Family Offices: A Vestige of the Shadow Financial System

An IPS Inequality Briefing Paper

Chuck Collins & Kalena Thomhave May 2021

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FamilyOffices:AVestigeoftheShadowFinancialSystemEnablingtheCreationofInheritedWealthDynastiesWealthyclansformfamilyofficestoaccumulatewealthandpromoteinheritedwealthdynasties.ButtheArchegoscollapserevealshowtheycontributetofinancialsystemriskandwhyit’stimeforoversight. The authors would like to thank IPS Associate Fellow Bob Lord for his assistance on this brief and Sophia Paslaski for editorial and layout assistance. Authors

ChuckCollinsdirectstheProgramonInequalityandtheCommonGoodattheInstituteforPolicyStudies,wherehealsoco-editsInequality.org.HismostrecentbookisTheWealthHoarders:HowBillionairesPayMillionstoHideTrillions.

KalenaThomhave,MPPisaresearcherwiththeProgramonInequalityandtheCommonGoodattheInstituteforPolicyStudies.

TheInstituteforPolicyStudies(www.IPS-dc.org)isamulti-issueresearchcenterthathasbeenconductingpath-breakingresearchoninequalityformorethan20years.TheIPSInequality.orgwebsite(http://inequality.org/)providesanonlineportalintoallthingsrelatedtotheincomeandwealthgapsthatsodivideus,intheUnitedStatesandthroughouttheworld.SubscribetoourweeklynewsletteratInequality.orgorfollowusonTwitterandFacebook:@inequalityorgTheIPSProgramonInequalityandtheCommonGood wasfoundedin2006todrawattentiontothegrowingdangersofconcentratedwealthandpower,andtoadvocatepoliciesandpracticestoreverseextremeinequalitiesinincome,wealth,andopportunity.Theprogramhasbeeninvestigatingtheintersectionofinequalityandrace,taxation,philanthropyandtheproblemofhiddenwealth.InstituteforPolicyStudies-NationalOffice1301ConnecticutAveNW,Suite600Washington,DC20036www.ips-dc.org,Twitter:@IPS_DCFacebook:http://www.facebook.com/InstituteforPolicyStudiesInstituteforPolicyStudies–NewEnglandOffice30GermaniaStreet,BuildingLJamaicaPlain,MA.02130Email:chuck@ips-dc.org©2021InstituteforPolicyStudies

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Summary

• Familyofficesareanunregulatedcornerofthefinancialmarketplacewithanestimated$6to$7trillioninassetsundermanagement(comparedto$3.4trillioninglobalhedgefunds).

• Ultra-high-net-worthfamilies—thosewith$250millionuptothe

billionaireclass—formfamilyofficestobringwealthmanagementservices“inhouse.”Keytotheirpurposeiscapitalpreservationandfosteringinheritedwealthdynasties.Theyaremajorutilizersofdynastytruststosequesterwealthandavoidestatetaxes.Inthisway,familyofficesservetoentrenchmulti-generationalwealthinequality.

• Astheconcentrationofwealthgloballyhasincreased,sohasthenumberof

familyoffices.Therearenowanestimated7,000to10,000familyofficesglobally,mosthavingformedinthelast15years.

• TheU.S.familyofficesectorformedthePrivateInvestorCoalitionto

successfullylobbyagainstfinancialoversightprovisionsinthe2010Dodd-Frankfinancialreformlegislation.Asaresult,after2011,dozensofhedgefundsconvertedtofamilyofficestructures.

• Proponentsoffamilyofficesbelievelightoversightisjustifiedbecause

theseofficesonlyserveprivatefamilies.Astheyarenotofferingservicestomultipleclients,thethinkinggoes,familyofficesshouldnotbesubjecttoscrutiny.However,theArchegoscollapserevealedthatfamilyofficescancontributetosystemicriskbecauseoftheirsize,secrecy,andgrowinginterestinspeculativeinvestments.

• FamilyofficesshouldberequiredtoregisterwiththeSecuritiesand

ExchangeCommission(SEC)andpubliclyreportcertainoptionandstockpositionsonaquarterlybasis.

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Contents

Summary........................................................................................................................................3

Introduction...................................................................................................................................5

TheFamilyOfficeBoom.................................................................................................................5

TrillionsYou’veNeverHeardAbout...............................................................................................8

GiantPoolsofUnregulatedCapital..............................................................................................10

OriginsofModernFamilyOffices.................................................................................................13

FinancialButlerstotheSuper-Rich..............................................................................................14

WorkinginWealthDefense.........................................................................................................15

GrowingInequality,GrowingWealthDefense.............................................................................16

FamilyOfficesProtectingtheirSpecialStatus..............................................................................17

TheCaseforOversightofFamilyOffices.....................................................................................18

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IntroductionHere’stherecipe:Startwithacouplethousandbillionaireswithtrillionsofdollarsinunregulatedpoolsofcapitalandaddadashofpandemicspeculation.Whatcouldpossiblygowrong?Enterthefamilyoffice,thelastknownvestigeoftheshadowfinancialsystem.Don’tbesurprisedifyouhaven’theardoffamilyoffices;theyintentionallyflybelowtheradar.Thesuper-rich—thosewithover$250million—formfamilyofficesinordertobringtheirwealthmanagement,taxplanning,familyservices,andsometimescharityactivitiesunderoneprivateroof.ThespotlightisshiningonfamilyofficesthankstothecollapseofBillHwang’sArchegosCapital,whichisnotahedgefundbutafamilyoffice.HedgefundsarerequiredtoregisterwiththeSecuritiesandExchangeCommission(SEC)andpubliclyreportcertainoptionandstockpositionsonaquarterlybasis.Single-familyoffices(sometimescalled“familyfunds”)havenosuchregistrationrequirementsandtheycanstructurethemselvestoavoiddisclosingtheirpositions.In2010,duringtheDodd-Frankfinancialreform,familyofficessuccessfullylobbiedandfendedofffederaloversight.ButlackoffamilyofficetransparencyisonereasonfortheArchegoscollapsethatledto$10billioninbanklossesatCreditSuisseandMorganStanleyandanestimated$33billioninstockvaluelosses.BecauseArchegosdidn’thavetodisclosetheirhighlyleveragedpositions,thesebankswereinthedark.Itistimetobringfamilyofficesintothesunnyworldoffinancialtransparency.Withoutproperoversight,thesehiddengiantsofunaccountablecapitalcouldfuelthenextfinancialmeltdown.

TheFamilyOfficeBoomCorrespondingtothegrowingconcentrationofwealthsince1980,thenumberoffamilyofficeshasexploded,reflectingtheincreaseinbillionairesandthegrowingupdraftofwealthintoafewthousandfamiliesglobally.Estimatesofthenumberoffamilyofficesaroundtheworldnowrangefrom7,000to10,000.Overhalfofthesefamilyofficeswerefoundedinthelast15years.Oneorganizationthatcloselymonitorswealthtrendsamongtheworld’swealthiestfamiliesisCampdenWealth,afamilyofficemembershipassociation.Theirresearcharm,CampdenResearch,estimatedin

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2019thattherearenow7,300familyoffices,a38percentincreaseovertheprevioustwoyears.Theseofficesmanageanestimated$5.9trillionforfamilieswith$9.4trillioninwealth.1Oprahhasafamilyoffice,OWManagementLLC.ThebillionaireKochfamilyhas1888ManagementLLCtomanageits$94billionincombinednetworth.2HedgefundmanagerWilliamAckmanandGoogleco-founderSergeyBrineachhaveone.Somefamilyofficesserveasmallclanwhileothersaresprawling.ThefamilyofficeoftheMulliezclan,ownersoftheAuchansupermarketchain,serves600familymembersinFrance.“Everybodywealthyseemstowanttohavetheirfamilyoffice,”saidDavidRubenstein,thebillionaireco-founderofprivate-equitygiantCarlyleGroupLP.He’sevenconsideringonehimself.Familiesorextendedclanswithover$150millionwillusuallyforma“single-familyoffice”toservetheiruniqueneedswhilefamilieswithaslittleas$25millionmightengageservicesthrougha“multi-familyoffice”thatservesdozensoffamilies.Today,theoriginalRockefellerFamilyOfficehasbecomea“multi-family”homeservingover250clientfamilies.TheyrecentlyacquiredWhitnell&Co.,a$1.4billionwealthmanagementfirmandmulti-familyoffice,andasubsidiaryofAssociatedBanc-Corp,expandingRockefeller’sreachintotheMidwestU.S.3

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Three-fourthsoffamilyofficesarebasedinNorthAmericaandEurope.Anestimated1,000familyofficesarebasedinLondon,managingover$1trillioninprivatewealth.4MostfamilyofficesareintheU.S.,whichhousesover3,100offices,or42percentoftheglobaltotal.TheemergingmarketregionsofSouthAmerica,Africa,andtheMiddleEastarehometoanestimated600familyoffices.Asiahasseenthemostrapidgrowthoffamilyoffices,withover1,300offices,mostformedinthelastdecade.ChinesebillionaireJackMa,retiredfounderoftheecommercegiantAlibaba—andhisright-handmanJoeTsai—boughttheBrooklynNetsNBAteamfor$2.3billionthroughtheirfamilyoffice,BluePool.SingaporeandHongKongareamongthefastestgrowingcentersoffamilyofficewealthmanagement,inpartbecauseoftheirlooseoversightandthefactthatChinaproducedtwonewbillionairesaweekin2017.5AccordingtoTheEconomist,Singapore’sgrowthhasbeenboostedasthe“government[has]greatlyrelaxedredtapeinordertoattractmorefamilyoffices.”6

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Therehasbeensomeconsolidationinthefamilyofficeindustry,drivenbymorebullishmulti-familyofficesandlargerwealthmanagementfirms.InNovember2014,FlemingFamily&PartnersmergedtogetherwithStonehage,thefirstfamilyofficeinSouthAfrica.TheFlemingclanincludesheirstoIanFleming,authoroftheJamesBondbooksandthechildhoodclassic,ChittyChittyBangBang.Theirlovechild,FlemingStonehage,isthelargestindependentmulti-familyofficeinEurope,theMiddleEast,andAfrica,serving250families.7Thesesecretiveandopaqueinstitutionsnowcontrolsomeofthelargestpoolsofprivateinvestmentcapitalontheplanet.

TrillionsYou’veNeverHeardAboutMostreadershaveheardaboutprivateinvestmentbanks,hedgefunds,andprivateequityfirms.Butmosthaveprobablyneverheardoffamilyoffices.Andfamilyofficespreferitthatway.Withtheircoremissiontopreserveandpassdownwealthacrossgenerations,familyofficesareacentralpartofthe“wealthdefense”infrastructure.Theyareunderreported,sowhentheyareperiodicallydiscovered,theyarediscussedinconspiratorialtones.“Clanswithnine-figurefortunesareincreasinglyinvestingthroughunregulatedfirmsknownasfamilyoffices,impingingonthebusinessofinvestmentbankingandprivateequity,”reportedTheWallStreetJournalina2017expose,describingthefamilyofficeasa“disruptiveforce”onWallStreet.”8Theseentities,setuptomanagethefortunesofthewealthyandabletooperateundertheradar,aremakingtheirpresencefeltwiththeirgrowingnumbers,fatwallets,andhungerfordeals.

InlightoftheArchegoscollapse,anunwelcomespotlighthasshinedupontheindustry.“Thesefirms,whichmanagehugepilesofwealthforindividualsorfamilies,areprovingtobeincreasinglyimportanttothefinancialsystem,”wroteGregoryZuckermaninTheWallStreetJournalinMarch2021.“Astheyhavegrowninsize,somefamilyofficeshaveembracedtheriskierinvestmentstrategiesusedinpreviousdecadesbythemostaggressivehedgefunds….Becausemostfamiliesareprivateandrarelysharedetailsoftheiroperationsorinvestments,itcanbehardtotrackthesizeandgrowthoffamilyoffices,ortheamountofmoneytheyborrowtojuicetheirreturns.”9Familyofficesareas“quietasyoucouldpossiblyfind,andthey’rewritingextremelylargechecks,”saidWardMcNallytoTheWallStreetJournal.McNallyisagreat-great-grandsonofAndrewMcNally,whoco-foundedatlaspublisherRandMcNally.“We’rethemostimportantpartoftheinvestmentlandscapemostpeoplehaveneverheardof,”onefamilyofficeexecutivetoldTheEconomistinanarticle,“Familyofficesbecomefinancialtitans.”AnotherarticleinTheEconomististitled,“Howthe0.001%invest.”10

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Thisdramatictoneisunderstandablegivenboththesecrecyandlackofaccountabilitysurroundingtheindustry,asfamilyofficesareneitherregisterednorlicensed.Someincludethewords“familyoffice”intheirnamesandothersshunit.Manyfamilyofficesaredeliberatelygivennamesdifferentfromthoseoftheirfamilies,suchasWaycrossefortheCargill-MacMillansorMiramarServices,Inc.fortheScrippsfamily.Thinkofthemasfamily-ownedprivateinvestmentbanksandassociations. Themediaandregulatoryspotlightsshineelsewherebecausefamilyofficesappeartobelessconcernedaboutamassingnewwealththanpreservingexistingfortunes.Butthistooischangingassomefamilyofficeshazardtowardtheadventurousedgeoffinance.Thereisnothinginnatelydiabolicalaboutfamilyoffices.Manyofthemprovidethemostmundaneofwealthmanagementservicesandotheractivities.Buttherearegrowingreasonsforconcern.Familyofficesareformedforwealthdefense,topreserveandgrowwealthoverseveralgenerations.SothereisadeepbiasintheirDNAagainstanythingthatmightreduceorerodecapital,includingtaxation.Inachievingthiscoremission,familyofficesdeploytherangeof“toolsinthetoolbox.”Theseincludecoordinatingbasicwealthmanagement,fashioningestateandtaxplanstomaximizeinheritances,creatingdynastytrusts,defendingfamilyassetsfromaggrievedex-spousessuingfordivorcesettlements,andpreparingthenextgenerationforwealth.Somefamilyofficesarealsoinvolvedinadministeringthefamily’scharitablefoundationsandactivities.Aswealthinequalitygrowsaroundtheplanet,familyofficesareinthedynastypreservationbusiness,sequesteringassetsforcenturiestocome.Asaresult,familyofficeshavethemselvesbecomeenormouspoolsofanonymousandunregulatedprivatecapital.Familyofficesareestimatedtoholdmorethan$6trillion,theequivalentof7percentoftheworld’sstockmarkets.11Thinkaboutit:Trillion-dollarpoolsofunregulated,anonymously-ownedcapital.Whatcouldpossiblygowrong?Somefunctionsoffamilyofficesarelegitimateenough.Ifafamilyiscomingtogetheraroundanexistingfamilybusiness,thenfacilitatingbusinesssuccessionisacentralfocus,especiallythetransitionfromabusinessfoundertothenextgeneration.Thethreattomanybusinessessurvivingformultiplegenerationsisnotexternal—suchasregulationortaxation—butinternalfamilydynamics.“Thecastleusuallycrumblesfromwithin,”saysGaoHao,anexpertwiththeGlobalFamilyBusinessResearchCenteratTisnghuaUniversityofBeijing.12Butsomefamilyofficesareengagedinaggressivetaxplanningandreduction.Thismovesthemintotheterritoryofdeployingforeignshellcorporations,opaqueintergenerationalfamilytrusts,bankaccountsinoffshoretaxhavens,andfinancialplanningtechniquestoconvertonetypeofincome(wageearnings)intoanothertype(capitalorroyaltyincome)thatmaybetaxed

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atalowerrate.AsanarticleinTheEconomistobserves,“Familyofficesarebecomingmorecomplex—athirdhaveatleasttwobranches—makingtaxwheezeseasier.”Themulti-familyofficeofUK-basedWernerCapitalaidedawealthycouplefromAzerbaijantostashwealthextractedfromthatcountrybycreatingshellownershipcompaniesandfunnelingfundstooffshoretaxhavens.JahangirHajiyev,chairmanoftheInternationalBankofAzerbaijan,waspaidalittleover$70,000inbanksalaryin2008.Yetwithoutanyothersourceofincome,heandhiswifeZamirawentonaspendingspreebetween2003and2015.TheyboughtaGulfstreamjet,agolfclubmembership,andatownhouseintheritzyLondonneighborhoodofKnightsbridge.Zamirawentonashoppingbinge,spending£725,000atHarrodsdepartmentstoreonjewelryanddesignerclothes.AsBloombergreported,“thegapbetweentheirspendingandincomeapparentlydidn’tstoparaftofenablers—lawyers,accountants,investmentadvisersandotherprofessionals—fromhelpingthecouplesteertheirwealthintoassetsintheU.K.fromawebofoffshorecompanies,accordingtocourtpapersandcorporatefilings.”13

GiantPoolsofUnregulatedCapital

“Familyofficescouldendangerthestabilityofthefinancialsystem.Combiningveryrichpeople,opacityandmarketscanbeexplosive.” -TheEconomist

Asidefromtheirmoney-hidingrole,familyofficesareraisinganumberofredflagsbyvirtueofbeingtrillion-dollarpoolsofanonymousandunregulatedcapital.Whilemanyfamilyofficescontinuethemoremundanebusinessof“wealthdefense”andpreservation,othersaremovingtowardthecuttingedgeofrisk-takingandunregulatedinvesting.

Somefinanceexpertsarealarmedwiththesheermarketpoweroffamilyofficesintheeconomy,theiranonymousnature,andhowtheycontributetoextremewealthinequality.Anadditionalconcernrelatestohowfamilyofficescontributetoatwo-tiercapitalmarketplace,oneforthesuper-richandanotherforeveryoneelse.

“Familyofficescouldendangerthestabilityofthefinancialsystem.Combiningveryrichpeople,opacityandmarketscanbeexplosive,”warnsTheEconomist.14

Stillonpeople’smemoriesisthe2008economicmeltdown,propelledbytrillionsinhotmoneyshiftedintounregulatedhedgefunds,derivatives,andotherexoticfinancialinvestments.Thosewithlongermemoriesharkenbacktothe1998debacleofLongTermCapitalManagement,the$100billionhedgefundthatblewupandalmostbroughtdownWallStreet.15

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Whenanyentitymanagestrillionsofdollarsofcapital,itisinevitablethatsomeofitwillbeinvestedintheflashing-lightsterritoryofthespeculativeglobal“casino”economyinsearchofhighrisk,highreturnpropositions.Familyofficeshavevastportfolioswithamixofassetclassesthatincludesafeinvestmentssuchasfixedratebondsandinsureddeposits,aswellasart,realestate,jewelry,andotherformsofwealthstorage.Itisnotsurprisingthataportionofthewealth,possiblytrillions,hasmovedbeyondpublicsecuritiesintoventurecapital,impactinvestments,andothermorespeculativeinvestments.Thespecialstatusoffamilyoffices—outsideregulatoryscrutiny—isnowoneofthebiggestdriversoftheirgrowth.“Lotsofpoolsofcapitalaregoingfromaregulatedtoanunregulatedenvironment,andbytheverynatureofdoingallthesedirectdeals,wemustbeputtingourselvesontheradaroftheregulator,”saysSimonFoster,chiefexecutiveofTYDanjuma,thefamilyofficeofTheophilusDanjuma,aNigerianbusinessmogul.16 Somefamilyoffices,includingthoserepresentingtheGatesfamilyandthePritzkerhoteldynasty,aremajorpurchasersofhigh-risksecuritizeddebt. “Familyofficesarebecomingmoreambitiousandareevolvingtoembracenewopportunitiesaccordingly,”observedAnupreetaDasandJulietChunginTheWallStreetJournal.“Theyareformingnewpartnershipstoconductbuyoutsandacquisitions;theyarefinancingstart-ups,purchasingdistresseddebt,realestateandesotericinsuranceproducts;andtheyareevenlendingtocompaniesandoccasionallygoingtobattlewithcompaniesasactivistshareholders.”17Theirunregulatednatureistheprimaryreasonanumberofhedgefundsreturnedtheirclient’smoneyandconvertedtofamilyofficestatus.In2011,GeorgeSorosconvertedhis$24.5billionhedgefund,SorosFundManagement,toafamilyoffice.18DavidTepperconvertedAppaloosaManagementfromahedgefundtoafamilyofficeandotherhedgefundimpresarios,suchasJonJacobsonandLeonCooperman,followedsuit.Altogetherthree-dozenmajorhedgefundsadoptedthefamilyofficestructure.19ThiswastrueofBillHwang,founderofArchegos.Afterpleadingguiltytowirefraudandinsidertradingin2012,Hwangtook$200millionfromhisclosinghedgefundandstartedArchegosCapitalManagementasafamilyoffice.Heleveragedthisintoa$20billionbetonpandemicmediaandtechstocks.Hwangdeployedwhatisknownasatotalreturnswap,atypeofderivativethatprovides“alltheeconomicbenefitsofowningastockwithoutrequiringArchegostospendthemoneytoactuallybuyit,”writesAlexisGoldsteinfromAmericansforFinancialReform.20Thoseseekingventurecapitalnowunderstandthisandtheyareactivelyknockingatthedoorsoffamilyofficesinsearchoflargechunksofflexibleinvestmentcapital.Anumberofservicesconnectstart-upcompaniesseekingventurecapitaltootherwiseinaccessiblefamilyoffices.Onecompany,FINTRX,wasfoundedin2014to“provideassetraisingprofessionalsaccessto

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highqualityFamilyOfficedata,”withcontactinformationandassetestimatesfor2,750familyofficesgloballyand11,000contacts.21Familyofficesareteamingupto“co-invest”together,assemblinglargercapitalpoolstodirectlyinvestinventures.ThePerotfamilystartedtoconveneotherfamilyofficestoformprivate-equity“clubdeals.”“Perotfamilyofficeexecutivessaidtheyhatchedtheideaafterhavingtopassonadealthatneededmorecashthantheywerewillingtoputup,”wroteDasandChunginTheWallStreetJournal.Thisissendingwarningsignalstoregulators.Europeanfamilyofficesinvolvedinco-investingmightbesubjecttotheAlternativeInvestmentFundManagersDirective(AIFMD),especiallyiftheyinvolve“politicallyexposedpeople,”thosewithpowerandpublicroles.Theymaybecomesubjecttogreaterdisclosureandreportingrequirements.22“AstheFedandothercentralbanksloosenmonetarypolicy,privatepoolsofcapitalaresearchingforever-moreinnovativewaystoearnreturns,”saidGillianTett,theseniorU.S.correspondentattheFinancialTimesandauthorofFool’sGold,abookaboutthecausesofthe2008economicmeltdown.“Indeed,publicmarketsasawholenowseemdangerouslyhostagetothewhimsofunfathomablepoliticiansandcentralbanks.”Familyoffices,accordingtosurveysconductedbyCampdenandotherfamilyofficenetworks,areshiftinginvestmentsoutoflowperforminghedgefundsandpublicequitymarkets.Basedonone2018survey,28percentoffamilyofficeinvestmentswereinequitiesand16percentinbonds.Meanwhile,theyincreasedtheirstakesinprivateequityto22percentandinrealestateto17percent.Hedgefundstakeswerebelow6percentandshrinking,whilesomefamilyofficeswerestartingtostockpilecashandequivalentsinanticipationofarecession.23Onedangerousimplicationofthesetrends,however,isthewideningofatwo-tierinvestmentmarket.Oneinvestmentmarketexistsforthemassesofpensionersandthe“merewealthy”thatincludespubliclytradedequitiesandbondswithlowreturns.Andanothermarketexistsfortheoligarchsandthesuper-richwithunregulatedalternativesandspeculativeinvestmentswithhigherreturns.Thisisthe$6trilliondollarcatch,saysTett:“Themorethateliteprivatepoolsofcapitalfindjuicyreturnsoutsidepublicmarkets,themorethisrisksfuelingwealthgaps.Afterall,mostnon-eliteinvestorsremainstuckinpublicmarketsandbankdeposits,exposedtothevagariesoflowinterestrates.”24Thiscreatessomeadvantagesforanalreadyadvantagedgroupofwealthyinvestors.“Familyofficesmighthaveprivilegedaccesstoinformation,dealsandtaxschemes,allowingthemtooutperformordinaryinvestors,”warnsTheEconomist.“Hungrybrokersandbanksarerollingouttheredcarpet[tofamilyoffices]andpitchingdealswithunlistedfirmsthatarenotavailabletoordinaryinvestors.Ifallthisdidleadtoanentrenched,unfairadvantage,theeffect,whencompoundedoverdecades,wouldmakewealthinequalitydisastrouslyworse.”25

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“Thisreturngapmaybegoinglargelyunnoticednow,becauseprivatemarketsaresoopaque,”saysTett.“However,thedifferenceislikelytogrow.Thereinliesanothermostlyunnoticedconsequenceofcentralbankeasing;anotherreasonwhythe20thcenturyvisionofdemocraticcapitalismbasedaroundpublicmarketsisunderattack.”26

OriginsofModernFamilyOfficesTheantecedentsofthefamilyofficedatebackcenturiestowhenroyalstewardshandledthefortunesofmonarchs.WithindynasticEuropeanfamilies,therewerewellknownfamilyformations,suchasthe“HouseofRothschild.”Thefirstmodernfamilyofficewasformedin1882byJohnD.RockefellertomanagetheaffairsofhisStandardOilfortune.There’sastrongbusinesscasetobemadeforbringingfinancialandotherservices“inhouse,”ratherthandealingwithanarrayofprivatelawfirms,bankers,andinvestmentadvisors.AssociologistBrookeHarringtonexplains,“Inbusinessorganizationalbehavior,thereistheclassicquestion:shouldyoubuystufformakeityourself?”ShegivestheexampleofhowfordecadesGeneralMotorsboughtpartsfromFisherBody.“Atonepoint,theyjustdecidedtobuythemandmakethempartofGM.”“EssentiallythesameintuitionoccurredtoJohnD.Rockefelleraboutacenturyago,”saysHarrington.Becausehispersonalfortunewassovastandcomplex,Rockefellerwasessentiallycontractingoutwithanarmyoflawyersandaccountantsandadvisors,evenphilanthropyadvisors,totakecareofhisaffairs.Eventuallyherealized,“Ishouldjustbuythem.”Soratherthanmakingthemcontractorshemadethememployees.“Theorganizationaldeviceforthiswasthefamilyoffice,adedicatedtrustcompanyplussoup-to-nutswealthconsultationfirm.”“Youreduceinformationasymmetriesandtransactioncosts,”saysHarrington.“Whenyouareworkingwithanexpert—thereisalwaysstufftheexpertknowsthatyoudon’t.Youmightbeleftwondering,‘havetheytoldmeeverything?’Whenyou’rerichenoughyouputanendtothatquestionandmakethemyouremployeeratherthanconsultant.”Afamilyofficemightalsobebetterabletoenforceconfidentialityandnon-disclosure,protectingfamilyprivacy.Otherdynasticallywealthyfamiliesfollowedsuit,includingJ.P.Morganandotherswithwealthemergingfromtheindustrialrevolutionandtheearly20thcenturyGildedAge.BostonbecameacenteroffamilyofficeswhereoldwealthNewEnglandfamiliesdiscreetlymanagedtheiraffairs,largelyoutsidethespotlight.Duringtheindustrialrevolution,BostonwastheSiliconValleyofitsday.Hugefortunesemergedfromearlymanufacturingthatwassubstantiallybiggeranddifferentfromland-basedfortunes.TheCabotsandLodges,withwealthfromshipping,merchandise,andearlymanufacturing,literallyhadmorecashthantheyknewwhattodowith.

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Stateandfederalofficialsweredevelopingtaxsystems—initiallyto“conscriptwealth”topayforwars.Asthesemoderntaxsystemscametogether,publicofficialswereobviouslyveryinterestedinhowtotaxthesegreatindustrialfortunes.“TheCabotsandLowellsdeployedpeopletoensurethatthestatedidn’tgettheirhandsontheirmoney,”saysHarrington.“Andthat’sbeenthejobofthewealthmanagereversince.”Harringtonexplainsthatalongsidethesenewformsofproduction—likethewoolandcottonmillsinLowellandLawrence—emergedthefinancialandlegalinnovationstomanagethiswealth.Forthisreason,Bostonbecamethecuttingedgeoftrustlawandfiduciaryrules.“Muchofwhatistheestablishedlawofmanagingprivatewealthcomesoutofearly19thcenturyBoston—becausethat’swheretherichpeoplewere.”MorefamilyofficeseventuallycroppedupinNewYorkCity,Chicago,andotherfinancialcenters,andoverthe20thcenturyseveralhundredwealthyfamiliesformedoffices,somenowservingthethirdandfourthgenerations.

FinancialButlerstotheSuper-RichSomefamilyofficesoffermorepersonal“conciergeservices,”suchasarrangingfortravel,includingbookingprivatejetsandmakingsurethegroundtransportationlimoshavetherightbeveragesandsnacksonhand.ThinkLadyGagaontour.“TheyarelikeaSwissarmyknifeforthewealthy,”quippedBenCowdockfromTransparencyInternational,referringtofamilyoffices.“Itdoeseverything.”27Ultra-high-net-worthfamiliesusuallyhavemultiplepropertiestostaffandmanage.Thefamilyofficemightoverseesomeofthesedomesticoperations,especiallyasfamiliesdecampfromNewYorkCitytoSunValley,ensuringcooks,housecleaners,drivers,andotherservicesareallinplace.CherylHowardofMaitlandFamilyOffice,oneofthelargestmulti-familyofficesinSouthAfrica,saidthatthewealthyarequicklybecoming“globalcitizens”andneedaservicethatistrulyinternationalanddeliveredseamlesslyacrossborders.Shebelievesfamilyofficesofferseveraladvantagesoverbanks,hedgefunds,andprivateequityfirms,including“themanagementoflonger-termcapitalneedsandgenerallyamorepersonaltouchwhenitcomestosupportservices.”SheoncehelpedaclientchoosetheinteriorcolorofhisnewBentley.28Globalizedfamilyofficesareinvolvedinhelpingforeignnationalstoobtainresidencyvisas,purchaserealestate,andsecurespotsinthebestprivateschoolsfortheirchildren.Theyoverseefamilycybersecurityandmonitorinvoices.Apparentlyyachtservicefirmsarenotoriousforoverchargingiftheythinkbillswillnotfaceclosescrutiny.

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AtthebeginningoftheCovid-19pandemic,familyofficesswungintoactionbothtoprotecttheassetsoftheirpatronsandtosetupremotelocationsforfamilymembers.Manyfamilyoffices,anticipatingeconomicvolatility,movedinvestmentsintocashorlookedforprofitsinhealthcare.Othersactivelypromotednewtrustsandwealth-hidingstrategiesfortheirclients.29Innon-emergencysituations,thetaskscanbequitediverse.OnefamilyofficestafferdescribedthathehadspenthisdayarrangingtransportforagoldenretrieverfromBostontoDubai.AwealthyheirtoadynasticMiddleEasternfamilyhadgraduatedfromaBoston-areacollegeandneededtogethisdoghome.AsoneBloombergreporterquipped,familyofficesmaybeinvolvedin“hiringjetsandhelicopters,maintainingyachtsandgettingchoiceticketstosportingevents.TheywillevenwalkyourPomeranians.”30Theyare“financialbutlers,”providing“super-help…forthesuper-rich.”Preparingthenextgenerationforwealthincludesteachingfinancialliteracy,helpingyoungadultsgetoutoftrouble,andguidingthegenerationsthroughtheinevitablefamilycycles—birth,marriage,children,divorce,remarriage,grandchildren,anddeath.Familyofficesarewherechildrenlearntheimportanceofthepre-nuptialagreementasamechanismtoprotectfamilywealth.

WorkinginWealthDefenseForthoseseekingjobswithintheWealthDefenseIndustry,workingatafamilyofficeisattractivetomanynewcomersandveteransinfinance.“Workingdirectlyforsomeoftherichestpeopleintheworldbringsperkssuchastripsaboardsuperyachts,butitcanalsocomewithfamilydramaandoffbeatpersonalities,”reportedBloombergMarketsinaninterviewwithtwofamilyofficerecruiters.Forpeoplecomingfrominvestmentbanks,workingatafamilyofficecouldbeabigchangeincultureandmindset.“Thewillingnessandtheattitudetobeatthebeckandcallofthefamilycanbeacultureshock,”saidfamilyofficerecruiterPaulWestall.Familiescanbeparticular.“Findingsomeonewhoistrustworthyanddiscreetandsomeonethefamilycanrelyonisthemainconcernbecausetheirfortunes,theirlivelihoods,andentiregenerationsofwealthareatstake.”31Insteadoftoilingfor70hoursaweekatahard-chargingprivateequityfirmorhedgefund,workingatafamilyofficemightbelessonerous,accordingtoBenIngramfromtherecruitingfirmBerwickPartners.32Butthereisalsolessstatusthanintheworldofhighfinance.Workinginfinancialfirmsthatbelievetheyare“wealthcreators”bringsbothhighercompensationand

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culturalcache.Familyofficesandotherwealthdefenseoccupationsaremoreabout“wealthpreservation.”Though,asdescribedabove,thisisrapidlychanging.Inrecentyears,familyofficeshaveluredawayskilledwealthmanagementprofessionalsfromotherfinancialinstitutionsbecauseoftheadvantagesofworkinginalessregulatoryenvironment.In2015,ThomasPritzker,thebillionairechairoftheHyattHotelsCorp.,poachedJosephGleberman,seniorbankeratGoldmanSachsprivateequitydivision,tohelprunhisfamilyoffice.33GregFleming,onceseenasthefutureleaderofMerrillLynchandMorganStanley,wenttotheRockefellerFamilyOffice.Investmentprofessionalsatfamilyofficesgettofocusmoreondirectventuresandalternativeinvestmentsoutsidethetraditionalsecuritiesmarket,whilealsohavingabetterworklifebalance.Forthosewantingtodevotetheirlife’slaborstohelpingthebillionaireclassgetricher,thisisonecareeroption.

GrowingInequality,GrowingWealthDefenseAsbrieflymentioned,theexpansionofthefamilyofficesectorisdirectlytiedtogrowinginequalityandthedizzyingconcentrationofwealthamongultra-high-net-worthhouseholds.Thegreatertheconcentrationofwealth,themorewealthdefenderscanfindemployment.AsofMarch2021,therewere2,755billionairesglobally,withacombinednetworthof$13.1trillion.34Overthefirstyearofthepandemic,billionairewealthsurgedover$4trillion.

AccordingtoCreditSuisse,anestimated89,500adultsintheU.S.hadwealthabove$50millionatthebeginningof2020(abouthalfoftheworldtotal).35AsofApril2021,710U.S.billionairesholdmorethan$4.6trillioncombined.36ManyofthesemayusetraditionalwealthmanagementcompanieslikeFidelity,notafamilyoffice.Buttheyaretheconstituencyforfamilyofficeformation.

Withanintergenerationalwealthtransferestimatedashighas$68trillionoverthenext30years,theneedforsuchfamilyofficeswillincrease.37Mostofthistransferwillbehappeningintheuppercanopyofthewealthforest,betweenhouseholdsinthetop0.01percent.Householdswithwealthover$5millionwilltransferanestimated$15.4trillionby2030tothenextgeneration.38Thereareseveraladditionaldriversoffamilyofficeexpansion.Intheaftermathofthe2008economicmeltdown,manywealthyfamiliesreevaluatedtheirfinancialarrangements.Apreferenceforafamilyofficegrewinpartoutofdisillusionmentwiththird-partyinvestmentmanagersfueledby“scandalsoveropaqueandabusivefees,andbankspushingtheirownexpensiveproducts.”39Thisprovidedanothergoodreasontobringfinancialservicesinhouse.

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Manysurgesofprivatewealtharetheresultof“liquidityevents,”asbusinessfoundersorheirscashoutofenterprisesaftersalesorinitialpublicofferings,andhavelargepoolsofcashthatneedmanaging.ThinkFacebookorUbergoingpublic,orotherwindfallsfrombusinessstart-ups.CarolBernickfoundedherfamilyofficein2002tomanageassetsfromoutsidethefamily-ownedhair-carecompany,AlbertoCulver,foundedbyherfather.Butwhenthebeauty-supplybusinesswassoldtoUnileverfor$3.7billion,thefamily’swealthsurged.Todaythefamilyoffice,PolishedNickelCapitalManagementLLC,has14employeesandinvestswithotherfamiliesandprivateequityfirms.40Forsomeamongtheverywealthy,familyofficesareastatussymbol.TheEconomistobserved,“newlymintedbillionaires,fromAsiainparticular,feelincreasinglythattheyarenotfullmembersoftheclubwithoutone.”

FamilyOfficesProtectingtheirSpecialStatusTheglobalmovementforgreatertransparencymayimpactthespecialstatusoffamilyoffices.Intheaftermathofthe2008economicmeltdown,theU.S.CongresspassedtheDodd-FrankWallStreetReformandConsumerProtectionAct.Thislegislationrepealedthe“privateadvisorexemption”forhedgefundsandotherprivatefundadvisors,requiringthemtoregisterwiththeSecuritiesandExchangeCommission.FamilyofficeshadhistoricallybeenexcludedfromregulationundertheInvestmentAdvisersActof1940,apost-GreatDepressionreform.

Familyofficesswungintoactiontoprotecttheirunregulatedstatus.Theyformedalobbyingarm,thePrivateInvestorCoalition,andworkedtoensurethatsingle-familyofficeswouldhavea“carveout”inDoddFrank.41Accordingtotheirlobbyingdisclosures,theyspenthundredsofthousandsofdollars,arguingthat“familyofficesareaimedatpreservingwealthandmakingconservativeinvestments,nottryingtobeatmarketsovertime.”42

Theysucceededinprotectingtheirspecialstatus,buttheSecuritiesandExchangeCommissionwaschargedwithdefiningwhatconstituteda“familyoffice”tobeeligibleforexemptionfromrules.Undertheseregulations,familyisdefinedas:

Familymembers.Familymembersincludealllinealdescendants(includingbyadoption,stepchildren,fosterchildren,and,insomecases,bylegalguardianship)ofacommonancestor(whoisnomorethan10generationsremovedfromtheyoungestgenerationoffamilymembers),andsuchlinealdescendants’spousesorspousalequivalents.

Aftertengenerations,therecouldbeseveralthousanddescendantstotheoriginalancestor,sothisdefinitionallowsforapotentiallyenormousconglomerationofwealth,especiallyifdynastysequestrationmeasuresaresuccessfulinthedecadestocome.

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Aslongasthefamilyoffice“doesnotholditselfouttothepublicasaninvestmentadvisor,”itfallsoutsideSECoversight.43Butfamilyofficesmaystillengageinactivitiesthatdofallunderoversight,suchasinvestinginprivatelyofferedsecuritiesandinvestmentfunds,commodityoptionsandswaps,andothervehiclesthatthemselvesaresubjecttoregulation.44

InEurope,familyofficeshaveflownundertheradar,buthavecapturedsomeunwantedpublicityinthepost-PanamaPapersera.TheEuropeanNetworkofFamilyOfficesformedtobeavoiceinthepublicpolicyandlobbyingspace,ledbyFrancoisMollatduJourdin,whoalsoservesasthesecretarygeneraloftheFrenchFamilyOfficeAssociation.45

IntheUK,familyofficegroupsareformingalobbyingarm.“ManyUK-basedfamilyofficesfinditfrustratingdealingwiththeFinancialServicesAuthority,themainUKregulatorbecauseofitslackofunderstandingofwhattheydo,”saidYogeshDewan,chiefexecutiveofHassiumAssetManagement.“Regulatorsaremorefocusedonassetmanagers,privateequity,hedgefundsandbanks,anddon’tseemtooconcernedabouttheactivitiesoffamilyoffices.”46

Butthemovementagainsttaxhavenabuseisalsobringingscrutinytofamilyoffices.“DemandforenhancedinformationsharingcomesnotjustfromtheUS,”writesSarahCormack,apartnerattheUKofficeofWithers.“Eventhosejurisdictionsthatwereselectedhistoricallybecauseoftheprivacytheycouldoffernowcarrywiththemanincreasedcomplianceburden.”

PaulGoldenobserves,“Familyofficesoftenlookforregimeswitha‘lowerkey’approachtoregulation...notonlytominimizetheamountofinformationtheyhavetoshare,butalsobecauseregulationisusuallydesignedforcommercialenterprisesandtherequirementscanbeonerousandwastefulforfamilyinvestments.”47

Indeed,regulationdesignedforlargecommercialinvestmentinstitutionsmightnotbeappropriateforasingle-familyofficemanaging$250millionforonefamily.Butwhathappensasmorebillion-dollarfortunesareshiftedfromotherinvestmentvehicles,suchashedgefunds,intofamilyoffices?Andwhathappensasfamilyofficesmovemoremoneyinto“direct”and“alternative”investmentsoutsideofalreadyregulatedfinancialmarkets?

TheCaseforOversightofFamilyOfficesFamilyofficesarguethatbecausetheyarejustmanagingonefamily’smoneythattheyshouldn’tbesubjecttothesameoversightasafinancialinstitutionwithmultipleclients.Andthismaybetrue.Althoughtoreadthedefinitionof“family”inthefamilyofficestatuteabovewouldallowforhundredsoffamilies.Regulatorsarerightfullytakingnotice.InearlyMay2020,DanBerkovitzattheU.S.CommodityFuturesTradingCommissionsaidoversightoffamilyoffices“mustbestrengthened,”notingthatthey“canwreakhavoconourfinancialmarkets.”48

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“Familyofficescanstilldobadthings,”saidTylerGellasch,aformerSECofficialandexecutivedirectorofHealthyMarkets,inaninterviewwiththeAustralianFinancialReview.49“Theycanstillhurttheoverallmarket.Wenowhaveaclearexampleofsomeoneexploitingthefamilyofficeexemptionandcreatingsystemicrisk.”“Weshouldnotbesurprisedifthisleadstoare-evaluationofwherefamilyofficesfitwithintheregulatorystructure,”saidMarlonPaz,apartneratthelawfirmMayerBrown,inaninterviewwithInvestmentNews.50Atminimum,familyofficesshouldberegisteredwiththeSECandshoulddisclosethesizeofassetsundermanagement.Theyshouldberequiredtomake13Fdisclosuresonaquarterlybasistodeclareallportfoliopositions,ashedgefundsmustdo.SenatorSherrodBrown,chairoftheSenateBankingCommittee,recentlyopenedaninquiryrelatedtoArchegos.BrownwroteinalettertoCreditSuisse,“themassivetransactions,andlosses,raiseseveralquestionsregardingCreditSuisse’srelationshipwithArchegosandthetreatmentofso-called‘familyoffices.’”51AndevenbeforetheArchegoscollapse,theSECwasplanningtoreviewtherulesgoverningfamilyofficesandtheirprivilegedstatus.52Asaresult,thefamilyofficelobbyistsatthePrivateInvestorCoalitionregisterednewlobbyistsinFebruary2021,53andareraisingmoneytoengageinanotherroundoflobbyingtofendoffoversight.54Familyofficesmayappearlargelybenign,butbecauseoftheirsizeandsecrecytheycouldalsocontributetothenextfinancialdestabilizationcrisis.Togethertheymanagetrillionsinunregulatedfinancialcapital,someinvestedinthenextgenerationofexoticfinancialinstrumentsandprofit-makingschemes.Archegosisanearlywarningsignabouthownewspeculativeinvestmenttools—theequivalentofcreditdefaultswapsduringthe2008economicmeltdown—willarriveonthescene.Don’tbesurprisedwhenthedeliverysystemsarecapitalsuppliedbyfamilyoffices.

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NOTES 1RyanSwift,“GlobalfamilyofficesgrowassetsundermanagementtonearlyUS$6trillion,reportshows,”SouthChinaDaily,July23,2019.https://www.scmp.com/business/money/wealth/article/3019665/global-family-offices-grow-assets-under-management-nearly-us6.2ForbesRealTimeBillionaires,accessedMay20,2021,latestestimatesofKochwealthhttps://www.forbes.com/real-time-billionaires/.3BusinessWire,“RockefellerCapitalManagementExpandsinMidwestwithAcquisitionofWhitnell&Co.,”January5,2021.https://www.businesswire.com/news/home/20210105005939/en/Rockefeller-Capital-Management-Expands-in-Midwest-with-Acquisition-of-Whitnell-Co.4DavidBatty,“HowLondon’sbooming‘butlerclass’takescareofthewealthyelite,”TheGuardian,March12,2016.https://www.theguardian.com/business/2016/mar/12/family-office-private-wealth-funds.5RebeccaGooch,Campden’sheadofresearch,estimates5,300accordingtoTheEconomist,in“FamilyOfficesbecomefinancialtitans,”TheEconomist,December13,2018.https://www.economist.com/briefing/2018/12/15/family-offices-become-financial-titans.TheGuardianestimatedcloserto10,000.SeeBatty,2016.6Ibid.7BloombergProfessionalServices,“TheFutureofFamilyOffices:Regulation,”BloombergProfessionalServices,March9,2015.https://www.bloomberg.com/professional/blog/future-family-offices-regulation/.8AnupreetaDasandJulietChung,“NewForceonWallStreet:The‘FamilyOffice,”TheWallStreetJournal,March10,2017.https://www.wsj.com/articles/the-new-force-on-wall-street-family-offices-1488991396.9GregoryZuckerman,“FamilyOfficesLikeArchegosTakeBigRisksLikeHedgeFunds,”WallStreetJournal,March31,2021.https://www.wsj.com/articles/family-offices-like-archegos-take-big-risks-like-hedge-funds-1161722399810TheEconomist,2018,“Familyofficesbecomefinancialtitans.”11Attheendof2019,theglobalvalueofequitiesmarketswas$85trillion:https://www.cnbc.com/2019/12/24/global-stock-markets-gained-17-trillion-in-value-in-2019.html.In2018,TheEconomistreportedthatfamilyofficesheld$4trillion,theequivalentatthetimeof6%ofglobalequitymarkets.SeeEconomist,December13,2018.12HennySender,“China’stechbillionaireskeepitinthefamilyoffice,”FinancialTimes,October30,2019.13EdwardRobinsonandGavinFinch,“DirtyMoneySpotlightsRoleofFamilyOfficesasEnablers,”Bloomberg,July30,2019.https://www.bloomberg.com/news/features/2019-07-30/dirty-money-spotlights-role-of-family-offices-as-enablers.14“Howthe0.001%invest,”TheEconomist,December15,2018.https://www.economist.com/leaders/2018/12/15/how-the-0001-invest.15SeeNicholasDunbar,InventingMoney:ThestoryofLong-TermCapitalManagementandthelegendsbehindit(NewYork:Wiley,2000).AndRogerLowenstein,WhenGeniusFailed:TheRiseandFallofLong-TermCapitalManagement(RandomHouse,2000).16DavidBain,“Familyoffices:investmentsunderthespotlight,”FinancialTimes,October20,2017.https://www.ft.com/content/4c6d79aa-a9cb-11e7-ab66-21cc87a2edde.17DasandChung,2017.18RobertFrank,GregoryZuckermanandSteveEder,July27,2011.

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19DasandChung,2017.20AlexisGoldstein,“TheseInvisibleWhalesCouldSinktheEconomy,”TheNewYorkTimes,May18,2021https://www.nytimes.com/2021/05/18/opinion/archegos-bill-hwang-gary-gensler.html21SeeFINTRXhttps://www.fintrx.com/.22BloombergProfessionalServices,“TheFutureofFamilyOffices:Regulation,”BloombergProfessionalServices,March9,2015.https://www.bloomberg.com/professional/blog/future-family-offices-regulation/.23“Wealthiestfamiliesarestockpilingcash,”InvestmentNews,September29,2019https://www.investmentnews.com/wealthiest-families-are-stockpiling-cash-8145524GillianTett,“Familyofficesaredivingintonewmarkets,”FinancialTimes,August1,2019.https://www.ft.com/content/dd01c02a-b45f-11e9-8cb2-799a3a8cf37b.25TheEconomist,“Howthe0.001%invest,”TheEconomist,December15,2018.https://www.economist.com/leaders/2018/12/15/how-the-0001-invest26Tett,2019.27RobinsonandFinch,2019.28RuanJooste,“FamilyOffices:Morethanjustkeepingitamongthekinandpayingitforward,”BusinessMaverick(SouthAfrica),November26,2019.https://www.dailymaverick.co.za/article/2019-11-26-family-offices-more-than-just-keeping-it-among-kin-and-paying-it-forward/.29FamilyOfficeExchange,“GRATExpectations:ExtraOpportunityintheCurrentEnvironment,”June10,2020.https://www.familyoffice.com/knowledge-center/grat-expectations-extra-opportunity-current-environment.Alsosee:H.F.RickPitcairn,“InvestingBeyondthePandemic,”Pitcairn,April8,2020.https://www.pitcairn.com/trending/investment-commentary/2020/04/08/pitcairn-global-market-update-investing-beyond-the-pandemic30RobinsonandFinch,2019.31BloombergNews,“Thetruthaboutfamilyofficejobs,”InvestmentNews,June12,2019.https://www.investmentnews.com/the-truth-about-family-office-jobs-79947AninterviewwithPaulWestallandTayyabMohamed,directorsofAgreusGroup,arecruiterforsinglefamilyoffices.32TheEconomist,December13,2018.33DasandChung,2017.34KerryDolan,“Forbes’35thAnnualWorld’sBillionairesList:FactsAndFigures2021,”Forbes,April6,2021.https://www.forbes.com/sites/kerryadolan/2021/04/06/forbes-35th-annual-worlds-billionaires-list-facts-and-figures-2021/?sh=3fbb5a935e5835CreditSuisseResearchInstitute,“Globalwealthreport2020,”CreditSuisse,October2020.https://www.credit-suisse.com/about-us/en/reports-research/global-wealth-report.html36“BillionairePandemicWealthGains,”AmericansforTaxFairnessandInstituteforPolicyStudies,April15,2021.https://ips-dc.org/wp-content/uploads/2021/04/IPS-ATF-Billionaires-13-Month-31-Year-Report-copy.pdf37“Thenumbersvarywildly,butallaredizzying:$15trillion.$30trillion.$59trillion.$68trillion,”fromScottReyburn,“A‘GreatWealthTransfer’isComing.WhatwillitmeanforArt?”TheNewYorkTimes,December18,2019.https://www.nytimes.com/2019/12/18/arts/design/great-wealth-transfer-art.html.38AbbyShultz,“TheWealthyWillTransfer$15.4Trillionby2030,”Barrons,June26,2019.https://www.barrons.com/articles/the-wealthy-will-transfer-15-4-trillion-by-2030-01561574217.39TheEconomist,December13,2018.

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40DasandChung,2017.40RyanSmith,July2019.41PrivateInvestorCoalition:https://privateinvestorcoalition.com/.Fromtheirwebsite:PICwasformedin2009when,after70yearsofexemptionfromregistrationasinvestmentadvisors,singlefamilyofficeswerefacingregistrationunderDodd-Frank.In2009and2010PICsuccessfullyledtheinitiativeundertheDodd-FrankWallStreetReformandConsumerProtectionActtoexemptsinglefamilyofficesfromSecuritiesandExchangeCommissionregistrationasinvestmentadvisers.42RobertFrank,GregoryZuckerman,andSteveEder,”SorosFundAllintheFamily:Billionaire'sFirmtoReturnOutsideCash,Convertto'FamilyOffice';AvoidingDodd-Frank,”TheWallStreetJournal,July27,2011.https://www.wsj.com/articles/SB1000142405311190399990457646976159955286443UnitedStatesSecuritiesandExchangeCommission,“FamilyOffices:ASmallEntityComplianceGuide,”U.S.SecuritiesandExchangeCommission,IssuedJune22,2011.https://www.sec.gov/rules/final/2011/ia-3220-secg.htm.44NathanJ.Greene,“UnitedStates:AU.S.FederalSecuritiesLawPrimerforFamilyOffices,”Mondaq,March14,2017(originallypublishedintheFebruary2017editionofTrusts&Estates).https://www.mondaq.com/unitedstates/Finance-and-Banking/576602/A-US-Federal-Securities-Law-Primer-For-Family-Offices.45PaulGolden,“LobbyingTimes,”CampdenFBIssue14,June18,2012.http://www.campdenfb.com/article/lobbying-times.46Golden,2012.47Golden,2012.48RobinWigglesworth,LaurenceFletcher,andKatieMartin,“Archegosandthe$10trnworldoffamilyoffices,”TheAustralianFinancialReview,April6,2021.https://www.afr.com/wealth/investing/archegos-and-the-10trn-world-of-family-offices-20210406-p57gtp49Ibid.50MarkSchoeff,“Archegosimplosioncouldleadtofamily-officeregulation,”InvestmentNews,April8,2021.https://www.investmentnews.com/archegos-implosion-could-lead-to-family-office-regulation-20495651https://www.banking.senate.gov/imo/media/doc/brown_letter_to_credit_suisse_48.2021.pdf52FederalRegister,Volume86,No.56,March25,2021.https://www.govinfo.gov/content/pkg/FR-2021-03-25/pdf/2021-05928.pdf53CaitlinOprysko,“Chamberstuckbetweenarockandahardplace,”PoliticoInfluence,February12,2021.https://www.politico.com/newsletters/politico-influence/2021/02/12/chamber-stuck-between-a-rock-and-a-hard-place-79336154JoeLightandBenjaminStupples,“A$6TrillionFamilyOfficeWorldFightsPost-ArchegosCrackdown,”BloombergWealth,April22,2021.Alsohttps://www.bloomberg.com/news/articles/2021-04-22/a-6-trillion-family-office-world-fights-post-archegos-crackdownAlsosee:CenterforResponsivePolitics,“ClientProfile:PrivateInvestorCoalition,”OpenSecrets.org.https://www.opensecrets.org/federal-lobbying/clients/summary?cycle=2021&id=D000055699