Family Offices Emphasize Trust, Long-Term Vision in Wealth Management

Family offices are crucial for building deep, trust-based relationships with families, aiming to be the first point of contact during any significant event, according to Eli Ben Zion, Head of Alternative Investments at Himalaya Family Office. Speaking at the Israel Private Markets Summit in Tel Aviv, Ben Zion highlighted that Himalaya has spent 18 years cultivating this trust. He described family offices as risk managers focused on preserving family wealth while achieving absolute, attractive returns, prioritizing loss protection through active management of investment portfolios in both public markets and alternative investments.

Ben Zion stressed the importance of a long-term perspective, stating that every investment decision is evaluated based on its benefit to the next generation. This involves close collaboration not only with the current generation but also with their children and grandchildren to build a lasting legacy. He summarized Himalaya's value proposition as trust, wealth preservation, and a long-term outlook.

Mariam Nir, Chief Investment Officer at Fidelis Family Office, identified three key challenges for family offices: consolidating diverse financial information from various institutions and currencies, balancing investment managers' strategies with families' unique goals, and ensuring cybersecurity, especially with the increasing use of AI. She emphasized the need for accurate data aggregation and careful vetting of AI tools to protect sensitive client information.

Regarding investment opportunities, Ben Zion noted that approximately 40% of Himalaya's portfolio is in alternative assets, with pre-defined allocation ranges for each sector. Flexibility is maintained, but with strict investment discipline. Valentina Sukhova added that family offices must scrutinize potential investments for red flags, such as a history of fraud, consistent underperformance, or returns below benchmarks, even if overall performance appears positive. The best investment, she stated, is one that fits the client's portfolio and diversifies it, not necessarily the one with the highest return.

The discussion also covered the balance between liquidity and long-term investments. Nir explained that while investors are compensated with excess returns for foregoing liquidity, the real challenge lies in managing this trade-off. This involves accounting for families' ongoing expenses, future capital calls, taxes, and other commitments. Fidelis uses a model to manage cash inflows from fund distributions and required capital calls, creating a continuous cash cycle. Crucially, she added, extreme scenario stress tests are vital for the worst-case situations where public markets decline and fund distributions cease.

Roi Lampert, Owner and CEO of Lampert Family Office, discussed identifying quality funds and managers to minimize investment errors. He emphasized examining the investment team's identity, tenure, and performance during difficult periods. Evaluating returns, exit pace, and managers' transitions between investments is also key. Importantly, he noted, managers should have "skin in the game" by investing their own capital. Lampert concluded that while a manager's quality is essential, the family office's role is to connect that expertise with the client's specific needs and goals, ensuring the investment is a suitable fit.