Frequently asked questions

Questions concerning Patrimonica Asset Management :

What is a Family Office ?

A Family Office is an independent, private wealth management firm, dedicated to fulfilling the financial management needs of one or more wealthy families, in an integrated and cohesive fashion. Centralizing the planning, decision making and supervisory functions with an independent team of experienced professionals ensures that the family’s affairs are managed efficiently, in a coordinated and coherent manner with respect to their overall plan.

The concept was developed in the United States during the second half of the 19th century. It was at this time that several major U.S. dynasties, such as Morgan, Rockefeller and Carnegie, established private management firms allowing them to hire and develop their own management teams to manage their vast family fortunes. As the entity is founded by the family, for the family, the structure ensures that the family's interests always come first.

More recently, the concept has gained broader appeal, and is fortunately, no longer the exclusive domain of billionaire families. Yet, the term Family Office is often used rather loosely by many financial institutions or asset management firms wishing to project an aura of exclusivity to a division or service offering.

Fundamentally, the following characteristics distinguish true Family Offices: independence, absolute objectivity, transparency and an absence of conflicts of interest. These essential traits ensure complete neutrality and an emphasis on counselling, where solutions and third-party providers are diligently selected to fulfill clearly defined needs, where decisions are not subject to biases due to direct or indirect financial interests or compensation arrangements.

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Who can benefit from the services of a Family Office?

If you wish to develop a global perspective of your financial situation, address all risks related to your well being and establish a master plan to protect and grow your wealth to fulfill your long-term goals. A Family Office is worthy of consideration and will provide several benefits such as:

  • Coordinating all of the family’s financial activities
  • Assessing, monitoring and addressing risks of every nature
  • Overseeing implementation and ensuring follow-up of the proposed strategies
  • Addressing complex financial or family situations
  • Ensuring that all financial, fiscal and legal commitments are satisfied
  • Minimizing involvement by delegating the administration of your financial assets
  • Providing access to a vast network of professionals or working with the professionals of your choice
  • Providing comprehensive and timely reporting
  • Ensuring continued management of your wealth in case of your incapacity or death

You obtain peace of mind knowing that your financial situation is handled by impartial and experienced professionals acting in your sole best interest, fulfilling their role with discretion and independently of other professionals involved in your matters.

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What are the essential characteristics of a Family Office?

A "true" Family Office should be :

  • Independent
  • Objective
  • Transparent
  • Aligned with your interests
  • Discrete
  • Trustworthy
  • Stable
  • Consistent with your values
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What are the advantages of a Family Office?

The holistic approach ensures greater efficiency and optimal results. A coordinated collaboration of specialists ensures the benefits of the strategies and solutions, selected to meet the specific needs of the family, are maximized.

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Is there a need to terminate long-term relationships with other trusted professionals?

No, you can continue to benefit from the services of other professionals if such makes good sense. We endeavour to plan, coordinate and supervise the activities of the needed professionals, bankers and money managers. We work with them to ensure your overall strategic plan is managed efficiently and coherently.

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Why do you emphasize independence ?

Patrimonica and Patrimonica Asset Management are independent, they have no affiliation to any financial institution, money manager or third-party service provider. We have no interest in recommending or selecting one solution over another. Our only criteria is that recommended solutions are best suited to your needs and offered at a reasonable cost.

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What are your fees?

Our income is derived exclusively from the fees paid by our clients and we believe in absolute transparency in this regard. The fees for our professional financial and tax planning services offered by Patrimonica inc. are based on our hourly rates and the time budgeted for specific tasks. The fees for portfolio management services offered by Patrimonica Asset Management inc. are a function of the assets under management according to a tapered fee schedule.

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What is an Outsourced Chief Investment Officer (OCIO) ?

The services of an Outsourced Chief Investment Officer can take the form of fully discretionary investment platform or implemented consulting, where investment decisions are submitted for approval prior to implementation. It is a service whereby institutional investors and high net worth families engage an independent third party to manage all or a portion of their investment portfolio. The offer usually consists of investment policy formulation, establishing the asset allocation and risk management framework, researching and selecting investment managers, implementing strategic and tactical portfolio decisions, providing on-going oversight as well as monitoring, reporting and analysing portfolio returns.

The outsourcing trend began with smaller institutions that could not or did not want to build an internal investment team. According to a study by the Family Wealth Alliance, approximately 40% of wealthy families have outsourced discretionary investment authority. The trend is even clearer among families with less than $500 million in assets where two-thirds have outsourced management. Similarly, only 11% of college endowments between $100 and $500 million internally manage their portfolios and instead rely on outsourced managers.

Source: Wikipedia

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What is an open architecture?

The term open architecture is used to describe an investment platform where the access to products, services or third-party managers is not constrained to a limited set of alternatives. For example, the wealth management units of large financial institutions typically offer a combination of in-house management capabilities and a limited number of third-party managers.

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If I currently deal with a few money management firms, one of which I’m very satisfied with, could this existing relationship be integrated into a portfolio under your supervision?

Of course, when onboarding a new client relationship, as is often the case, we are already familiar or have a relationship with the incumbent manager. On occasion, we have had situations where the manager is unknown to us. In any case, the decisions are always based on the clients needs and our unbiased assessment, therefore, if it is agreed that an existing manager is a worthy and relevant contributor to the overall portfolio, they will be integrated. That said, it is not usual for us to alter the managers mandate to take full advantage of their strengths.

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Our family currently has an investment committee acting in a decision making capacity with regards to the selection and retention of outside managers and acquisition of private investments, with no desire to delegate these responsibilities. However, we would be interested in outsourcing the investment accounting, policy compliance oversight as well as risk/return reporting and analysis. Could you provide these services only and how would you charge for these services?

We do offer the administration, monitoring and reporting functions separately. These services are offered for a flat annual fee that is determined based on the complexity of the portfolio. In such a relationship, it is possible to benefit from broader expertise on an adhoc basis i.e.; manager assessment and due diligence, manager search or transition management based on hourly rates.

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As a boutique firm, how can you provide comfort as to the safety and integrity of our investment portfolio?

Our registration as an investment counselor/portfolio manager confers very specific responsibilities and limitations as to what we can and can't do. The most relevant fact is that our role is limited strictly to the management of portfolios and the transactions we execute in the context of our duties. Your assets, all cash and securities deposited, are held in an account with a custodian. The custodian is responsible for the administration of your assets and all money transfers, to and from your account. We currently use two custodians, RBC Investor Services Trust and National Bank Correspondant Network (NBCN), both subsidiaries of Canada's soundest and most reputable financial institutions.

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How can I be assured that the firm does not receive kickbacks from third-party managers?

To be objective and transparent are two of our  most fundamental principals of our mission. It is also a regulatory requirement to disclose any conflict of interest, that may arise. Copies of sub-advisory and subscription agreements with all third-parties can be reviewed upon request.

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I can appreciate the benefits of having a manager of managers oversee our investment portfolio, but I’m afraid the additional layer of fees would negate any benefit. How do you demonstrate the value that you bring to the table?

Demonstrating our value added in factual terms is fairly straightforward. Yet, the benefits of our services are multi-faceted, and go beyond the obvious value of manager selection and thoughtful allocation and portfolio design. In addition, our clients benefit from economies of scale as management fees charged by third-party managers tend to be lower, as most consider Patrimonica as a single relationship. We also have the ability to further reduce risk by broadening diversification among specialist managers. While many specialists have minimum account thresholds of $5 million or $10 million, the collective size of our relationships enables us to provide access for smaller amounts all the while paying fees based on our total assets with the manager. In other words, if one were to attempt to replicate one of our portfolios, at best, the total fees would likely be considerably higher and at worst, would not be possible given minimums.
Another significant benefit to employing a CIO for a taxable portfolio stems from the ability to see the big picture; a view of every position held within a client’s portfolio as well as the adjusted cost base across multiple accounts/managers. This enables us to implement strategies in order to effectively  minimize taxes on capital gains.

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Does your firm assist in the education and encourage the participation of heirs in order to prepare them for the responsibilities of managing and hopefully sustaining a family’s wealth?

As a family office, we believe that we can play an important role in educating family members, young and old. In fact, we encourage younger family members to invest their savings along side the family's larger accounts. This enables the young adults to benefit from the same level of investment expertise, economies of scale and most importantly, an opportunity to familiarize themselves and become conversant in investment finance over many years, in preparation for the eventual hand-off to their generation.

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What can be done to mitigate the risk of the all too often seen pattern of shirt-sleeves to shirt-sleeves in three generations?

As you’re most likely aware, versions of the well known American proverb exist in all cultures and can be traced back as far as the written word. While there is no tried and true approach to eliminating the risk, both research and anecdotal evidence point to certain factors that foster the perpetuation of a family legacy. A common trait of successful multi-generational families is to be united by a shared mission; a family business, an investment holding company or a charitable foundation. As the family grows from successive generations, the groundwork required is the development of a strong family culture, the education of family values from childhood on and exemplary leadership. Another success factor which is conducive to growth in existing wealth from higher investment returns is pooling the management of family assets in order to benefit from economies of scale and access to investment opportunities which are accessible only to larger pools of capital.

Some interesting litterature on the subject can be found in our recommended reading list.

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Is it possible to deal with you with the understanding that recommendations are to be submitted for our approval prior to implementation?

Absolutely, this service model is what we refer to as Consulting/Implementation. It is favored by many families where decision making is achieved through deliberation and consensus building. In addition, it also serves an important educational function in families that encourage the involvement of younger generations and family members that are not as proficient in investment finance.

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