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THE STRUCTURE


Security: Cash and securities as well as other assets are held by a custodian of the client’s choice. Oversight is provided by an appointed trustee for a unit trust. The fund platform is not a credit counterparty and is not permitted to move assets held by the funds. They instruct the Administrator to pay pre-approved service providers but do not control the bank accounts. Authorised signatory lists are always established in conjunction with all service providers prior to a funds launch. Where the fund is to appoint a Trustee, the implementation of an effective governance system will ensure correct and proper procedures, controls and operation.


Transparency: Investors can choose to receive daily, weekly or monthly reporting on portfolio assets depending upon the strategies they employ. The platform should offer transparent and easy-to- understand pricing with all fees charged by external service providers and other fund-related expenses delivered to the end investor in a comprehensive and clear fashion. The fees the platforms charges reflect the recognition that they are a service provider to their clients. Working with a provider with competitive and clear pricing provides a genuine alternative to self-structuring and self-management.


Flexibility: Flexibility must be one of the cornerstones of a platform offering. Families will have a number of options as to their level of involvement in the fund. Based on the wishes of the family, the fund can be closed to all but the family, be offered to a small number of other families/investors, or indeed be offered globally to accredited investors. The platform provides a means whereby each client can select service providers from a wide range of counterparties. It enables clients to mix and match between the legal counsel, administrators, brokers, auditors, custodians and auditors of their choice. Although the platform has extensive pre-existing relationships with a wide range of service providers, there is no pre-determined set of service providers that they insist clients use. The clients have the ability to select service providers they have relationships with or to suggest others. Given that platforms bring with it many years of experience it can bring funds to market in a relatively short period of time.


Control: The platform offers all the benefits of outsourcing the setup and operation while allowing the client at the same time to maintain control of the fund and the strategies that it employs. Clear lines of responsibility are delineated prior to the launch of the fund, allowing the individual or family to determine their own level of involvement. Appointment of the family as co-signatories to the fund’s bank account results in an increased level of control and comfort.


42 FAMILY OFFICE: THE FUTURE


FOS and Gordian


Family Office Services is the consulting arm of the IFOA. It engages a group it has worked with for more than 10 years, Gordian Capital, which is based in Singapore and the CEO is an Australian with 30 years experience in Asia.


FOS and Gordian Capital welcome people asking more questions in confidence about their particular circumstances and like to work with people on how to structure their affairs once the understand the facts of each specific set of client/family needs – which requires research and due diligence tailored to each individual situation.


Cost Efficiency: The whole operation must be cost-efficient and cost-effective for the family. Post-establishment, advisory fees and ongoing management-fee costs for these solutions come out at approximately 30-40%/per annum less expensive than traditional options (when calculated applying to client funds of USD$100-150m). At the same time, they offer a more tailored approach – each client is matched with a solution that meets their personal and family needs because this model provides for constant proactive management by the owners.


What is a Fund? For this discussion we will refer to a standard Cayman domiciled investment trust which is a structure many families already currently use. However, other jurisdictions may be appropriate. A unit trust is a form of a collective investment scheme constituted under a trust


deed. Unit trusts are open-ended investments. Therefore the underlying value of the assets is always directly represented by the total number of units issued multiplied by the unit-price less the transaction or management fee charged and any other associated costs. Each fund has a specified investment objective to determine the


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