Family Office Leaders are Eager for Insights

Family Office Leaders are Eager for Insights

ILLUSTRATION: GETTY IMAGES

Single-family offices serving the financial and wealth management interests of rich families have become a growing force in global markets as wealth has boomed.

In the last 10 years, the number of single-family offices managing wealth management, investing and philanthropic needs for families with at least $200 million has doubled to as many as 15,000, according to Citi Private Bank. Yet little is known about how many of these offices—managing several trillion dollars of assets—operate. Even executives who run single-family offices are often in the dark about what their peers do.

But unlike the past, these execs are not as worried about privacy and confidentiality—they want to reach out and learn from other family offices. They view their role as more as an emissary for the families they serve, rather than a “gatekeeper,” keeping other outside experts at bay, says Stephen Campbell, chairman of Citi Private Bank’s global family office group, and the former chief investment officer of a large Seattle-based family office.

One way the veil can be lifted is by getting family office executives together, which private banks and wealth managers that serve them as advisors and bankers, try to do. In fact, many single-family office practitioners, once happy to work alone, are now eager for insights they can gain from their peers and will seek out opportunities to network with the right people, Campbell says.

“We’ve seen a significant pick up in interest in (learning) what’s working, what’s not working and how they can learn from the mistakes of others,” he says.

A familiar adage in financial services is that, “if you’ve seen one family office, you’ve seen one family office,” meaning, no two are alike. But the truth is, the operations of most family offices are very much the same, he says. Most of them have to manage investment portfolios, estate planning and philanthropy, as well as paying bills and handling legal affairs.

“Where they differ is in areas of culture and values, and in the governance biases and practices of the family,” he says.

Campbell’s insights are well-founded: Citi works with 1,100 family offices, most of them serving a single family. Most also use Citi as their primary bank, he says.

How families communicate with the offices that run their wealth management needs is one area that can differ wildly. One of the families Citi works with, for example, established a family office in a separate jurisdiction from where they lived, a practice that can provide tax advantages. The office was set up nine years ago with a staff to run it, but as of today, no one in the family has ever been there, Campbell says.

At the other extreme, a principal member of another family that works with Citi goes into his family office every Thursday, sometimes with other family members, and they cook a meal together with the staff. “Oddly enough, those are both models that work,” he says.

Citi has found families are willing to share what’s worked for them on a range of topics if they can exchange ideas with families of a similar wealth level and degree of sophistication. Two years ago, the private bank began a “family office leadership program” in New York, which includes 125 family-office executives serving the world’s “most affluent families,” Campbell says. The event has now spread to programs in Hong Kong and Dubai, and elsewhere to accommodate demand.

Because it’s difficult to cover all the topics families want to discuss, Citi is now rolling out a series of articles and white papers on nitty-gritty topics, like, “why family offices are increasingly relying upon bespoke remuneration packages to attract top executive talent” and “how grooming tomorrow’s family leaders can help preserve family wealth and influence and prevent discord in the family.”

There are a lot of “how-to” manuals on how to set up and run a family office, Campbell says, but “the nuance is in how and when to apply these concepts, and that’s what we’re tackling with these articles.”

[“Source-barrons”]

Legislators Are Missing the Point on Facebook

Legislators Are Missing the Point on Facebook

HIGHLIGHTS

  • The real issue: How our data get used
  • Facebook has been quite open and obvious about their skeevy practices
  • America needs a smarter conversation about data usage

I’m getting increasingly baffled and disappointed by the scandal-cum-congressional-ragefest surrounding Facebook. Instead of piling on Mark Zuckerberg or worrying about who has our personal data, legislators should focus on the real issue: How our data get used.

Let’s start with some ground truths that seem to be getting lost:

– Cambridge Analytica, the company the hoovered up a bunch of data on Facebook users, isn’t actually much of a threat. Yes, it’s super sleazy, but it mostly sucked at manipulating voters.

– Lots of other companies – maybe hundreds! – and “malicious actors” also collect our data. They’re much more likely to be selling our personal information to fraudsters.

– We should not expect Zuckerberg to follow through on any promises. He’s tried to make nice before to little actual effect. He has a lot of conflicts and he’s kind of a naive robot.

– Even if Zuckerberg was a saint and didn’t care a whit about profit, chances are social media is still just plain bad for democracy.

Politicians don’t want to admit that they don’t understand technology well enough to come up with reasonable regulations. Now that democracy itself might be at stake, they need someone to blame. Enter Zuckerberg, the perfect punching bag. Problem is, he likely did nothing illegal, and Facebook has been relatively open and obvious about their skeevy business practices. For the most part, nobody really cared until now. (If that sounds cynical, I’ll add: Democrats didn’t care until it looked like Republican campaigns were catching up to or even surpassing them with big data techniques.)

What America really needs is a smarter conversation about data usage. It starts with a recognition: Our data are already out there. Even if we haven’t spilled our own personal information, someone has. We’re all exposed. Companies have the data and techniques they need to predict all sorts of things about us: our voting behaviour, our consumer behaviour, our health, our financial futures. That’s a lot of power being wielded by people who shouldn’t be trusted.

If politicians want to create rules, they should start by narrowly addressing the worst possible uses for our personal information – the ways it can be used to deny people job opportunities, limit access to health insurance, set interest rates on loans and decide who gets out of jail. Essentially any bureaucratic decision can now be made by algorithm, and those algorithms need interrogating way more than Zuckerberg does.

To that end, I propose a Data Bill of Rights. It should have two components: The first would specify how much control we may exert over how our individual information is used for important decisions, and the second would introduce federally enforced rules on how algorithms should be monitored more generally.

The individual rights could be loosely based on the Fair Credit Reporting Act, which allows us to access the data employed to generate our credit scores. Most scoring algorithms work in a similar way, so this would be a reasonable model. As regards aggregate data, we should have the right to know what information algorithms are using to make decisions about us. We should be able to correct the record if it’s wrong, and to appeal scores if we think they’re unfair. We should be entitled to know how the algorithms work: How, for example, will my score change if I miss an electricity bill? This is a bit more than FCRA now provides.

Further, Congress should create a new regulator – along the lines of the Food and Drug Administration – to ensure that every important, large-scale algorithm can pass three basic tests (Disclosure: I have a company that offers such algorithm-auditing services.):

– It’s at least as good as the human process it replaces (this will force companies to admit how they define “success” for an algorithm, which far too often simply translates into profit),

– It doesn’t disproportionately fail when dealing with protected classes (as facial recognition software is known to do);

– It doesn’t cause crazy negative externalities, such as destroying people’s trust in facts or sense of self-worth. Companies wielding algorithms that could have such long-term negative effects would be monitored by third parties who aren’t beholden to shareholders.

I’m no policy wonk, and I recognise that it’s not easy to grasp the magnitude and complexity of the mess we’re in. A few simple rules, though, could go a long way toward limiting the damage.

[“Source-gadgets.ndtv”]

Charter Schools Are Reshaping America’s Education System for the Worse

Buttons opposing charter schools

A protester wears buttons opposing charter schools during a protest in Bellevue, Washington, on October 13, 2017. (AP Photo / Ted S. Warren)

Charter schools have been hailed as the antidote to public-school dysfunction by everyone from tech entrepreneurs to Wall Street philanthropists. But a critical autopsy by the advocacy group Network for Public Education (NPE) reveals just how disruptive the charter industry has become—for both students and their communities.

Charter schools are technically considered public schools but are run by private companies or organizations, and can receive private financing—as such, they are generally able to circumvent standard public-school regulations, including unions. This funding system enables maximum deregulation, operating like private businesses and free of the constraints of public oversight, while also ensuring maximum public funding.

According to Carol Burris of NPE, charter schools “want the funding and the privilege of public schools but they don’t want the rules that go along with them.” She cites charter initiatives’ having developed their own certification policies, as well as disciplinary codes and academic standards—a tendency toward “wanting the best of both worlds” among both non- and for-profit charter organizations.

In California, a nonprofit charter industrial model has flourished. The California Virtual Academy (CAVA) network runs hundreds of schools, delivering online-based programs through “cyber” outlets, often concentrated on students in low-income communities of color. CAVA’s political influence has expanded along with its brand.

California’s 2016 primary elections saw fierce battles funded through charter-school industry groups, particularly the Parent Teacher Alliance, which spent several million dollars on races for local superintendents and legislators. Reflecting the ambitions of charter proponents to aggressively expand the sector statewide, the charter boosters pushed candidates who favored lifting district limits on opening new charters. Such policies have sparked controversy, since charter growth is associated with budget erosion for public schools and resistance to staff unionization in the host district. Another measure opposed by the charter sector would “make charter board meetings public, allow the public to inspect charter school records, and prohibit charter school officials from having a financial interest in contracts that they enter into in their official capacity.”

The Los Angeles Unified School District has seen dramatic effects from the expansion of charter schools as it wrestles with budget crises. The teachers’ union recently estimated that charter funding imposes costs on the district of about $590 million annually (the figure is disputed by charter proponents), which to critics affirms that charters receive a growing share of taxpayer funds while leaving regular schools to struggle with chronic funding shortfalls.

The “flexibility” granted to charter schools also drives questionable academic trends. One online charter chain, managed by the Learn4Life network, serves 2,000 students in 15 schools through distance-learning-based programs. But its modular “storefront” teaching system has been accompanied by a churning enrollment with huge attrition rates. According to NPE, in 2015, four-year graduation rates ranged from zero percent in two of its schools, to 19 percent, with an overall average of less than 14 percent making it through all four years.

NPE’s investigation found a similar pattern at a BASIS charter school in Arizona, part of a nationwide charter network. Drawing on an earlier report by the Arizona Center for Investigative Reporting, and reflecting the findings of an ACLU investigation into de facto segregation at Arizona charters, NPE argues that, despite heavy private financing, the school falls short in equity. The predominantly white and Asian-American student body of the BASIS Phoenix school contrasts with the high-poverty, mostly Latino surrounding district. With about 200 students total, BASIS Phoenix ultimately graduated just 24 students in 2016, after shedding 44 percent of the graduating grade’s students over the previous four years. The statistics, which matched similar trends across Arizona’s charter sector, suggest charters may actually be perpetuating the discrimination and exclusionary practices that they claim to help remedy.

In response, several school administrators claimed to be striving to address racial disparities. BASIS has forcefully denied that it is abetting inequality in Arizona’s schools, stating that it is “incredibly proud of the diverse nature” of its schools. BASIS.ed also issued a public rebuttal to NPE contending that its chain of schools, overall, maintained high retention rates, did not discriminate by background or ethnicity, and attracted a diverse range of families, as well as donations from them.

But the values of the BASIS network don’t necessarily reflect community diversity. The NPE report cites a third-party analysis of BASIS in a high-profile ranking of schools, America’s Most Challenging High Schools: BASIS Phoenix earned a top rating, according to publisher Jay Mathews, based on standards focused on performance scores. BASIS denies that it unfairly screens out children, citing overall high retention rates across the network for most K–12 classes. But the company, which admits it is “not for everyone” and that students do leave, also promotes a structure that prioritizes retaining high-scoring students, while lower performers realize eventually they can’t meet the standards.

This approach may boost the schools’ business competitiveness, but education advocates who focus on the social goal of providing equitable education for all see it differently. As NPE argues, “there must be a balance between reasonable challenge and inclusivity.” The demographic polarization linked to charter-school expansion, critics warn, exposes the harmful impact of exclusion on diversity: Charters claim to serve diverse populations, but may actually just be segregating the system further.

Examining the broader social impact of charters, NPE tracked financial manipulation and fraud at various schools. In Pennsylvania, lax financial regulations have allowed charters in some districts to absorb extra funding with little oversight. In the New Hope–Solebury School District, for example, the government contributes $19,000 per pupil attending a charter school, even if they are only learning through a screen, since “Those costs must even be paid to cyber charters that have no facilities costs at all.” Another financial question surrounds lopsided pay structures with much higher salaries for charter principals.

Another subsurface problem at many schools is harder to measure: Charters are known for high faculty-turnover rates. Although turnover is a problem in both charter and non-charter schools, NPE’s Burris notes that chaotic management and unregulated expansion, combined with intense academic pressures and high student attrition, can destabilize the whole institution. Traditionally, however, public schools have served as social pillars for the surrounding community. In stable schools, teachers and families grow up together. “Community schools are family schools in many, many ways,” Burris says. “And when they become businesses all of that is destroyed…those relationships are just not there, the way they are in the neighborhood community school.”

Charters may offer a different relationship to communities, but their brand of “free market” schooling carries costs. Who accounts for the lost social opportunities when education becomes just another market investment?

[“Source-thenation”]

Several new and refurbished Razer laptops are on sale

We may have said goodbye to Black Friday and Cyber Monday, but not to tech deals altogether. There are some nice discounts available as we progress through the holiday season, including ones from Razer, which is having a sale on several of its Blade, Blade Pro, and Blade Stealth laptops.

Razer’s sale includes a mix of new and refurbished models, both in the US and UK. Here’s a look:

UK DEALS

Razer Blade Stealth 12.5″ 4K: £1,250, Razer (save £700) – This laptop pairs a Core i7-7500U processor with a 1TB SSD, giving you ample storage. It also has 16GB of RAM. Bear in mind that it’s running integrated Intel HD 620 graphics, so for more serious gaming, you’ll want to pair this with a external GPU enclosure.

Several other configurations of this laptop are on sale as well, though some are sold out. We’re listing them here anyway in case they come back in stock.

  • Razer Blade Stealth 12.5″ 4K w/ i7-7500U 512GB SSD:  £999, Razer (save £550) – sold out
  • Razer Blade Stealth 13.3″ 4K w/ i7-7500U, 256GB SSD:  £1,305, Razer (save £45) – sold out
  • Razer Blade Stealth 13.3″ 4K w/ i7-7500U, 512GB SSD:  £1,460, Razer (save £90)
  • Razer Blade Stealth 13.3″ 4K w/ i7-7500U, 1TB SSD:  £1,810, Razer (save £90)
  • Razer Blade Stealth 13.3″ 4K w/ i7-8550U, 256GB SSD:  £1,455, Razer (save £45)
  • Razer Blade Stealth 13.3″ 4K w/ i7-8550, 512GB SSD:  £1,610, Razer (save £90)
  • Razer Blade Pro 17.3″ Full HD w/ i7-7700HQ, GTX 1060, 256GB + 2TB: £1,830, Razer (save £270)
  • REFURBISHED Razer Blade 14″ Full HD w/ i7-7700HQ, GTX 1060, 256GB:£1,700, Razer
  • REFURBISHED Razer Blade 14″ Full HD w/ i7-7700HQ, GTX 1060, 512GB: £1,850, Razer
  • REFURBISHED Razer Blade 14″ Full HD w/ i7-7700HQ, GTX 1060, 1TB: £2,200, Razer
  • REFURBISHED Razer Blade Stealth 13.3″ QHD w/ i7-7500U, 128GB: £850, Razer – sold out
  • REFURBISHED Razer Blade Stealth 13.3″ QHD w/ i7-7500U, 256GB: £1,100, Razer – sold out
  • REFURBISHED Razer Blade Stealth 13.3″ QHD w/ i7-7500U, 512GB: £1,200, Razer

US DEALS

REFURBISHED Razer Blade V5 14″ QHD: $1,750, Razer (save $350) – This thin and light laptop has a Core i7-6700HQ processor, 16GB of RAM, 256GB SSD, and a GeForce GTX 1060 GPU. Razer backs it with a 1-year warranty.

Here are several other configurations and models that are on sale. Note that all of these are refurbished models, backed by a 1-year warranty.

  •  REFURBISHED Razer Blade V5 14″ QHD w/ Core i7-6700HQ, GTX 1060, 512GB:  $1,800, Razer (save $500)
  •  REFURBISHED Razer Blade V5 14″ QHD w/ Core i7-6700HQ, GTX 1060, 1TB: $2,000, Razer (save $700)
  • REFURBISHED Razer Blade Stealth V1 12.5″ QHD w/ Core i7-6500U, 128GB: $750, Razer (save $250)
  • REFURBISHED Razer Blade Stealth V1 12.5″ QHD w/ Core i7-6500U, 256GB: $950, Razer (save $250)
  • REFURBISHED Razer Blade Stealth V1 12.5″ UHD w/ Core i7-6500U, 256GB: $1,000, Razer (save $400)
  • REFURBISHED Razer Blade Stealth V1 12.5″ UHD w/ Core i7-6500U, 512GB: $1,100, Razer (save $500)
  • REFURBISHED Razer Blade Stealth 12.5″ QHD w/ Core i7-7500U, 128GB:$850, Razer (save $150) – out of stock
  • REFURBISHED Razer Blade Stealth 12.5″ QHD w/ Core i7-7500U, 256GB:$1,050, Razer (save $200)
  • REFURBISHED Razer Blade Stealth 12.5″ QHD w/ Core i7-7500U, 512GB:$1,150, Razer (save $250)
  • REFURBISHED Razer Blade Stealth 12.5″ 4K w/ Core i7-7500U, 512GB:$1,300, Razer (save $300)
  • REFURBISHED Razer Blade Stealth 12.5″ 4K w/ Core i7-7500U, 1TB: $1,500, Razer (save $500)

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[“Source-pcgamer”]