Dynamic Preservation

Ashvin Chhabra on Goal-Based or Aspirational Investing

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In my ongoing investigation of dynamic preservation, some exploration of Ashvin Chhabra's work seems to be in order ...

Rob Kaufold recently turned me on to Ashvin Chhabra's The Aspirational Investor. In part because of my recent exposure to Tony Deden, I have been starting to think about dynamic preservation as really requiring a very simple thought process or mental model: there are two types of investments in dynamic preservation. Just two. Investments designed to protect asset value, and investments designed to grow asset value. Protect and grow. That's it. Rather than thinking about a portfolio by asset class, geography, industry, or any other breakdown one can use, maybe it's as simple as breaking a portfolio into these two classes: protect and grow. As I think about it, most of us are very good at "grow." The entire investment industry is really focused on "grow."

Even assets that advisors put their clients in to "protect" are, in many ways, still really designed to grow--or, at least, one could say that they don't meet Deden's definition of what a 100-year protective asset might look like. Chhabra's three buckets Now, one might not want assets that "protect" to the degree that Deden does, but at least one should have a really carefully thought-out "protect" strategy that will actually protect and not just nominally protect. Again, many have a pretty thought-out grow strategy. But their protect strategy? Not so thoughtful. I've been asking around about where investors or advisors have their clients' "protect" assets. And lots of the answers aren't very protective. Anyway, more on that some other time when I've thought it…

Tools

Using Kumu to Create a Dynamic Family Enterprise System Map

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This post walks through an example of mapping family members, family organizations, trusts, service providers, and key family investment holdings using Kumu. While dynamic family enterprise system maps may not replace the classic genogram, they should become as common.

We are all familiar with the classic family genogram (see Figure 1). Using circles, squares, and various sorts of lines, one can use a genogram to map a family tree, showing the various generations of a family as well as marriages and divorces, adoptions, etc. Figure 1 In this post I want to introduce a powerful online tool called Kumu as a way to create dynamic, interactive, family enterprise system maps. Kumu is an incredibly powerful online tool. It is free (so long as your map is public) or charges a fee (if you want your map to remain private and accessible only to those to whom you grant permission.) I won't go into all the details of what Kumu can do. If you explore their web site, you will find various examples of systems, concept, and relationship maps that tap the power of Kumu. Here I want to demonstrate how Kumu can be used to create a dynamic family enterprise system map. Kumu allows you to create elements and connections. An element is an object, represented on the map by a circle. It could be a person, an organization, a concept--really, anything you desire. A connection is a relationship between two or more elements, represented on the map by a line. It could be a family relationship, an employee relationship, a Board position, a trustee-beneficiary relationship--really, again, anything you desire. In Kumu, you can customize everything. So you can define all sorts of element "types" or connection "types." Your…

Family Enterprise

Words Matter: Why “Trusted Company” Instead of Trust Company and “Family-Centered Office” Instead of Family Office

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What is the focus of a "trust company"? The trust. What is the focus of a "trusted company"? The quality of the relationship between the trustee and the beneficiary.

I recently began saying that I do not aspire to head up a trust company; I aspire to be a "trusted company." This may seem like word smithing, but I think it’s important. There is a subtle but powerful difference between a trust company and a trusted company. The former implies that the object of the company’s attention is—trusts. A “trust company” administers trusts. That’s what it does. That’s the focus of its efforts. In many ways, the phrase “trust company” suggests that the entity’s clients are the trusts that it oversees. If a PTC aspires to be a “trusted…

Dynamic Preservation

Anthony Deden on Preserving Financial Capital

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What does dynamic preservation of wealth over time really require? This is a great starting point.

Jay Hughes recently referred me to a wonderful video interview of investor Anthony Deden. Deden has kept a low profile for many years, and this is the first interview he has granted. He is a deep thinker, however, on the subject of what it takes to preserve and protect financial capital over a long period of time. This is one of the best presentations on that topic that I've seen. I will be posting some thoughts on the dynamic preservation of capital soon. In the meantime, I encourage anyone interested in these topics to watch this in it entirety.…

Tools

How PTC Boards Can Improve their Discussion of the Distribution Function

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This one-page essay describes two simple tools for improving PTC Board discussions.

A trust is an ownership vehicle; a trustee operates as the functional owner of the assets and invests those assets for the benefit of the beneficiaries. In addition, however, a trustee must fulfill the distributive function: making the assets available to the beneficiaries appropriately (under the terms of the trust documents) for their use. A private trust company (PTC) has the advantage (over an individual or traditional corporate trustee) that it is focused exclusively on the well-being of one particular family. It can therefore really come to know the needs and interests of that family and tailor not only its…