From a small northwestern observatory…

Finance and economics generally focused on real estate

Archive for March 2018

NYC Family Office Club

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I had the very real pleasure of attending the Family Office summit in New York City last Friday.  The meeting drew together about 400 individuals, give or take, who are involved in various aspects of management or advice to family offices.   Greenfield was, of course, the one of the leading real estate advisory providers there.

For the uninitiated, a Family Office is more-or-less what it sounds like.  A family views its financial and other holdings as something to be managed for the benefit of the entire multi-generation family.  A very, very rough division might categorized those families with a billion dollars of net worth or more, families with $100 million to a billion, and families with aggregate net worth below $100 million.  For the first category, the family office is usually a separate business enterprise managing just that family.  It may directly employ one or more attorneys, accountants, and investment advisors, or at the lower end of the scale perhaps just one or two professional managers with other professionals on retainer.  The family office manager ensures that the assets are well invested and well managed, that the taxes and other bills get paid on time, and that the family estate is managed.

In the middle category, a professional manager may oversee several families, or in some cases a management team may oversee a dozen or more families.  The suite of services is somewhat less (estate management and day-to-day bill paying may not be on the table).  At the lower end, for families with $50 to $100 million in investable net worth, there are trust companies that manage the money and make sure the tax accountant gets everything needed.

It goes without saying that above a certain level, every wealthy family has some sort of family office.  To quantify this, the wealthiest 0.1% (that is, one tenth of one percent) of American families have an average net worth of $200 million.  Ahem… That’s 125,000 families.  It perhaps goes without saying that these families are shown the best investments, receive the best legal, accounting, and advisory services, and expect mind-boggling results.

Now, you’d think that the lessons learned from these uber-wealthy families and their advisors would have little to do with the average American family, but indeed that’s far from the truth.  Amazingly enough, the lessons learned here are applicable to every family in America, indeed the world.  I’ll summarize just a few.

  1. The family matters more than the money.  Indeed, the wealthy families I’ve spoken with manage their money carefully and purposefully to knit together the family across generations.  Even so, only 30% of earned wealth hangs around past the third generation.  Why?  The biggest single issue was family disputes.
  2. There is an extraordinary global industry of lawyers and others devoted to family reputational management.  Managing a family’s reputation is paramount.
  3. Most wealth families expect their investment advisors to preserve wealth.  They already know how to make money, they just don’t want their advisors to lose it.  That said, they don’t like blind pools, they want to be in control of private equity investments (but are open to partnering with other families or “sidecar” arrangements) and prefer private equity to public.
  4. Wealthy families and their investment managers are rarely open to an investment “pitch”.  They want to get to know an investment manager first, and may not be open to an investment until the third or fourth idea.

There were a lot of other details, and I’ll leave those for another time.

Written by johnkilpatrick

March 29, 2018 at 2:18 pm

Posted in Economy, Finance

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Extraordinary women in aviation

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It’s women’s history month, and as an avid pilot, I’m terrifically impressed with the women I’ve met in the front seats of airplanes of all stripes.  With so many famous male flyers (Yeager, Glenn, Lindbergh, Doolittle, Curtis, the Wright Bros), we lose sight of the fact that women have been there from the beginning.  Here are just a few, off the top of my head:

In 1910, Blanche Stuart Scott was the first woman to fly solo, and later became a test pilot for Martin Aviation.  She was also the second woman (also in 1910) to drive across the U.S., and the first to drive east-to-west (NYC to San Francisco).  She went on to become a Hollywood script writer.  In 1948, Chuck Yeager took her on a ride in a Lockheed TF-80C trainer, making her the first woman to ride a jet.

In 1911, Harriet Quimby became the first woman to earn a pilots license in the U.S., and in 1912 became the first woman to fly the English Channel.  As a side venture (!) she wrote screenplays and seven of her movies were directed by the famed D.W. Griffith.

Katherine Stinson became the 4th woman to earn a U.S. pilots license in 1912, and became the first woman to be licensed to carry the U.S. airmail.  She became one of the first female flight instructors shortly thereafter, and set the aviation speed record in 1917 on a flight from San Diego to San Francisco.

Bessie Coleman was the first African American aviator in 1922. The daughter of sharecroppers, she fell in love with aviation, but no American flight school would give her the time of day, both because of her gender and her race. She taught herself French, and went to France to enroll in a flying school there. Returning to the U.S., she became famous in the barnstorming circuit, but tragically died a the age of 33, in 1926, rehersing for a show.

Beryl Markham was one of the first African bush pilots in the 1920’s and 30’s, and in 1936 became the first person — male or female — to fly the Atlantic from east to west. (Lindbergh flew from west to east. Markham’s passage was the more difficult due to prevailing eastbound winds.)

Jackie Cochran was the first woman to break the sound barrier in 1953.  She’d founded the WASPs in World War II, and still holds more aviation records than any other pilot, male or female.  She was the first woman to pilot a bomber across the Atlantic (in WW-2) and after the war, was commissioned a Colonel in the newly formed U.S. Air Force reserves, making her the first woman pilot in the USAF.

Jackie Cochran’s co-founder was the somewhat lesser known Nancy Harkness Love, who founded the Women’s Auxillary Ferrying Squadron (actually, several squadrons) that was eventually merged with Cochran’s group to form the WASPs.  Love was certified on 19 different military aircraft, including the P-51 Mustang.  She was eventually commissioned a Lieutenant Colonel in the Air Force Reserves.

So, there’s our history lesson for today, folks.

 

 

 

Written by johnkilpatrick

March 13, 2018 at 11:04 am