Joan Malloy opened Greenway Family Office in St. Louis, a comprehensive wealth advisory firm, with a burning goal: to beat the odds that 70% of all multigenerational wealth transfers fail.

Malloy, a CFP who is Greenway's managing partner and director of family strategy, set out two years ago to share values while managing family valuables. Even with the most well-drafted trusts, family members fight, misunderstand one another and botch financial responsibilities. When they do, it's likely that neither the family nor their finances will flourish.

Greenway serves families with assets in excess of $25 million and offers a wide range of C-suite services. Supplying multiple integrated services comes naturally to Malloy, who spent 16 years managing the personal tax, investment and estate planning needs of C-level executives for two international accounting firms, Price Waterhouse and Arthur Andersen. Her family practice assumes full responsibility for the coordination, execution and oversight of all things financial for client families.

 

Full-Service Firm

Of the roughly $400 million in total family assets her firm oversees, liquid investment assets account for about 25% of that amount. Client families generally don't leave other custody, brokerage or investment management relationships when they engage the firm's services. The firm adds value to existing portfolios by slotting in a complementary manager within the existing multicustodian structure.

Greenway charges a combination fixed family office fee, based on the complexity of family finances, with a small pass-through variable investment reporting and monitoring fee. The firm sells no products - no bank loans, insurance policies, trustee services or investment products.

Malloy pays particular attention to integrating cash flow management, investment oversight, tax planning and estate planning - all time-consuming tasks. Getting first-generation wealth clients to focus on these details can be challenging. In more than one instance she discovered that families devote 80% of their time and energy to what has turned into a minority portion of their financial capital - their daily business.

Another challenge for this family CFO involves the sheer complexity of client assets. Getting a good handle on new assets can take her firm six to nine months. "When it comes to client assets, we always trust, but verify the information they provide," Malloy says. "Reducing the Byzantine assets of a recently acquired client into a three-page snapshot took an enormous amount of research."

 

From Cars to Wine

While Malloy provides all of the services typical of a multifamily office, she's essentially each family's chief operating officer and focuses particularly on risk management, mitigation and lifestyle enhancements.

Optimizing personal and business assets is as important as managing liquid investable assets. A 10,000-bottle wine collection, a fleet of classic cars or multiple homes provides innumerable opportunities for risk mitigation. The firm's concierge services include purchasing and managing private jets, protecting private art collections and managing residences and household employees.

In their book, Preparing Heirs: Five Steps to a Successful Transition of Family Wealth and Values, Roy Williams and Vic Preisser - co-founders of the Institute for Preparing Heirs - say that the 30% of multigenerational wealth transfers that succeed share three common elements: 1) communication among family members, 2) family philanthropic efforts and 3) development of the next generation's leaders.

Malloy offers family governance, charitable planning and business succession planning. She'll handle everything from organizing family meetings and setting up family foundations to working on strategies for effectively addressing ownership and management of company assets.

 

Client Cooperation

The best-laid plans, though, cannot succeed without client cooperation. Malloy worked several years ago with a retired executive whose personal net worth, as she describes it, exceeded that of a midsize village. By all outward appearances he was highly successful, but felt quite unsettled in his personal life. He had passed on all that he planned to give to his children, but he couldn't figure out what to do with the rest of his assets. He longed for a stronger relationship with his children and grandchildren. This client's situation has troubled Malloy for 20 years, she says.

While she would like to provide him with the tools for philanthropy and family governance, the man is not ready, she says. For such clients, her firm focuses on traditional wealth management solutions, identifying tax, investment and estate-tax savings.

 

Special attention

Clients with assets exceeding $25 million need "daily attention," Malloy says. Most days she's doing something for each of her clients.

"You can dilute the focus and benefit of your insight and advice when trying to be a comprehensive resource for scores of families,'' she says. "Too much scale does not help the client. It only benefits the firm charging the fees."

One of her hard-learned lessons, she says, is that bigger is not always better. She is assisted by four partners, all advisors, as well as by three professional staff members. She has hired two associate firms to keep from doing everything herself. Being a CPA, she has witnessed other accounting and planning firms attempt to build and maintain custom Excel spreadsheets to handle the complex data needs of their clients.

"I'm glad I didn't try to solve the reporting issue myself," she says. One of the firms she engaged has created and maintains an automatic, aggregated, multigenerational accounting and reporting software system that pulls client information on a daily basis and provides access across multiple custodians. The other firm offers strategic investment advice and performs due diligence on her clients' money managers.

 

Financial Rewards

Malloy says she had some of her greatest insights during her years working in the public accounting trenches.

As an audit professional, she was assigned to companies to identify adjustments that could have added up to millions of dollars in savings, yet those suggestions were discarded as "immaterial" by her behemoth public company clients. Now, she says that finding savings and planning opportunities that bring $25,000 or $100,000 in savings are greatly appreciated by most families.

Malloy says she enjoys the comprehensive family office approach to clients and she is as concerned with protecting each family's personal assets as with overseeing their investments. "If we're not busy preparing the money for the family,'' she says, "we're busy preparing the family for the money."

 

 

Jim Grote, a CFP in Louisville, Ky., is a contributing writer of Financial Planning.

 

 

Joan Malloy

Managing Partner, Greenway Family Office, St. Louis

Credentials: CFA, CPA, CFP, PFS B.S., accountancy, University of Illinois at Urbana-Champaign

Experience: Senior managing director, Price Waterhouse; partner, Arthur Andersen

AUM: $400 million

How I see it: "If we're not busy preparing the money for the family, we're busy preparing the family for the money."