The Development of the Family Office

The Development of the Family Office A historical understanding

It requires a great deal of boldness and a great deal of caution to make a great fortune, and when you have got it, it takes ten times as much wit to keep it. Nathan Mayer Rothschild

History in ThePast • I would like to propose that the concept of the Family Office History goes back to Biblical Times: • There are many well known stories that justify elements of the Family Office concept: • The garden (the capacity to survive first wealth – the apple) • Bethel (building the first reference of values and place - vision) • Machpelah (defining the first memorial and remembrance of family heritage)

EuropenaHistoryMulty Family Office – Magna Carta • If anyone dies holding of any escheat such as the honor of Wallingford, Boulogne, Nottingham, Lancaster or of other escheats which are in our hands and which are baronies, his heir is not to give any other relief or render any other service to us that would not have been rendered to the baron if the barony were still held by a baron, and we shall hold such things in the same way as the baron held them, nor, on account of such a barony or escheat, are we to have the escheat or custody of any of our men unless the man who held the barony or the escheat held elsewhere from us in chief.

History in theModernArea • Origins: • Sale of operating businesses in the seventies and nineties (today for some countries) • The need to separate the operating business from the individual assets • The need to define issues regarding: • Succession • Fiscal • Liquidity • Retirement plans

PresentSituation • Most Family Offices around the world continue to deal with accounting and fiscal plans with strong concentration in the management of liquid assets • Few family offices administer issues like: • Fiduciary planning • Life cycle events • Concierge • Intangible Values

Multi Family Offices • Initial stages of creation of multi family offices • Transition from the single to the multi family concept • A great majority are asset managers that want to provide secondary services • The role of Private banks

Nameswerecognize.... USA • J.P. Morgan – 1837 – 1913 • Son of Junius Spencer Morgan - 1813 – 1890 founder of the House Of Morgan • Morgan Family Foundation • John Davis Rockfeller – 1839 -1937 • Henry Ford- 1863 – 1947 • Ford Foundation

Nameswerecognize.... Europe • Mayer AmschelRothschild– 1744 -1812 • "Banque de Candolle Mallet & Cie" was founded on 23 July 1805. The name "Pictet & Cie" was adopted 120 years later. • The foundation was laid in 1789, when at the age of only 17, Salomon Oppenheim jr. formed a commission and exchange house in Bonn. At that time, the French Revolution was spreading from France across Europe.

Nameswefillnotfind ... • Family Offices in the Muslim World due to Shariah limitations will not be public. • Complex heritage issues different from the western concepts • Family offices in Japanese culture because of the creation of large business conglomerates • Family Offices in religious theocracies that are based in theocratic cultures

A forgottenname... • The Medici Bank (1397–1494) was the largest and most respected bank in Europe during the 15th century. There are some estimates that the Medici Family was for a period of time the wealthiest family in Europe.

The Family Office is not: An asset manager; A place for individual needs before the collective good will; A place to redefine business strategy when there is a corporate governance structure in place; A place to over rule corporate governance for family individual needs An occupation for family members incapable of being in the business; A place to socialize in a casual way;

The Family Office is Responsible for: • All educational programs of the family; • To create a communication project • among family members (need to create a formal protocol of dialogue) • family members with the business executives • To administer partnership rules across generations • To insure legal protection of the individual partners and collective needs; • To generate solutions for individual crisis; • To create an environment of individual fulfillment.

Multi Cultural Family Businesses • In a global ever increasing world based on: • The speed of individuals ability to change their places of origin; • Access to information; • The volatility of social structures The Family Office tends to merge diverse tangible and intangible factors.

Ren • Graduated from Columbia University (1974), with post graduate studies in England, Israel, and the USA. • Attended specialization courses at the University of São Paulo, FundaçãoGetúlio Vargas and Harvard Business School. • Visiting lecturer at the MBA program of the University of São Paulo. • Member of the Brazilian Institute of Corporate Governance. • Member of various Family Boards and Advisory Boards. • Member of the Family Business Network. • Member of the Family Firm Institute. • Editor of the book “A Industrial de Tintas no Brazil, CemAnos de Cor e História” (A Hundred years of the paint business in Brazil). • Author of the book: Family and Business, a road to success. • Active in Non Profit Institutions. • National and International Speaker in events.

Werner & Associados Rua da Consolação, 3741 – 12º andar Conjuntos 121 e 122 01416-001 – São Paulo, SP Brasil Tel: +55 (11) 3898-2918 Fax:+55 (11) 3085-7262 E-mail:rwerner@wernerassociados.com.br www.wernerassociados.com.br

The Development of the Family Office