Case Study
Corner Office

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Situation: Managing assets for families of extreme wealth comes with unique hurdles, including tax issues, asset location (where to most efficiently invest assets between taxable, tax deferred, and tax-exempt accounts), and asset ownership among various generations and legal structures. However, one of the greatest challenges is providing flexible yet comprehensive reporting to the parties of interest. One such family had many accounts in many different places, legal and tax advisors requiring different levels of document access, and various fiduciaries for each account. The family’s greatest concern was maintaining an appropriate management strategy in each account and a central repository for documents. On top of these needs, the patriarch of the family invested smaller pools of assets in private equity outside Cornerstone’s scope of management. The family and its advisors were concerned about “key man risk,” or the risk they could not efficiently manage their wealth should the patriarch unexpectedly pass away.

Solution: Cornerstone worked with the family to consolidate the number of accounts and created transparency around the family’s investment and operational risks through upgraded reporting. Cornerstone has long prided itself on its ability to gather, analyze, and aggregate and disaggregate assets in a custodian-agnostic manner. Our technology allowed us to consolidate these assets such that the client could dictate who had access to each account or account group. We now monitor the performance and risk metrics of the family’s entire wealth and any of its subcomponents. Even those assets managed outside our firm are brought into our reporting sphere to provide a comprehensive daily snapshot for individual stakeholders. These reports, which are fully customizable, are delivered via a secure online vault which also houses the family’s most important documents, including wills, trusts, and powers of attorney.

Results: Prior to engaging Cornerstone, the extraordinary level of liquid assets that had been “squirreled away” in various investment houses and vehicles posed significant key man risk. Cornerstone’s consolidation services, along with a thorough review of the family’s existing insurance policies, enabled the family to focus on running its operating business while relying on Cornerstone to manage and report on their liquid net worth. In addition, the family and their various advisors are able to access the documents they need at any time, allowing for seamless integration between their financial, legal, and tax advisors. There is still key man risk – a strong leader is not easily replaced – but we have been able to reduce the burden of investment management and oversight, in turn allowing us to focus on helping the family develop its next generation through education and family meetings.