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Doug Regan, EVP President The Wealth Management Group

Serving The Complex Needs of Ultra-Affluent Families and Family Offices. Doug Regan, EVP President The Wealth Management Group. Nancy Felton-Elkins, SVP Director of Fiduciary Services The Wealth Management Group. What Will We Do Today?. What is The Wealth Management Group?

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Doug Regan, EVP President The Wealth Management Group

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  1. Serving The Complex Needs of Ultra-Affluent Families and Family Offices Doug Regan, EVP President The Wealth Management Group Nancy Felton-Elkins, SVP Director of Fiduciary Services The Wealth Management Group

  2. What Will We Do Today? • What is The Wealth Management Group? • How are we serving the Ultra High-Net-Worth client? • What may be changing?

  3. The Wealth Management Group • Founded in 1982 • 285 highly trained professionals on staff • Our relationship managers have 18 years average industry experience • Wealth Management staff in Chicago, New York, Los Angeles and London • $194 billion in assets under administration • $30 billion in assets under management • 64% of Wealth Management Group clients utilize a single family office which represent 85% of AUA • We serve 22% of the Forbes 400 families • Average client relationship size is $475 million • Over 35 client relationships with $1 billion or more in Assets under Administration • 410 family relationships, with clients located in 48 states and 15 countries • Services offered: • Global Asset Servicing and Reporting • Investment Management • Investment Consulting • Performance Measurement and Risk Assessment • Fiduciary • Private Banking

  4. Education • Family Financial Forum • For Families and their Family Office Executives • Pre-conference for Family Office Executives • Inspiring Human Capital • Exclusively for Family Members • Learning and networking • Defining values and passing them on to future generations • Global Wealth Alliance • Education for our largest clients’ Family Office Executives • Client Advisory Board • For the heads of Family Offices to network with each other and to aid in improving the overall quality of services we provide to our mutual clients ― the Family • Financial Executives Group • Networking Group for Family Office Financial Executives

  5. Wealth Passport With a quarter-century of experience working with Family Offices, Northern Trust understands their complex structures and can deliver comprehensive, customized solutions. Wealth Passport’s secure environment empowers wealth owners and family offices to conduct business more efficiently, make strategic decisions and focus less time on administrative functions.

  6. Acquirors vs. Inheritors • Acquired • Transition in socio-economic class • Identity is established partially or wholly prior to acquiring the wealth • Acquiror’s Quandary • Incorporating wealth into personal identity • How much do I assimilate? • Inherited • Maintenance of socio-economic class • Identity is tied up with wealth • Inheritor’s Quandary • Growing an identity out of a wealth environment

  7. What is Making My Phone Ring? • What shall I tell my children about our wealth? How can I educate them about wealth? How can I stop them from feeling entitled to it? • Is the client an acquiror or an inheritor? • Acquiror: Concern that the next generation will have too much money • Inheritor: Concern that the next generation will not have enough money-needs to work; entitlement

  8. What is Making My Phone Ring? • Why would I NOT want Dynasty Trusts? • Family Offices becoming investment companies or multifamily offices • Family Offices becoming Private Trust Companies • Aggressive tax strategies • Investment performance requests for complex portfolios to review managers and consultants • Partnerships or LLC’s to pool assets in smaller trusts

  9. What is Making My Phone Ring? • Can I put my plane, yacht, ranch, art, etc. in a trust? • Estates with staffs • The ocean is coming over my seawall. • Art • Can I put the museum in a trust? • Jewelry • Timber • Natural gas wells • Yachts with crews • This is the monthly for only ONE boat in Monaco? • Airplanes • Is this the gas bill?

  10. What is Making My Phone Ring? • How many trees did you kill to produce this report? • Challenges of Information • Wealth Passport encourages customization and aggregation • Some folks want it simple • Electronic reporting, CD’s, or paper? • Fear of computers • Partnership accounting • “I’ve been elected. What should I do?” • Blind trusts

  11. Where In the World Do I Go? • What states don’t have state “death” taxes? • Should I avoid moving to a Community Property state? • What does de-coupling mean? Will I pay more death taxes in the state I call home? • What states don’t have state taxes? • Where can I have a Dynasty Trust with no Rule Against Perpetuities? • Should I have an Asset Protection Trust in Delaware? In Guernsey? • I know some states have better laws for Special Needs Trusts. Which ones? • If Northern Trust in Chicago is co-trustee with my attorney in California, will my Irrevocable Trust be taxed in California if I am not a California resident? • Where is it best to establish a Private Trust Company (PTC)? • We have a PTC but want Northern Trust for: • Asset Servicing/Information Delivery / Global Assets • Co-Trustee with powers limited to making discretionary distributions • Consultant on investments, discretionary decisions, being a trustee • Can I reform this trust in Illinois? Ohio? California? Delaware? • Can I repatriate my Bahamian trust and what will it cost in taxes?

  12. Asset Allocation Challenges with Alternative Asset Classes The Yale Syndrome

  13. The Yale Syndrome • Percentage recommendations of consultants and investment committees range from 25-80% • Passive versus Active Investments • Knowing the Trust and family objectives, goals for advisors, and risk tolerance: family meetings • Need for pooling assets, LLC’s, layered entities, schematics • Flight to safety in turbulent markets

  14. Lack of sophistication, need for education The Yale Syndrome

  15. What In the World Are You Doing? • Facilitating family meetings • Working with multiple attorneys from several firms • Reforming, remodeling or decanting trusts • Clients willing to pay for strong attorneys and accountants • Engagement letters • Pooling assets • Filing tax returns for the underlying interests • Seeking discounts for pooled asset gifting

  16. What In the World Are YouDoing? • Retainers or pay as you go and expenses • Bias to big law firms with global capabilities • Global capabilities for international legal, trust and estate planning • You wear many hats

  17. What May Be Changing? • EVERYTHING! • Investment security • The tax law • Strategies to unbundle fees • New President and Congress in 2009 • Global Issues • AML for every country • Next generation Issues • Succession planning • Philanthropy

  18. Thank You Serving The Complex Needs of Ultra-Affluent Families and Family Offices

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