Steering family offices to success

Caroline Garnham, a partner at Lawrence Graham, has clients in such far flung places as Switzerland, South America and Singapore. She studied psychology at University before deciding to be an opera singer. She later decided to expand her horizons taking a conversion course in the law, uncertain whether a career on the stage would provide a satisfying future. This led her to Allen & Overy where she started life as a tax lawyer “spending five years in corporate tax.”

During her time in the hard nosed corporate world she found herself gravitating more to people than the deals and so eventually decided to switch into private client.
Once firmly established in the private client space she later took the title of head of department at Simmons & Simmons. The promotion though, wasn’t without its problems. The mid nineties saw London law firms reviewing their core work, which left many like Caroline, who ran a relatively small department, pensive about the future. She determined to use every ounce of energy to build her team and put them in a strong financial position to prevent any ‘strategic reviews.’ Fired-up, she set about inventing a whole new marketplace and revenue stream for herself and her team.

Family offices were a growing area of interest for the ultra high net worth client, which became Caroline's chosen target market. Caroline quickly pin pointed problems that still exist today. She discovered that many family offices as well as being tucked away inside a family business, making them difficult to identify, were often riddled with disputes and grievances or dominated by stronger personalities within the family.

The sorts of problems families were having were wide spread. Trustees were being challenged by children on the death of a parent; second or third wives were fighting for prominent places within a business for their children; distanced or estranged children were being written out of wills and parents spent much time worrying that their vast fortunes would be too stressful to pass down to financially unsophisticated children. “Wealth is like fire” interjects Caroline “if properly contained, it provides warmth but uncontained it can burn and destroy absolutely.” She says her research revealed that many family members had no voice within, with the result that conflict was spreading easily.

Armed with this information, she harnessed her corporate background and hit on the idea of applying board room processes to families or offering them “family governance” as a saleable template. The structure she set up emulated a board room approach, with segmented control and accountability for the offices. It ultimately meant fair procedures and a level playing field for all. Caroline comments. “Despite enormous wealth within a family office, personal issues or favouritism could catapult the office out of control, which in worst case scenarios meant millions in litigation fees.” Caroline began lecturing on the benefits of using corporate business processes like AGM’s in family offices to assist transparency and communication and still does so to this day. “Containing wealth is ultimately going to harness wealth and keep it for proper purposes for instance to maintain the business or help in a philanthropic cause. Otherwise it can be used for unpopular business decisions or to support lavish lifestyles for whoever is in charge.”
Established in this field now with a high profile move to flourishing private client firm Lawrence Graham in the past year, her entrepreneurial drive continues and is expanding into new areas. An imminent project will see a private client online offering launch with Caroline and industry heavyweights behind the helm. It's aim is to promote the private client Industry and highlight good practices. The plan is to have a subscription based interactive website for all within the industry to access. Caroline comments. “It’s for those who are frustrated at not being able to get their marketing message across to the right people.”

Caroline believes there are a vast number of families and multi millionaires who have problems with their wealth but have no idea who to approach, which is one of the reasons for starting the new ‘Family Bhive online forum.’ “I don’t think many private clients are using the industry effectively, they need to know who does what in a more relevant and meaningful way.”
Of the big changes she has seen throughout her illustrious career at the very top end of the private client industry, Caroline says old fashioned tax planning has become exasperating with the likes of Gordon Brown and his tax officers issuing anti avoidance legislation almost by the day. She makes a fair point that it makes life difficult if clients with good tax planning find themselves being investigated. “They understandably find it irritating when they’ve paid good money on legal fees. The UK tax service is too aggressive” says Caroline “I noticed this trend some years ago so made sure I diversified so as not to be too involved in private client tax work.”

Of her actual day to day working life she says she spends a lot of time with families and entrepreneurs who are “very bright.” Ongoing administration is usually not needed for families, her work is more focused on one off structures which she then updates periodically.
As to where her clients tend to reside, she says. “They are peppered around the world on every continent.”

Caroline has more billionaire clients than most and although it’s difficult to put a number on how many, she considers thirty to be a good guess.

Of her clients, Caroline says she prefers dealing with entrepreneurs rather than those who’ve inherited because “entrepreneurs grasp difficult concepts easily and make decisions quickly.” She continues on this theme. “The second generation are often in a difficult spot. Normally whatever they do will evoke criticism from someone and it’s harder to follow in the footsteps of their parents with the public and media glare. A challenging life can result in the second generation client becoming a professional complainer.”

Finishing off the interview I see if we can dig up any stories of super rich excesses. Are her clients all whizzing around in helicopters and private jets? She reveals they are but not just because its fun. “If you have a client with a busy life they probably have enough problems without day to day travel irritations. One of my clients was on the road for three months and was tired and fed up with hotel rooms, delays and dry cleaning not coming back. They spend to ease lifestyle problems rather than to show off.” She confirms.©




This appeared in http://www.citywealthmag.com/

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