The Philippine Chamber of Commerce and Industry (PCCI), the Philippine Young Entrepreneurs Association (PYEA), and Round One reached its third leg in the webinar series aimed to discuss building generational wealth.

 

The focus of the webinar held last May 6, 2022 was the concept of a family office.  Experts on this topic tackled the importance, various models, factors to consider, and alternatives that can aid in deciding if this is the correct path to embark on to manage finances.

 

Mr. Joel Tugade, Chairman of the SDG Committee mentioned his take on a family office during his opening remarks. “In a family-owned corporation, the relationship among shareholders is familial, where the emotions, feelings, expectations, and needs of family members are taken into consideration.  Whereas a non-family-owned business has a structured set up and relationships are not familial,” he stated.

 

Family office to manage family wealth

 

Dr. Queenie Lee- Chua BOD of Ateneo Family Business Development Center, defined a family office as a structured and more professional approach to manage family wealth.  She added to the discussion by sharing the key to integrational planning.

 

The first type of family office is the founder’s office which comprises of an assistant or a few staff members that handle the financial needs of the founder.

 

The second type is more appropriate for shareholders as it is an elaborate way to handle the family’s corporate duties.  This is called the embedded family office.  In the event that an accountant or lawyer is added, the embedded family office can be classified as a compliance or tax office.

 

Investment management office is for those that have private bankers or family members that have intensive knowledge to manage private equity investments gained through an MBA in top universities.

 

Lastly, the full-service office or the private trust company office handles the entirety of the service such as tax investment; and governance and accounting across multiple generations.

 

Dr. Queenie emphasized the difference between a single-family office and a multi-family office; as well as certain strengths and risks to consider when choosing an option.

 

A single-family office (SFO) requires a higher capital requirement compared to a multi-family office. The benefits of a SFO are that it provides privacy and confidentiality; directs the selection of staff and strategy; completes alignment and focus with the requirements of the family; highest level of transparency regarding cost and performance; no conflict for outside professional, and highest level of emotional attachment.  On the other hand, a MFO saves more time and cost; removes recruiting efforts, has a lower level of personal involvement, lower critical mass necessary, and regulatory independence.

 

“Family offices are important and FO’s do a great job. If you feel that your family needs a FO, go ahead.”, she stated.

 

Strategy-based solutions to management finances of clients

 

Mr. Melvin Esteban, CEO of Welead financial advisory added to the discourse through suggesting strategy-based solutions to manage the finances of clients with regards to the family office.

 

Based on the survey he conducted, high network investors claim that the higher investment priority is: 56% asset growth and 44% wealth preservation. 54% chose long-term capital appreciation over the 46% that voted for steady income.  According to Esteban, the close to equal result disproves the common misconception that continuously adding your funds to equity will automatically increase the chances of earning.

 

“We always look at wealth through three different areas called the today, tomorrow, and beyond. The purpose of today is to help preserve the way of life of clients. We look at the tomorrow to make sure that we continue to improve this way of life; and we look at beyond to improve others way of life,” he shared.

 

In another survey he conducted stating that diversification is the best way to minimize risk and is important in investment, he found that 39% of millennials strongly agree while 43% only somewhat agree; 41% of the generation X strongly agree, 43% only somewhat agree; boomers showcased that 53% strongly agree, while 40% only somewhat agree; those who are classified under silent resulted to 41% whom strongly agree, and 51% only somewhat agree.  However, Esteban clarified that in the end, too much diversification is also quite bad.

 

Aside from factors to consider when building a family office, speakers educated the audience about equities, investments, bonds, and other ways to manage wealth at a young age. In partnership with PCCI, PYEA and Round One will be conducting part 4 of the series to discuss crowd investing as a form of building generational wealth.

 

4th Leg: Crowd Investing: Fad or Future

 

The 4th leg of the webinar titled, “Crowd Investing: Fad or Future” will be held on June 17 (Friday), 2:00 pm via Zoom.  Please register at bit.ly/CrowdFundingPH! --- Avery Danielle Quizon

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