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COMPENSATION & GOVERNANCE


which family offices approach compensation. All senior leadership positions – including the CEO, CIO, COO, and CFO – typically received base pay plus some kind of bonus/incentive compensation or co-investment opportunities (see Figure 1). The survey results revealed a wide dispersion of compensation across most positions (see Figure 2). As would be expected, during the market crisis of 2008, the majority of families sought to increase liquidity and cash reserves, resulting in a rebalancing and a reduction in overall portfolio risk (see Figure 3). The respondents to the survey represented


a wide range of governing body structures, including offices dating back more than 50 years with well-established investment programs to newly formed offices supporting recent liquidity events. Figure 4 shows the governing structures across all respondents; with the majority appointing senior family members, either with or without a formal Board of Directors, to oversee the investment responsibilities. Cambridge Associates will continue


to conduct periodic compensation and governance studies in addition to the firm’s ongoing family asset allocation study. These comparative asset allocation and compensation studies help the firm’s consultants add to their understanding of how family offices manage their investment responsibilities. The studies are also a valuable source of knowledge for family clients seeking to understand how other family offices operate. From its beginnings in 1973, Cambridge Associates has been built on research, and its clients benefit from the multidimensional approach in addressing issues such as asset allocation, governance, compensation, and risk management. Cambridge Associates’ investment approach with private wealth clients – and all clients – is advisory only and conflict-free because the firm has no products to sell and no commissions to collect. In an increasingly complex investment environment, Cambridge Associates’ sophisticated global family practice is benefitting from studies like these. Families who are interested in learning


more about Cambridge Associates and the firm’s proprietary research and studies, may contact Alvin Tay who leads the firm’s Singapore office.


Contact:


Singapore office – Alvin Tay – Ph. +65 6224 8688 Sydney – Eugene Snyman – Ph. +61 2 9229 6500 Beijing – Chris Hunter – Ph. +86 10 6535 4707


FAMILY OFFICE: ASIA TOMORROW 41


THE FAMILY OFFICE


Increase liquidity/ cash reserves


Rebalance Actively reduce risk


Generate more cash flow & capital call projections


Become more tactical


Amend the strategic asset allocation


implementation No change in Review debt levels absolute return strategies Increase focus on hedges or derivatives Implement tail


pledged as collateral Become more long


Adjust investments term/strategic in focus


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