First, off what is a family office? 
 
“According to Forbes, a family office performs centralized management or oversight of investments, tax planning, estate planning, and philanthropic planning.  Perhaps the simplest definition of a family office is an organization that assumes the day-to-day administration and management of a family's affairs.”
 
In our case, we do those functions for multiple families thus the multi-family tagline.
 
We are boutique in that we are small and intimate, like a boutique hotel in your favorite travel destination or an old fashion family doctor.
 
Finally, we are virtual in the fact that we work with a group of your professionals or those outside professionals we may introduce to the process to facilitate your planning and structure management.

​So now the part you may care about.  The answer to the question “why do I care?”
 
The simple answer is that most advisory or wealth management firms just do basic financial planning and investment advisory for the masses. 
 
They do not offer the next level services to actually help you manage the structures they helped put in place. 
 
We can do more to help you remove those management burdens, while delivering more peace of mind.
 
Check out this list of possible services we offer our clients in addition to wealth planning and investment advisory services:

​As the complexity of our families' needs increase, so do the breadth of the services we can offer including the pinnacle of such offerings, family office services.

None of this is one size fits all!  It is all customized to your needs, whether large or small.
 
In the case of the family office and family owned business services, we don’t even need to manage your investment assets to help you.  
 
Everything is a la carte and customized to your needs, just like a fine boutique hotel or the type of service provided by an old fashion family doctor.
 
How can we help simplify your life today?

​“Buy and hold for the long term!  Markets go up and markets go down but in the long run markets have gone up at an 8% annual clip.”
 
How does that make you feel?  Better?
 
The market is dropping precipitously on a daily basis and all you are told is “to stay the course.” 
 
However, your broker is not the one who has to live on these savings later in life!
 
Maybe this is how you felt during this most recent of two 2018 market swoons.
 
Really all you want is a straight answer and somebody who cares.
 
Well today, I hope to give you that answer.
 
Is This The Bear Market?
 
The answer is probably, but we will only definitively know in hindsight.
 
What we have seen is that the major indexes have given us a bearish divergence on our long-term (monthly charts) which usually means things have changed and the trend is changing.

​We have trend lines being challenged and indicators that have historically signaled longer term downward price action crossing key levels, like the MACD histogram at the bottom of the above chart.
 
Do you need to panic yet?  No.
 
Markets do go up and markets do go down and unless this is a market crash (which no one can predict), this market will bounce again.
 
The Big Question
 
The big question is when it bounces do you have a plan?
 
You know something other than “stay the course.”
 
Here is our plan:
 
Step one – take off some market exposure.  Check.  We did this early on in the decline.
 
Step two – wait on the bounce, see where it goes and make adjustments to market exposure as necessary.  Adding on the rise, removing exposure on a peak.
 
Step three – continue to adjust exposure as necessary as market confirms trend change.
 
Step four – enjoy the circus as a hedged (or net short) participant.
 
 
Now I know this seems simple and believe me it is not.  But does your advisor have a plan?
 
Our plan may not work out exactly as advertised but at least we are doing our job of trying to client protect capital.
 
What About The Fact That Markets Always Recover?
 
Great question and no doubt this one will recover (if you live long enough).  The Great Recession of 2007—2008 recovered its losses in five+ years because of substantial government intervention.
 
The underlying excesses were never really corrected, just papered over.  So with Federal Reserve interest rates still quite historically low and their balance sheet still very large, what are the odds they will intervene in any substantial way this time around?
 
I would guess, not very great!
 
So what if the recovery this time takes eight or even ten years?  How would that affect your financial planning? 
 
For most Americans, it would be devastating!
 
Here is the math for you technical few:

​A 50% decline in the value of your portfolio requires a 100% return to get back to break even.

If the market average is 8% for the sake of argument, how many years would it take to recover just a 45% loss?
 
Almost 8 years. 
 
So if we had a 50% decline it is quite feasible you could spend most, if not all, the next up cycle just trying to get to break even.  Just reaching break even in time for the next bear market assuming a 10 year cycle, which is one of the longest in history already.
 
The Solution
 
The solution is simple!  You have to do something. 
 
Don’t let some newly minted broker or advisor tell you to just “buy and hold.”  In this market, that could be a recipe for disaster!
 
Let us know if we can help.

Last week I attended the life celebration for one of my favorite clients who passed away recently at the impressive age of 100.  Interestingly enough that individual's life celebration event was held on the date that client would have been 101.
 
As you might expect, the celebration began with family telling how much she meant to them.  Many tears were shed!

It then transitioned to both local and national charities providing testimonials about this client’s big heart and focused charitable mission.   Interspersed between live speakers and video pieces were more video clips of this incredible person’s goals to support childhood education as a way to hopefully keep some of those kids from becoming crime statistics.
 
This person’s belief was that early childhood education and education in general could reduce the worlds’ overcrowded prisons.
 
Whether you concur or not two things struck me:
 
First, how focused this client was in giving and second, what a difference this client made as result of being focused in giving.
 
The whole event made me re-examine how I/we were giving and wonder aloud with my wife if we were as focused as this client. 

As a result, we came up with five ways to realign our charitable giving with our passion.  Here they are:

1. Find Your Passion
 
This is one is almost self explanatory.  I have been on enough charitable boards to tell you that unless you are passionate about something, it will just get old in a hurry!
 
I distinctly remember one such education related board position I took just for the perceived networking value.  Not only was I not passionate about the organization’s mission, but my lack enthusiasm for its mission actually showed to those I met and worked against me in my networking.
 
Of course the complete opposite has been the case with my involvement with many other organizations where my excitement level led me to great satisfaction, better relationships and better results.

2. Align Your Mission With Your Passion  

Here the simple action step is find your passion and then align where you spend your time, give your treasures (funds) and use your talents with that passion.
 
After this client’s celebration, my wife and I sat down and determined that our passion was still for international missions.  International missions that either make or train disciples, support the oppressed or care for orphans.
 
This newly aligned mission and passion is the sweet spot for our giving.

3. Cull The Dead Wood
 
Hopefully by this point you have a pretty good idea of what you are passionate about and how to align your mission with that passion.
 
The next step is to see where you are giving of your time, treasures and talents and eliminate those charitable activities that no longer fit with your mission.
 
This quite frankly can be the though part as I have never met a charity that did not need additional resources and here you are pulling back those valued inputs.  However, like my failed foray into the world of educational charities, the world will be a better place in the long-term if you are truly passionate about your giving.
 
My suggestion is you set a date in the future, give them proper notice of at least 90 days and then soften the blow a bit with the reason you are pulling back your giving.  They will respect you for your candor, even though they may not be excited about its impact on them.

4. Determine How Best to Use Your Time, Treasures or Talents
 
Hand and hand with culling the dead wood is the process of determining the best uses of your resources.  As a result of your cull of certain charitable activities, you may have extra time, funds or talents to lend to the right charity.
 
You may decide that you already have the right charities and now its just a matter of realigning your available resources with that slimmed down list. 
 
The point here is to develop a plan to maximize the impact of your giving on existing or possibly new organizations where your mission can best be met. 

5. Measure Your Impact
 
The final step is to measure your results and fine tune your giving.  This is the measurable part of goal setting. 
 
What do you hope to accomplish, over what time period and what does an acceptable result look like?
 
Remember this is a process, you may need to periodically reassess your commitments to keep them in line with your goals.
 
Let me know what you think in the comments below. ​


Written By: Jeff Diercks