Posted by Admin | April 15th, 2012

When families trust their investment decisions to a third party, it is assumed that the proxy wealth manager is functioning solely as an advocate on behalf of the family. However, money managers at investment firms also are responsible for their own companies’ success, which depends on sales. The wealth management industry is largely unregulated when it comes to fiduciary standards, but only adherence to fiduciary standards can reconcile these two mandates. And very few firms have an explicit commitment to put client advocacy ahead of corporate profitability.

The family office is a company that bases its investment decisions on what’s best for the client family. One such business, GenSpring Family Offices, is recognized as a leader in client advocacy and return on investment, with $20 billion in assets under advisement.

GenSpring CEO Mel Lagomasino is an ardent supporter of the need for fiduciary standards. “When professionals are compensated based on the products their clients buy, when money manager selection is biased toward proprietary products or revenue sharing arrangements, when soft dollars and preferential trading relationships are involved, then you don’t have a family office. A family office is comprised of professionals only working on behalf of the family and only compensated by the family.”

Her view—and that of many investment professionals and fiduciary experts—is that investment advice is fiduciary advice and should be subject to five key requirements:

  • Puts the client’s best interests first
  • Exhibits prudence: the skill, care, diligence and good judgment
  • Provides conspicuous, full and fair disclosure of all pertinent information
  • Avoids conflict of interest
  • Fully discloses and fairly manages, in the client’s favor, unavoidable conflicts

These fiduciary standards are essential for the client advocacy expected from those who manage family wealth.

GenSpring considers itself an attractive alternative to traditional wealth management firms. Unlike banks, brokerages and trust companies, GenSpring does not sell investment and financial products. Rather, the firm oversees and manages the complex financial lives of wealthy families with the freedom to invest their money with providers around the world.

Additional Resources:

Mel Lagomasino Genspring :: Article on

Mel Lagomasino Genspring :: Listed on

Mel Lagomasino Genspring :: Article on

Mel Lagomasino Genspring :: Information on

Mel Lagomasino Genspring :: Listed on