Post Type: Insights

Jan 17th

Strategic Wealth Planning for UHNWIs for the Second Trump Administration

The new year will present challenges and opportunities for ultra-high-net-worth individuals as they re-evaluate their portfolios and long-term financial plans in light of President-elect Donald Trump’s incoming administration. Strong partnerships between UHNW clients and their advisors will be essential during this transition and the ensuing four years. Proactive planning will be key, especially given potential shifts in tax laws, market dynamics and interest rates.

Tax Law

Before Trump’s election in November, many ultrawealthy families were scrambling to optimize their estate plans ahead of the scheduled sunset of the Tax Cut & Jobs Act to take full advantage of exemptions while they remained in place and to adjust estate plans when and if those exemptions reverted at the end of 2025.

The policy uncertainty in 2024 paved the path for families and their advisors to give more consideration to their legacy and how it will affect their extended family in the future. The impending tax law change forced conversations around important estate planning considerations such as dispositive provisions, age attainments, and wishes for the use of the hard-earned wealth for future generations. The difficult decisions around the mechanics of intergenerational wealth were front and center leading up to the election.

However, with the incoming administration, it’s likely that the TCJA will be extended or even made permanent. UHNWIs and their advisors should continue to review their estate plans and build on those important conversations despite having more time to approach their plans strategically.

This extended horizon also allows for a renewed focus on aligning investments and real estate strategies with enduring goals, emphasizing tax efficiency, diversification and legacy planning. Advisors should take this opportunity to evaluate the use of tax-advantaged structures, optimize trusts and consider philanthropic vehicles that can minimize tax burdens while fulfilling broader family objectives.

Market Dynamics

From deregulation to policy shifts on renewable energy sources to protectionist economic policies, Trump’s election will hold many implications for investors and their portfolios.

The stock market’s reaction to the election results was initially positive. The day after the election, 3 in 4 companies traded higher, with the three major indices reaching record highs. As investors digested the possible policy changes under the new administration, markets in November saw a strong post-election rally, led by small-cap stocks and supported by gains in large-cap indices. However, recent Federal Reserve interest rate cuts and signals of a cautious monetary policy approach for 2025 have sparked turbulence, with major indices like the Dow, S&P 500 and Nasdaq experiencing sharp declines in mid-December.

Projected winners are expected beneficiaries of deregulation including banks; energy-related companies (especially in the liquified natural gas space); cryptocurrencies, particularly bitcoin; technology companies facing increased anti-trust exposure; and Tesla with Elon Musk leading the newly formed Department of Government Efficiency, or DOGE, committee.

Projected losers are companies in the renewable energy space, including EVs not owned by Elon Musk and utilities invested in renewable energy sources. Other losers, given Trump’s protectionist platform, include international companies broadly, and China specifically.

It is still unclear how the markets will treat healthcare companies. Managed care organizations initially saw a bump in anticipation of a hoped-for easing in pricing scrutiny.  Since the election, MCOs have been selling off (CVS Health’s Stock has fallen 24% in December with UnitedHealth Group and Cigna Group also experiencing substantial declines), with the expectation that they may be more heavily scrutinized if Robert F. Kennedy Jr. is confirmed to head the Department of Health and Human Services. The industry-level volatility may create opportunities for investors with the ability to tolerate short-term pricing aberrations if the policies are more moderate than feared.

Seriously, Not Literally

As the markets react and overreact to policy decisions, we are reminded that the new administration should be taken "seriously" but not "literally." Advisors and clients should keep in mind that administrations rarely achieve everything they set out to do. The challenge will be to react to a broader understanding of what the administration intends to focus on rather than fearing the most radical proposal or enacted policy.

Regardless of what policy shifts come to pass, the time-honored values of successful planning remain the same: prioritizing long-term strategies, tax efficiency and high-quality companies. It’s important for the advisor to encourage clients to stay disciplined, avoid being too hasty to react, and emphasize strategic consistency within a portfolio.

Having said that, it’s also important to communicate often with clients about shifts and expected changes within market cycles, as there are opportunities to be seized within any market environment.

Caleb Silsby is the Executive Vice President, Chief Portfolio Officer at Whittier Trust, overseeing a team that collaboratively manages portfolios for high-net-worth clients, foundations, and endowments. He is credentialed as a CFA Charterholder and CFP professional.

Featured in Barron's. For more information about private market investments, start a conversation with a Whittier Trust advisor today by visiting our contact page.

 

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Jan 14th

Who Should Be the Trustee of My Real Estate Portfolio?

Make sure your family’s property assets are stewarded from one generation to the next.

The story of family wealth-creation in the West is not complete without a discussion of the role real estate has played in building multi-generational legacies. This is true throughout the region but specifically so in California. Almost every entrepreneur has a balance sheet that includes significant real estate assets in addition to whatever operating business may be the primary driver of the family’s fortune. In our experience at Whittier Trust, many of these entrepreneurs think of real estate as the “simple” part of the balance sheet. Buy the property, maintain the property and collect the rent—easy, right?

Those of us who work with families holding large real estate portfolios know all too well that, while it may seem simple on the outside, the day-to-day of owning real estate is far from easy. The glamor in real estate comes from the acquisition and the disposition and rarely from the details of operating the property. As it is often said, the devil is in those details!

Multi-family housing is a good place to start our discussion since it may be the asset class that requires the most hands-on attention by owners. Units must be rented and common areas maintained, but there are a whole host of other considerations. What tools are employed to monitor market rental rates to ensure rents are sufficient? Is there someone in the family who will perform the day-to-day supervision of property management, or will they oversee an outside management company? Who is vigilantly reviewing insurance markets and the myriad of local governmental regulations concerning housing? Property management of multi-family buildings is fairly labor intensive and while the wealth-creating generation may do this work themselves, it is important to consider whether there is someone with the interest and aptitude in the next generation. If not, seeking a professional fiduciary may be a good option.

Commercial and industrial buildings may be less hands-on, particularly if there are triple net leases in place. However, when vacancies arise, the buildings must be properly marketed to maximize the family’s return on the asset. What if there is damage to a building caused by a fire or a natural disaster? Who will vet potential new tenants for creditworthiness and overall desirability?

When talking with families about succession planning concerning their real estate assets, our team at Whittier Trust often finds that the older generation who has been performing these oversight and management activities will downplay the difficulty involved and the skills required to successfully operate the real estate portfolio. We will hear things like “All they have to do is deposit the rent checks and pay the insurance and property taxes.” In our experience of serving as a successor trustee in innumerable trusts with real estate, there is always more to the story than depositing checks and paying a few bills. 

In the worst-case scenarios, we see surviving spouses who have never been involved in operating the real estate being named as the successor trustee. This is usually done to provide the spouse with control, but there are better ways to accomplish this objective. An unprepared or unskilled spouse can easily make costly mistakes. Frequently, the surviving spouse is an older person who may not be fully able to appreciate and understand the responsibilities they’ve been given. They may experience confusion or even be susceptible to undue influence. This is a particularly difficult situation if the surviving spouse is the stepparent of the ultimate remainder beneficiaries. We often see litigation result in these cases. 

A best practice is to be as thorough and thoughtful about the succession plan for the management of the real estate as one would be in the planning for an operating business. Corporate trustees who have a history of direct real estate investment and management of a variety of assets, make good succession partners. The family can always be given control by holding the power to remove and replace the corporate trustee—a far better solution than having an ill-equipped family member serve in a fiduciary capacity. 

Selecting an experienced and trusted partner who can enter the situation when needed helps preserve and enhance the value of the real estate assets for generations to come.

Written by Thomas J. Frank, Jr., Executive Vice President, Northern California Regional Manager, Whittier Trust.

Featured in Mountain Home Magazine. For more information about trustee services or transitioning a real estate portfolio to the next generation, start a conversation with a Whittier Trust advisor today by visiting our contact page.

 

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Jan 6th

Getting Started in Private Market Investment

Investor interest in private markets has surged over the past decade. To understand why, it's essential to grasp what these investments entail and the factors driving their growth. Here, we offer insights into the complexities and benefits of private market investments and outline Whittier Trust's distinctive approach.

Demystifying Private Market Alternatives

Private market alternatives might sound exotic, but they're essentially the private counterpart to public markets. Publicly traded stocks represent ownership in public companies. Private equity is simply ownership of a private company. The key distinction between public and private markets is liquidity. Public shares can be easily bought and sold on exchanges, whereas private equity investments may be subject to transfer restrictions and may require specialized brokers to facilitate transactions.

The Appeal of Performance

So why is investor interest in private markets growing so rapidly? The answer lies in performance. A report by Hamilton Lane found that over the past 20 years, returns from private equity buyouts outperformed global equities on a public market equivalent basis. This trend extends to private credit, which has also delivered more income compared to the public leveraged loan market, particularly appealing during low-interest environments.

Expanded Opportunities and Diversification

Beyond performance, the expansion of investment opportunities is a significant driver of interest in private markets. The number of public companies in the U.S. has declined by 50% since 1996, while private equity firms now own more companies than those listed publicly. Globally, the number of private companies with revenues over $100 million is over eight times that of public companies. This shift provides a broader array of investment options and helps mitigate concentration risk in public markets, where the top 10 firms currently account for over 35% of the S&P 500’s value.

The Whittier Trust Approach

It’s important to note that private markets come with additional risks, costs, and complexities, notably illiquidity. At Whittier, we use private markets to complement our core internal strategies, enhancing returns, diversification, and cash yield. This hybrid approach combines top-tier internal investment management with best-in-class private market managers.

Quality and Alignment of Interests

Quality is a cornerstone of Whittier’s investment philosophy. We believe that quality in public markets, and private markets, and the managers we partner with, are key to compounding wealth. This focus on quality extends to the selection of private market opportunities and partners.

Crucially, Whittier's incentives are aligned with client interests. We are not compensated by private equity managers to raise capital, nor do we incentivize employees to direct client assets to private markets. This conflict-free approach ensures that decisions are made solely in the best interests of clients, avoiding the pitfalls of added fees, commissions, and feeder expenses that can erode returns and turn good investments into poor results.

Strategic Integration and Expertise

Whittier Trust integrates private market investments as part of a holistic, diversified portfolio strategy. We view private investments as an extension of public market opportunities. With companies staying private longer, substantial value creation occurs before potential public offerings. Investing in private entities like SpaceX, which remains private and valued at over $200 billion after 20 years, exemplifies the potential for significant returns.

Final Thoughts

Private market investments offer expanded opportunities and the potential for superior returns, but they come with added risks and complexities. Private investment should be considered when after-tax returns, risks, and correlation characteristics more than compensate for higher costs and lower liquidity.

With a focus on quality, a conflict-free approach, and a strategy that integrates private and public market opportunities, Whittier Trust positions itself as a trusted partner for ultra-high-net-worth investors navigating the private market landscape. Whether you are new to private markets or seeking to deepen investments, Whittier’s expertise and alignment with client interests ensure a thoughtful and strategic approach to wealth compounding.

Written by Eric Derrington, Senior Vice President and Senior Portfolio Manager at Whittier Trust. Eric is based out of the Pasadena Office.

Featured in Kiplinger. For more information about private market investments, start a conversation with a Whittier Trust advisor today by visiting our contact page.

 

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Dec 19th

Navigating a Challenging Landscape: Key Considerations for UHNWIs Amid Interest Rate Cuts

In September 2024 we saw a Fed interest rate cut of 0.5 percentage points and another rate cut of 0.25 in November. Now, as we start 2025, The Fed is considering additional rate cuts. For ultra-high-net-worth individuals (UHNWIs), shifts in interest rates carry significant implications for wealth management strategies. Lower interest rates—though more elevated than in prior cycles—can influence everything from investment decisions to long-term planning. To navigate this landscape effectively, Whittier Trust advises affluent families to check in with their advisors to assess risks, seize opportunities, and safeguard their legacies.

Here are five essential questions to guide those conversations:

1. How Should My Investment Strategy Adjust to Reflect Market Conditions?

Interest rate cuts tend to buoy stock valuations, often making equities a more attractive option than bonds in certain scenarios. However, the dynamics of today's market—where interest rates remain higher than historical lows—warrant a nuanced approach. UHNWIs should ask their advisors about the wisdom of rebalancing their portfolios to capitalize on sectors poised to benefit from economic growth spurred by rate cuts.

For example, technology and consumer discretionary sectors often thrive when borrowing becomes more affordable, stimulating corporate growth. Conversely, some traditionally defensive sectors may underperform. The goal is to ensure your portfolio is positioned to benefit from rate-driven shifts while maintaining the long-term diversification necessary to weather economic uncertainty.

2. What Role Should Bonds Play in My Portfolio Now?

While bond yields have been suppressed in recent years, even modest increases in yields can make fixed-income assets more attractive as part of a diversified portfolio. Families relying on predictable income streams should consider whether their bond allocations need adjustments to optimize for yield and risk.

Ask your advisor if now is the right time to reintroduce or increase exposure to investment-grade bonds, municipal bonds, or alternative fixed-income vehicles. The relationship between rising bond yields and overall portfolio performance should be carefully analyzed to avoid unintended risk.

3. Is My Portfolio Adequately Hedged Against Inflation?

Lower interest rates stemming from Fed rate cuts often coincide with muted inflation, which can diminish the urgency of inflation-hedging strategies. However, inflation trends are dynamic and UHNWIs must remain vigilant. Ask your advisor to review whether your current portfolio includes sufficient protection against potential inflationary pressures in the future.

Real assets, such as real estate and commodities, can serve as hedges while offering diversification benefits. Meanwhile, Treasury Inflation-Protected Securities (TIPS) may be less necessary in a low-inflation environment. An advisor's expertise can help you fine-tune the balance between inflation protection and growth-oriented investments.

4. Are There Opportunities for Alternative Investments in This Environment?

Lower interest rates often drive interest in alternative investments, which can offer uncorrelated returns and enhanced growth potential. Private equity, venture capital and real estate are often key areas of focus for UHNWIs seeking to diversify and capitalize on rate-driven opportunities.

A crucial question to ask your advisor is whether the timing aligns with your financial goals and risk tolerance. In a shifting rate environment, access to exclusive investment opportunities through private markets can complement traditional portfolios, particularly for families with multigenerational wealth aspirations, but it’s important to ensure this decision is right for you.

5. How Can We Leverage Lower Interest Rates for Long-Term Wealth Transfer?

An interest rate cut creates potential opportunities for intergenerational wealth planning. Lower rates can reduce the cost of intra-family loans, making it more affordable to transfer wealth in ways that minimize estate and gift tax exposure. Additionally, strategies like grantor-retained annuity trusts (GRATs) become particularly attractive in a lower-rate environment. 

Meet with your wealth management advisor to evaluate how the current rates align with your estate planning objectives. By employing rate-sensitive strategies effectively, families can amplify the impact of their wealth transfers while preserving their legacy.

Partnering for Strategic Decisions

Navigating this period of post-pandemic inflation, one currently defined by periodic Fed interest rate cuts requires strategic decision-making and close collaboration with your advisor. Every family’s financial situation is unique, and a tailored approach is essential.

The interplay between interest rate cuts, market trends, and long-term goals underscores the importance of regularly revisiting your financial and estate plans. These five questions provide a strong starting point for meaningful discussions with your advisor, helping you adapt to evolving market conditions while safeguarding your family’s future.

An experienced advisor not only understands the technical aspects of wealth management but also acknowledges the emotional considerations that come with stewarding significant assets. By focusing on both, UHNWIs can position themselves for success across generations, regardless of economic shifts. At Whittier Trust, we’re committed to helping you navigate these complexities with a customized, thoughtful approach that evolves alongside your goals.

For answers to these questions and more, start a conversation with a Whittier Trust advisor today by visiting our contact page. 

From Investments to Family Office to Trustee Services and more, we are your single-source solution.

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Dec 16th

Finding The Right Family Office

For high-net-worth individuals and families, a family office can optimize giving, investing and more.

The term “family office” is frequently used, but what exactly does it mean and how are these services delivered? Each high-net-worth family needs a full complement of professionals to manage their needs. What does this look like? There are probably as many configurations of a family office as there are families that use them. Here, we explore some of the many functions a family office may fill in the lives of wealthy families. 

What is a Family Office?

Typically, when we talk about family offices, we think of one or more financial professionals working with wealthy individuals to help them manage their financial lives. This may range from a single “personal CFO” or even a bookkeeper to a team of dedicated employees or an outsourced resource like an accounting firm or multi-family office. 

Who Might Need a Family Office?

Typically, wealthy individuals and families with multiple business interests and a complex ownership structure, including trusts, corporate entities and partnerships, might be well served by a dedicated team. If the beneficial ownership of the assets includes various family members and different generations, then a family office may be an excellent way to optimize investing and reporting. 

Financial Reporting 

At a minimum, most family offices will provide a level of financial reporting and bookkeeping. This will often include paying bills, coordinating insurance and reconciling bank and other financial statements. Depending on the level of assets and complexity, this financial reporting function may be split among a bookkeeping staff and a true accounting/tax staff. Even if the actual tax compliance work is outsourced, many family offices will have CPAs on staff to coordinate tax documents, review returns and schedule payments. These same professionals may also provide tax planning to family members. 

Financial reporting often includes balance sheet and cash flow reporting, broken out by legal entity. In situations where there are multiple family members with split ownership of investing entities, rolled-up reporting by family members is often desired. Cash flow projections and budgeting services are also quite common. For very sophisticated offices, asset allocation and investment performance reporting will also be provided to the family. 

Investment Oversight

Investment functions provided by family offices vary. In some situations, the family members will direct their own investments. In other cases, the family members may have a particular area of investment interest, for example, real estate, and then have investment professionals on the family office team who will either oversee outside managers or directly invest assets themselves, or both. Very large family offices will often resemble major investment firms, with a Chief Investment Officer and managers who specialize in particular asset classes. 

Legal Services

Family offices are often a compliment to the family’s legal team. Larger family offices may have in-house counsel who coordinates the delivery of legal services to the users of the family office. Like the investment function, for very large family offices, a staff of practicing attorneys will perform most basic legal services but work with outside counsel for complex matters, allowing the outside counsel to practice at the higher levels.

Philanthropy

If a family is particularly philanthropic, it may have a private foundation or a very large donor-advised fund. If they’re running their own family foundation, there is usually some level of staffing by philanthropic professionals. This can range from grant-making to full-on compliance services. Of course, the very largest private foundations will have staffs that rival large public nonprofits. Once families are beyond the first-generation wealth creators, it is rare that they don’t use some type of professional philanthropic assistance. 

Family Governance and Family Continuity

The family office may replace the governance structure once provided by an operating business. Whether or not this is the case, multi-generational families of significant wealth tend to benefit from the structure provided by a family office as they can provide a framework for the family to make decisions concerning shared assets and philanthropic goals. In addition, teaching younger generation family members about finances is frequently an important job of the family office. 

Types of Family Offices

As mentioned earlier, the term “family office” can be used to describe everyone from a bookkeeper to a full-time staff covering multiple disciplines. It is generally only the very wealthiest individuals or families who can afford the costs associated with building all the capabilities in-house. 

There are several stand-alone multi-family offices around the United States. These multi-family offices usually provide the services already mentioned, but are typically more economical and can be a more effective choice than a single-family office thanks to their proven infrastructure and access to diverse and comprehensive expertise. Most of these were established by a single family who then expanded their services to include other wealthy families. Multi-family offices are also often set up as trust companies, so they are able to also serve as a fiduciary for the family by acting as the trustee and executor. They typically serve a limited number of individuals and families and offer bespoke solutions depending on the needs of each client's family. 

There are also registered investment advisory firms that offer family office services. Typically, however, they are unable to serve as a trustee as their business models center around providing investment management. Several national banks offer divisions that provide family office services, often tied closely with banking and investment products. 

Next Steps

Each individual and family will need to carefully consider the assistance they require prior to either launching their own family office or securing outsourced support. It is not uncommon for each generation of a family to either reaffirm the choice made by the preceding generation or strike out on a different path. After all, as a family gets generationally further from the wealth creators, the wealth typically becomes dispersed and various family members will have different goals and objectives. 

For those families who make the choice to have family office services, whether they build their own or outsource, a clear understanding of what the family is seeking from the provider and ways to measure against the expectations will be essential. 

Featured in Mountain Home Magazine.

Written by Thomas J. Frank Jr., Executive Vice President and Northern California Regional Manager at Whittier Trust. Tom is based out of the San Francisco Office and oversees the investment team for multiple Whittier Trust offices.

For more information, start a conversation with a Whittier Trust advisor today by visiting our contact page. 

From Investments to Family Office to Trustee Services and more, we are your single-source solution.

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Nov 26th

Wealth Education: Fall Back Into Financial Discipline and Secure Your Family’s Future

As the fall season and the upcoming new year usher in a sense of fresh beginnings, they provide an ideal opportunity to revisit an essential aspect of family wealth: preparing younger generations to manage and preserve it responsibly. Just as students gain knowledge for their futures, educating heirs about financial discipline and responsibility equips them to handle the complexities of wealth. This season is a perfect time to embrace a mindset of renewal and growth in family wealth education, establishing a legacy that will benefit future generations.

Wealth education is a crucial element of estate planning, empowering heirs to understand and build upon the foundation their families have established. Here are five strategies to create a culture of financial responsibility and stewardship within your family, and how Whittier Trust’s family office services can play an influential role in your journey.

1. Start Early

Integrating financial education at an early age is paramount to personal development. Foundational skills like budgeting, saving, and investing can be tailored to fit each stage of development, ensuring that wealth management becomes second nature. These early lessons should progress from simple financial activities, such as managing allowances or setting savings goals, to more complex discussions and experiences that develop a lifelong understanding of prudent wealth stewardship. Fostering these responsible habits will set your children up for success, supporting their futures in many ways.

2. Create a Family Legacy

 True wealth education extends beyond numbers; it instills a deep-rooted understanding of hard work, family values, responsibility, and philanthropy. Children should be taught that wealth extends beyond financial capital—it represents the power to create, impact, and foster societal change. Family discussions centered around shared goals, charitable initiatives, and community contributions not only reinforce these values but also inspire a sense of purpose that transcends material wealth. 

3. Involve Advisors

Navigating the multifaceted nature of wealth management requires expertise, and a family office can play a vital role in supporting families through this journey. Engaging trusted advisors provides heirs with guidance that goes beyond family conversations, introducing them to the nuances of wealth management from a professional standpoint. At Whittier Trust, our team of advisors works alongside families to guide them in creating structured wealth education, ensuring heirs receive advice that reinforces family values and clarifies their financial responsibilities.

4. Foster Open Communication

Effective wealth stewardship is built on a foundation of open communication. Transparent discussions about the complexities of managing significant assets help develop a clear understanding of roles and responsibilities within the family structure. By encouraging questions and facilitating conversations about wealth, families create an environment where heirs feel empowered to participate actively and responsibly in managing the family estate. Such dialogue mitigates potential future conflicts and reinforces a unified family approach to wealth.

5. Embrace Continuous Learning

Financial education should be an ongoing process, with each generation adapting to new financial landscapes and personal milestones. Incorporating continuous learning into family life—through discussions, advisor-facilitated workshops, or shared learning activities—ensures that heirs remain well-prepared to manage their assets as circumstances evolve. This commitment to lifelong learning fosters resilience and a proactive mindset, hallmarks of responsible and adaptive wealth management.

As you look to the future, consider how investing in wealth education can fortify your family’s legacy. By instilling these principles, families create a framework for future generations to navigate their financial responsibilities with acumen and respect for the values that define their family. By embracing these strategies, supported by Whittier Trust’s comprehensive expertise, families can establish a tradition of disciplined wealth stewardship that secures their prosperity and purpose for years to come.

To learn more about wealth education and the stewardship a multi-family office can offer future generations, start a conversation with a Whittier Trust advisor today by visiting our contact page.

 

 

 

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Nov 18th

Weathering the Storm: Preparing for the Unexpected in Wealth Management

In a world where sudden shifts are inevitable, natural disasters such as the recently devastating Hurricanes Helene and Milton are powerful reminders of life’s unpredictability. Such events highlight the importance of robust financial preparation for ultra-high-net-worth individuals (UHNWIs), especially on the West Coast—an area prone to natural risks. While personal disaster preparedness is key, UHNWIs should also focus on “storm-proofing” their estates and real asset portfolios. Just as it's necessary to reinforce a home to withstand a hurricane, safeguarding wealth from the unexpected requires a strategic approach. Proactive wealth planning can act as a financial safety net, helping to ensure financial resilience against both environmental and economic storms and unforeseen complications.

What Are The Challenges For An Estate?

Earthquakes, wildfires, and other natural disasters can create challenges for property, businesses, and financial portfolios. In 2020 alone, OEHHA reported that California experienced a record high of 4.2 million acres burned, which was more than 4% of the state's land. As of October 22, 2024, Cal Matters has recorded 1,708 structures that have already been destroyed by wildfires this year. The California Department of Conservation also estimates that the state's annual earthquake loss is around $3.7 billion. 

UHNWIs are advised to consider not only that real assets could be in danger but a broad spectrum of risks—including family challenges, market volatility, and even potential economic disruptions—that could impact their financial well-being. By aligning wealth management strategies with these regional threats, UHNWIs can create more resilient financial plans.

Staying Ahead of Risk: You May Not Be Thinking About It, But a Good Advisor Is

Ultra-high-net-worth families and individuals already have much to consider, and while they’re deeply invested in managing their estates, they may not fully grasp the range of challenges that could impact their assets. In other words, people often don’t know what they don’t know to look for. Fortunately, multi-family offices and experienced advisors do, and it’s proven to be a sound practice to trust long-term preparation and proactivity to the professionals. 

As an example and an area of focus often impacted by “Acts of God,” Whittier Trust helps clients stay on top of essentials like insurance, ensuring that their coverage matches the current value of their properties, collections, and other real assets and is comprehensive enough to mitigate for any number of events. Proper coverage for homes, collectibles, and other valuables is essential in regions prone to earthquakes and wildfires, where the cost of damage can quickly escalate. Additionally, business owners may need specific policies to protect against disruptions from natural events, ensuring continuity and stability despite environmental challenges. The peace of mind that comes with knowing your family office has thought through every detail—both expected and unexpected—means clients can focus on their passions, families, and future without worry. It’s about being able to enjoy the present, knowing the future is secure.

For ultra-high-net-worth families, a trusted family office does more than manage finances—it handles the day-to-day, so clients can focus on what truly matters, while also preparing for the unexpected. A family office like Whittier Trust is dedicated to looking out for every aspect of a client’s wealth, anticipating needs they may not even be aware of, from tailored insurance coverage to proactive asset protection.

Protecting Real Estate Assets

Real estate can be an impactful asset, but it comes with its own set of risks—especially in regions prone to natural disasters. For the same reasons that Whittier Trust portfolio managers diversify to mitigate the effects of market instability and disaster-related threats on investments, Whittier Trust understands these challenges and takes a “storm-proofing” approach to managing real estate portfolios. This means not only diversifying locations but also selecting properties and investment strategies that can weather market and environmental changes. What sets Whittier apart is their in-house real estate team, which actively manages assets with an eye toward both protection and growth—a unique benefit few family offices offer.

Communication and Education: Ensuring the Family Is Prepared

Preparing for the unexpected isn’t just about securing assets; it’s also about ensuring that family members are prepared. Whittier Trust holds firm to the belief that open communication and education are essential. Our team understands the unique dynamics of family relationships and helps navigate these to promote cohesion and clarity, particularly in times of change or uncertainty. By working closely with families to keep them informed on the protections and strategies in place—from insurance to estate plans—we ensure that each member understands their role and responsibilities in case of an emergency.

Empowering the next generation with financial stewardship education is also a crucial piece of preparation that multi-family offices and wealth management advisors employ to ensure younger members of the family are ready to take on future challenges and responsibilities. Family meetings led by Whittier Trust advisors not only keep everyone informed and engaged but also foster a culture of resilience across generations, making it easier to adapt and respond effectively to the unexpected.

Estate Planning: The Silver Bullet of Preparedness

Estate planning is one of the most valuable tools for preserving family wealth against all manner of challenges. Whittier Trust focuses on creating estate plans that account not only for life’s expected transitions but also for impactful natural events and sudden changes within the family or Family Business. A comprehensive estate plan includes everything from trusts and charitable foundations to provisions for asset distribution and protection in unexpected circumstances. Our goal is to ensure that, no matter what happens, your family’s vision is safeguarded, and your legacy is protected for generations to come.

By working with a multi-family office to prepare for both expected and unexpected events, UHNWIs can build resilience and confidence, allowing them to weather not only financial storms but also life’s inevitable shifts with stability and foresight.

To learn more about how an experienced multi-family office can help protect your assets, start a conversation with a Whittier Trust advisor today by visiting our contact page.

 

 

From Investments to Family Office to Trustee Services and more, we are your single-source solution.

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Nov 14th

Assessing the Need for a Family Office or Transitioning an Existing One

For individuals and families of significant wealth, managing a substantial portfolio of assets and investments demands a sophisticated and comprehensive approach. From financial planning and asset management to legal and tax strategy, risk mitigation, and multi-generational legacy preservation, there are myriad intricate factors to navigate. This growing complexity has led many affluent individuals and families to establish private family offices—exclusive firms dedicated entirely to addressing the distinct challenges of significant wealth.

Family offices can take various structural forms. Sometimes, these offices evolve organically within a family-owned business over time to meet specific family needs. In other instances, they are established through a family-controlled holding company, often following a significant liquidity event or wealth transfer. Alternatively, they may be operated by a professional multi-family office firm, such as Whittier Trust, servicing the needs of multiple wealthy families collectively.

Regardless of their particular structure, family offices function as the private wealth management and advisory teams for ultra-high-net-worth individuals and families. Their primary goal is to centralize the comprehensive management and stewardship of substantial family assets. These offices offer a range of services, including investment management, estate planning, philanthropic guidance, tax planning, accounting/bookkeeping, real estate administration, and family business oversight. However, most tend to specialize in a few core areas based on the family's specific situation.

The evolution and particular needs of a family office can vary greatly depending on factors like whether the family operates an active business, their generational status, any significant past liquidity events, and the extent of their philanthropic goals. For families led by first-generation wealth creators, the office may concentrate operationally on accounting, bookkeeping, taxes, and growing the founder's assets. Transparency and outside advisory involvement can be more limited.

Families undergoing a liquidity event, such as selling a business or transferring to subsequent generations, often require more comprehensive services. This includes support with multi-generational wealth transition, estate and tax planning, family governance, and philanthropic engagement. Embracing change and collaborating with specialist advisors during this phase is key.

For families with an office spanning multiple generations after a full wealth transition, the focus may shift to maximizing core competencies like investments or charitable activities. These well-established offices rely heavily on robust governing protocols and targeted outside expertise. However, given the private nature of family offices, it can be difficult for them to find opportunities to share ideas and gain outside insight.

Defining family offices presents a challenge, as the industry's interpretation varies widely based on perspectives and context. As the saying goes, "If you've met one family office, you've met one family office." Each is uniquely tailored to individual client needs, current stage, and philosophies regarding legacy and wealth management. Understanding these nuances is crucial for affluent families assessing whether to establish a centralized family office or transition an existing one.

Families can face significant challenges when it comes to structuring a new family office, modifying an existing office, or winding down operations due to the retirement of key employees or shifts in priorities. The cost of setting up or maintaining a single-family office can start at $1.5 million annually and increase substantially from there. Additionally, the ability of a single-family office to adapt to rapidly changing landscapes in areas like cybersecurity, compliance, and technology efficiencies can be costly or difficult to implement effectively.

Partnering with a multi-family office like Whittier Trust can allow families to still look and feel independent while gaining enhanced benefits from leveraging an institutional-caliber platform. These firms provide families with seamless access to sophisticated resources, dedicated expertise across all wealth disciplines, and a permanent governance framework able to evolve with the family's needs over generations—all often with a significant decrease in overall operating cost.

Knowing when and where to partner with a firm that can provide scale, deep resources, and specialized implementation capabilities is vital for affluent families navigating critical family office decisions. By consulting seasoned multi-family office professionals well-versed in the entire lifecycle, families can gain invaluable guidance tailored specifically to their circumstances and long-term goals.

Written by Whit Bachelor, Senior Vice President, Client Advisor at Whittier Trust. Whit is based out of the Newport Beach Office .

Featured in the Las Vegas Review Journal. For more information about how Family Office services can bennefit your family, start a conversation with a Whittier Trust advisor today by visiting our contact page.

 

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Nov 5th

Don’t Let ‘Em Buy the Ferrari

Exploring trustee discretionary distributions:

Trustees are often given discretion over the circumstances under which a distribution may be made from a trust to a beneficiary. This article explores some of the factors that are important to consider when giving your successor trustee this power. 

There are many reasons people place money in trust for their heirs. Trusts provide professional management of assets for beneficiaries who either do not want to spend their time on such matters or perhaps do not possess the required skills. Trusts may also provide a level of asset protection from the beneficiary’s creditors. Finally, trusts often protect the beneficiary from their own impulses to spend recklessly. By naming a successor trustee to control distributions from a trust, the protective nature of a trust is more easily preserved.

Most people who place money in trust for heirs want the funds to be available for certain things and not available for others. Frequent reasons for distributions include paying health and education expenses, starting a business, or buying a home. The common joke is that Mom and Dad want their children to be able to buy a car—just not a Ferrari! The challenge is that a successor trustee, particularly a corporate trustee (such as a bank or trust company) is not going to know the beneficiary as well as a family member and may have a harder time weighing the decision to distribute or withhold funds.

Disbursements for health and educational expenses are quite common and straightforward. Absent contrary language in the trust agreement, health expenses would include doctor bills, pharmacy invoices, and health insurance premiums. Educational expenses would typically include tuition, materials, room and board, and even travel expenses. Medical and education expenses that may be considered “alternative” may also be covered unless the trust agreement contains restrictions.

What about funds to start or buy a business? If the grantors are entrepreneurs themselves, they may want to make money available to their heirs for such purposes. In such cases, a good trustee will want the beneficiary to present more than just an idea. At Whittier Trust, we ask the beneficiary to have a business plan and financial projections. An important consideration will be how quickly the business will get to break-even status. It’s best to avoid a situation where the trust will be asked to support future distributions without limitation, or“throwing good money after bad.” While the nature of start-ups is always uncertain, it is good for the beneficiary to be aware of the limitations of the trust.

A similar business plan analysis should be undertaken when the beneficiary wants to buy an existing business or invest capital in a friend’s business. Most corporate trustees will be leery of the latter and often can play the role of “bad cop,” allowing the beneficiary to keep the friendship intact. In such cases, we are happy to let the friend know that the proposed investment is not aligned with the trust’s overall investment philosophy. This has saved more than one beneficiary from making an investment in a pal’s bar or movie.

Many parents and grandparents want the trust funds to be available for the purchase of a home for the beneficiary. In such cases, we will weigh the choices between buying the home in the trust or making a distribution directly to the beneficiary for that purpose. If the house stays in the trust, the trust is often responsible for things such as property taxes, insurance, and capital improvements. The house, as an asset of the trust, remains safe from potential creditors of the beneficiary.

If the funds are given to the beneficiary for the purpose of buying the home, it is important to consider the beneficiary’s ability to support the normal carrying costs of real estate. Will the trust need to make further distributions for insurance and property taxes, or does the beneficiary have resources outside of the trust to handle these? If the home is in a community property state, is there a risk of inadvertently converting the real estate from separate property to community property?

What about the Ferrari? We have yet to meet a grantor who is in favor of the Ferrari-type purchase. After all, if the desire is to let the beneficiary do whatever they want with the money, there is not much need for a trust.

What is the best way for a grantor to convey their wishes to the successor trustee? Trustees are duty-bound to follow the specific terms of the trust agreement, so it’s possible to include very specific distribution provisions. However, given the ever-changing nature of life and the longevity of many trusts, handcuffing a trustee is not optimal. We often recommend that the trust language be broad enough to accommodate unforeseen circumstances, giving future trustees plenty of latitude. The trust agreement can be supplemented by a “letter of wishes” in which the grantors spell out their desires for the use of the funds. While these letters are not legally binding, trustees will look to them for guidance. Most trustees find these very helpful when making distribution decisions.

When looking for professional trustees, it is important to ask them about their practices and procedures when it comes to entertaining a beneficiary’s request for distributions. Some corporate trustees are relatively inflexible and only review requests monthly by committee. At Whittier Trust, we look at requests on a case-by-case basis as they are made since time is of the essence in certain situations. Also, ask if the main objective of the trustee is strict preservation of the trust for future generations or if they are willing to accept a letter of wishes or trust language that favors the current beneficiary. Any good trustee will welcome these conversations in advance of being named in the trust.

For the grantor who is afraid of a recalcitrant trustee, including language allowing the beneficiary or another family member the ability to remove the current trustee and replace them with another trustee may provide additional comfort.

Like with all estate planning, professional advice from a capable attorney is the best place to start. Your lawyer will have had experience with different trustees and will be able to provide a perspective on what they have seen.

Written by Tom Frank, Executive Vice President and Northern California Regional Manager at Whittier Trust. Tom is based out of the San Francisco Office and oversees the investment team for multiple Whittier Trust offices.

Featured in Mountain Home Magazine. For more information, start a conversation with a Whittier Trust advisor today by visiting our contact page.

 

From Investments to Family Office to Trustee Services and more, we are your single-source solution.

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Oct 25th

Identifying the Key Traits of Market Disruptors

Typically, in portfolio asset allocation, the concept of diversification is deemed beneficial to avoid stock-specific risk.  There have been many academic studies supporting this concept.  Although diversification makes sense from a “risk-return” perspective, to have robust performance and beat benchmarks consistently, investors should find stocks that they are willing to hold in a sufficient portfolio weight that will consistently outperform benchmarks.  With the S&P 500 averaging 8-10% annual returns, finding stocks that provide upside over the index is not an easy task.

Nevertheless, the one way we have found to accomplish this objective is to take positions in stocks that are disruptors - disrupting their industries or even creating new ones and fulfilling customer needs better than the competition.  This means companies that are innovating in such a unique way over the longer term that the competition just cannot keep up.  These companies rapidly gain market share from incumbents or even establish new end markets where there is little competition.   

The modern-day example of such disruption is Nvidia. Most know the semiconductor industry was dominated by Intel for the majority of the late 20th century and into the 21st.  Intel focused on central processing units (CPUs) that were the “brains” of personal computers, notebooks and servers.  Intel relied upon Moore’s law, created by former Intel CEO Gordon Moore, which involved the doubling of computing power every two years. This worked well as the personal computer (PC) proliferated in global society and, later, as internet usage grew.  Intel dominated its end markets and had few viable rivals.

But as Moore’s law reached its peak, Nvidia has taken the crown of the world’s largest semiconductor company by making its graphics unit processors (GPUs) more functional to manage the demands of artificial intelligence (AI).  Nvidia’s semiconductors can work together in an array to create massive computing power and exceed the limits under Moore’s law.  In addition, Nvidia management has indicated a doubling of computing power essentially annually with each generation of AI-based GPUs.  

Such innovation has led to massive revenue growth with FYQ12025 (April) sales growth of over 262% and adjusted earnings per share growth of over 573%.  Nvidia has been a clear disruptor in the semiconductor industry and remains at the forefront of AI innovation likely for many years in the future. 

This is akin to Apple Inc.’s performance under former CEO Steve Jobs.  On June 29th, 2007, Apple introduced the iPhone which clearly took the smartphone concept to a new level.  Apple sales growth and stock price appreciation have been phenomenal from that date forward with an annualized revenue run rate just for iPhones of almost $200 billion (as of June 30, 2024) and the stock up 6000% (60x return) since the introduction.

So, what are some common denominators to successfully invest in disruptive companies?

We focus on the following:

  • A Visionary CEO 
  • High Growth or Nascent Industry That Will Be Very Large
  • Company’s Approach to Industry is Disruptive to Incumbents
  • Advantage(s) Will Last for Long-Term – Creating a Moat
  • Growing Free Cash Flow & Improving ROIC

1. Strong CEO Who is A Visionary

A visionary CEO is one of the most important things to look for when investing in the stock of any company, no matter the sector.  There have been many instances where a visionary CEO was replaced by one who was not so prescient or insightful.  These instances have typically led to the failure of the stock. We can point to many examples, with one of the most recent being Disney.  CEO Bob Iger led Disney from March 2005 and retired at the end of 2021.  Disney’s board chose Bob Chapek as Iger’s successor.  The company went from a well-run entertainment conglomerate to one that had lost its competitive advantages in many end markets.  Disney stock declined about 40% in less than a year under Chapek. Luckily, Iger returned in November 2022 with Chapek’s inauspicious dismissal.

2. High Growth Industry

A strong company in a weak industry is usually a poor investment.  Rather, the “secret sauce” is to own a “strong company in a strong industry”.  This typically indicates a market share gainer with a large total addressable market (TAM).  Nike’s rise to become the premier athletic shoe supplier was based on taking market share in an industry with an exceptionally large TAM. The same has been true for other disruptors like Nvidia, Meta, Eli Lilly and other stock success stories.

3. Disruption of Incumbents

On the introduction of the iPhone in June 2007, cellphone market leaders included Nokia, Motorola, Samsung, and LG.  As discussed above, the iPhone was a giant leap forward in terms of both communication and computing.  Apple’s growth under both CEO Steve Jobs and Tim Cook has been astounding, allowing Apple stock to surpass $3 Trillion in market capitalization.  The first iPhone disrupted the cellphone market and created the world’s largest company by market capitalization.  An investment of $100,000 at the introduction would be worth almost $5,800,000 today!  There are many other examples of such industry disruption from Netflix for consumer entertainment to Chipotle for burritos.

4. Advantage(s) Will Last for Long-Term – A Moat

Any investment that does not offer a long-term advantage is arguably a trade.  Trades are attractive to many investors but will not typically provide outsized gains, especially after short-term capital gains taxes are paid.  Companies that are disrupting need a large “moat” to make sure their competitive advantages remain intact over the long term to generate outsized stock returns.  This can be through patents and licensing (although enforcement internationally has been difficult), a superior customer interface or proprietary software (such as iOS for Apple or Cuda for Nvidia), or other means.  Nvidia’s annual product cycles which entail massive improvements in performance and efficiency for AI systems (as seen with the transition from the Hopper generation of GPUs to Blackwell late in 2024 and with Rubin planned in 2025) are the latest method demonstrated to maintain a long-term technological lead over competitors.

5. Growing free cash flow & Improving ROIC

Ultimately, companies that are disrupting their industries should show extraordinary improvement in their financial metrics i.e. they need to generate outsized returns for investors.  Some metrics to judge success are growth in free cash flows and return on invested capital (ROIC).  These metrics allow an investor to monitor company progress in an impartial fashion.  Improvement in both metrics over time should result from a successful industry disruption. Improvements in net margin also should be tracked.

Conclusion

Companies that are disrupting their industries have the possibility of adding outsized equity performance in a diversified equity portfolio.  There are many historical examples including Apple, Starbucks, Nvidia, Nike, Netflix and others whose CEOs and/or founders out-innovated and tactically outperformed peers to either create massive new markets or garner massive shifts in existing market share.  Undoubtedly, there will be new examples in the future.  Finding such companies early in their growth cycles is a key to future investment success.

To learn more about Whittier Trust's market insights, investment services and portfolio philosophies, start a conversation with a Whittier Trust advisor today by visiting our contact page.

 

From Investments to Family Office to Trustee Services and more, we are your single-source solution.

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