campden Media, +1-212-382-4602, Web Site:

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