{"id":504,"date":"2008-06-05T18:09:00","date_gmt":"2008-06-05T18:09:00","guid":{"rendered":"https:\/\/clusterfamilyoffice.com\/blog\/?p=504"},"modified":"2008-06-05T18:09:00","modified_gmt":"2008-06-05T18:09:00","slug":"su-dinero-trabaja-para-usted-o-para-otros","status":"publish","type":"post","link":"https:\/\/clusterfamilyoffice.com\/en\/su-dinero-trabaja-para-usted-o-para-otros\/","title":{"rendered":"Does your money work for you........ or for others?"},"content":{"rendered":"
This question is particularly relevant in light of what we\u2019ve been coming across in our meetings with new clients.<\/p>\n

It is very important to ask yourself this question. Is your money working for you? For your bank? For your tax adviser? For your solicitor? For your estate agent?<\/div>\n

<\/div>\n

\"\" <\/p>\n

The traditional banking business involves raising funds at low interest rates and subsequently lending them to other individuals, the Government or other companies at higher rates, which can sometimes be more than double what is paid to depositors. This spread enables banks to cover their costs and also make a profit. When banks raise funds, they refer to this as \u2018liability operations\u2019 (this is how they finance themselves), and when they lend it out, they call it \u2018asset operations\u2019 (this is when they invest it).
\"\"For this reason, sometimes, when an investor has money that they do not need until a future date, rather than lending it to the Government (by buying a Treasury bond), to a company (by buying a share or a corporate bond) or even joining other investors through a collective investment scheme, CII (by buying a stake in an investment fund or a pension scheme), what they do is open a deposit account (a liability transaction) which, in reality, involves transferring ownership of their money \u2013 and the profit they might have earned had they made the loans themselves \u2013 to the bank, so that the bank can do business with their money. <\/p>\n

It is at this stage in the conversation that the client raises the issue of risk, understood as the possibility of losing some or all of their capital. Logically, whoever puts their money to work will reap the greatest rewards, but will also bear the risk that \u201cputting their money to work\u201d may not yield the returns that were initially expected. The two variables \u2013 return and risk \u2013 are usually inversely related; thus, investments that carry greater risk tend to offer higher returns, and vice versa. <\/p>\n

What is currently happening with the \u201cliability war\u201d? Banks\u2019 liquidity (cash) requirements are driving them to take commercial steps to attract as much money as possible in order to clean up their balance sheets.<\/p>\n

\"\"<\/a>When a bank offers a return above the \u201cnormal\u201d level, we must bear in mind, as we have mentioned previously, that the two variables \u2013 return and risk \u2013 are usually inversely related. In our meetings with new clients, we find that their assessment of a bank\u2019s risk is heavily influenced by the bank\u2019s image, the number of high-street branches they can see for themselves, and the impression the bank gives them. This is not the case. Does nobody remember the Banesto case anymore?<\/p>\n

If the Euribor stands at 5%, how can a bank offer us a higher return? After all, anything above that 5% represents a loss for the bank. If, in the current climate, we came across someone selling their house at a loss, we\u2019d immediately assume they were in dire straits. Well, the same applies to banks. <\/p>\n

It\u2019s not the same as leaving our money on deposit with a bank that has a long-term credit rating of AAA highest credit rating <\/em>(at present, no Spanish bank holds it, although the Spanish State does) that in a bank with a CCC rating high risk of default<\/em>. Has your bank told you what your credit rating is?<\/p>\n

\"\" <\/p>\n

Other people for whom your money might be working could be your tax adviser or your solicitor. As part of their customer acquisition strategy, banks enter into agreements with solicitors and tax advisers to gain access to their clients in exchange for substantial commissions. Have you ever considered that your solicitor or tax adviser might have more favourable terms with your bank than you do, even though you are the owner of the money? This is another sensitive question \u2013 if you want to know the truth, you should put it to the relevant person. Many solicitors and tax advisers have also made money by acting as intermediaries in property transactions between two of their clients.<\/p>\n

\"\" <\/p>\n

Another professional who can put your money to work is your estate agent. By analysing the assets that make up a family\u2019s property portfolio and retracing the steps from the acquisition of the asset to the recommendation to purchase, we can see that no estate agent has ever recommended an investment that they did not have in their own portfolio. Developers themselves have acted as property advisers, recommending properties without taking into account their characteristics, such as their location in a prime area, future implications of town planning regulations, or how well they complement the family\u2019s other property assets, etc. Essentially, the recommended property was the one being sold by the property developer, and its location was determined by the availability of land that the developer had been able to purchase at a favourable price. As for the quality of materials and workmanship, these were whatever the developer could best negotiate for the developer\u2019s own benefit, not that of the family.<\/p>\n

\"\"<\/p>\n

How have some families dealt with this confusion? By setting up a Family Office, to ensure personalised wealth management tailored to the family\u2019s objectives.<\/p>\n

Among the many benefits of having a Family Office, clients highlight the following:
The freedom it gives family members to pursue a career outside the family business.
To ensure that your money is managed in a cost-effective manner.
Stable and controlled asset management.
May our heritage flourish in an atmosphere of trust and loyalty.<\/p>\n

The major advantage for families is that family offices provide protection against any conflict of interest and ensure that the family\u2019s interests come first. If the family sets up its own investment firm, the family is its sole client and there is no conflict whatsoever, as the family will act in its own best interests.
Once this stage is reached, there are two possibilities: either the Family Office is managed by a family member or by an external professional. Various studies and research highlight the advantages of having an external professional manage it, as it is easier to define the Family Office\u2019s functions and governance rules, thereby avoiding misinterpretations by other family members not involved in its management; it is often inevitable that personal differences within the family will spill over into decisions regarding the family\u2019s wealth strategy. <\/p>\n

According to Raphael Amit, a professor of management at Wharton, it is only worth setting up a Family Office if the family has at least 100 million dollars in assets. For families with fewer assets, there are similar entities known as Multi-Family Offices, which is the case for us. The only difference is that we serve more than one family. Personally, I find this option more rewarding, as the personal and professional enrichment is greater and more wide-ranging.<\/p>\n

We have found that high-level wealth management advice is applicable to those with medium and even small amounts of capital, and that, ultimately, it can be accessible to everyone \u2013 which is precisely what we at Fresh Family Office set out to achieve.<\/p>\n

Who\u2019s joining our rope team?<\/p>\n

\"\"<\/p>","protected":false},"excerpt":{"rendered":"

Esta pregunta viene al caso a ra\u00edz de lo que nos vamos encontrando en nuestras reuniones con nuevos clientes. Es muy importante hacerse esta reflexi\u00f3n. \u00bfSu dinero trabaja para usted? \u00bfPara su banco? \u00bfPara su asesor fiscal? \u00bfPara su abogado? \u00bfPara su asesor inmobiliario? El negocio tradicional bancario consiste en captar dinero a bajos tipos […]<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[],"class_list":["post-504","post","type-post","status-publish","format-standard","hentry","category-sin-categorizar"],"_links":{"self":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts\/504","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/comments?post=504"}],"version-history":[{"count":0,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts\/504\/revisions"}],"wp:attachment":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/media?parent=504"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/categories?post=504"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/tags?post=504"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}