Family Wealth Report speaks to GenSpring about the firm's pursuit of business opportunities in the international wealth management sector.

Globalization is, as the saying goes, making the world seem like a much smaller place, given tremendous advancements in areas such as travel and communication.

As people are increasingly mobile in their personal and working lives, the number of transnational families is seemingly on the rise. To give a flavor of how this trend is materializing, the number of people born in a country other than that in which they live in North America rose from 27.8 million in 1990 to 53.1 million in 2013, according to data from the OECD and the United Nations Department of Economic and Social Affairs. For the world as a whole, those figures are 154.2 million and 231.5 million respectively.

There are clear business opportunities for the family office sector to help transnational families with their complex wealth needs. Individuals – particularly the high net worth – will often have spouses, children or other contacts in multiple countries due to their resources enabling more travel, international home ownership and access to sophisticated global investments.

“The world today is linked in so many ways…it's part of a cultural movement that has to be translated in our professional activities,” GenSpring’s Joe Rotella told Family Wealth Report.

GenSpring, a multi-family office, today serves more than 350 wealthy families based primarily across the US. The firm expanded its international business when it bought TBK Investments, which focused on Latin American clients, in 2007. Although that business was divested back to its original owner in 2012, GenSpring is now pursuing international growth under the leadership of the firm's recently appointed chief executive, Willem Hattink.

“It’s an area that begs right now for people like myself in the industry and related industries to think a lot about,” said Rotella, who is managing director of client service for the eastern region at GenSpring. “It requires recognizing our range of talent, resources and expertise, and pulling them all together, which, under Willem's leadership, we now have the mandate and full support to do.”

Rotella defines a transnational family as any family that has connections with a primary and one or more secondary jurisdictions – in a myriad of ways but most typically with geographically dispersed family members. A common example would be a family that generated its wealth outside of the US but has family members who have acquired US citizenship having studied or gotten married there.

“It's crossing two jurisdictions, and, for us, if the family doesn’t have a connection with the US it's a little further afield from our focus at the moment,” Rotella said.

New York and Miami, FL, are areas where he believes GenSpring will “really take off” in the international wealth management space in the months and years ahead. In New York, the opportunity is clear with the Trans-Atlantic region and on the West Coast with the Pacific Rim, while Atlanta also has a significant population with a growing transnational family base.

“From our geographical and historical orientation, we have real strengths at the moment in the Americas – it's a huge component of our business,” he said.

Rotella said that while GenSpring has no plans at present to open an office outside the US, “we regularly send our advisors to meet with non-US clients in their countries of residence, and collaborate with SunTrust International Wealth Management to service these relationships.”

Expertise

It goes without saying that working with transnational families requires bringing other areas of expertise to the table besides the usual repertoire of family office services.

Rotella outlined the specific challenges associated with serving transnational clients as: developing a comprehensive understanding of the particular objectives associated with the cross-border nature of the family; voiding the natural inclination, institutionally or individually, to interpret those objectives from a parochial, domestic perspective; achieving a level of cultural fluency and trust, bridging the domestic-foreign dividing lines in each relationship; and operating from a cosmopolitan point of view to integrate all dimensions of the wealth management plan, across boundaries.

As Carol Harrington, chair of the international law firm McDermott Will & Emery's private client department, previously told this publication: there are many traps for the unwary.

“The key when you’re in the wealth space is to understand all the facts – all the resident and citizenship statuses of all your beneficiaries – as well as where all the assets are,” Harrington said. “End-families have become more international, especially the wealthy ones, which means you need to become more sophisticated in your product delivery...”

While the “template” remains the same, Rotella said there needs to be a deep understanding of the regulatory and tax needs of transnational families and, equally as crucial, of their cultural and family dynamics needs.

“We bring in our highest caliber talent to address what is typically a more complex initiation process than with purely US domestic families,” he said.

In terms of regulation, a recent example is the Foreign Account Tax Compliance Act, a major piece of legislation that came into effect on July 1 last year. It requires all financial institutions outside of the US to regularly submit information on financial accounts held by American citizens to the US Internal Revenue Service.

“There is lots of work to do there and it's incumbent on us to ensure that all of our advisors understand the various related issues,” Rotella said.

As regards the more “intangible” elements of effective international wealth management, in Miami, for example, GenSpring works with primarily South and Latin American clients, so the firm has numerous fluent Spanish-speaking representatives based there. Rotella also said he has observed a strong desire among transnational families to incorporate family dynamics services into their wealth plan – an area where he believes the family office sector can really add to the equation.

He warned that overlooking these intangible elements will likely make it harder to connect with a transnational family, which could weaken the quality of the advisor-client relationship and ultimately have a detrimental effect on how effectively they can be served.

“If we were to hire someone today, I’d want them to be a multi-lingual, family dynamics person who I could send to Mexico to conduct a family meeting,” Rotella said. “I’d also love to hire people with more international tax and estate planning experience.”