The best experts have gathered for one of the most important events of the year: The Mundo conference on how to create your family office. 

Calling this conference one of the most important ones of 2022 is not arbitrary. There are few times in which one sees experts, with wide knowledge in their respective fields, gathering together with one common goal. In this case, the goal is to achieve perpetual freedom. 

At Mundo, we offer a new philosophy. In what we call the Forever Free package we provide a 5-step structure to generate and protect wealth in perpetuity. The beauty of this concept lies in its flexibility. As long as you understand the philosophy and get the right advisors, almost any service and jurisdiction can fit into the strategy. 

On the other hand, the Family Office concept has been around for some time. It is basically a structure that organizes a family’s assets for the highest protection and maximum profit. The concept, created by baron Rothschild, fits perfectly well into the Forever Free package. 

For this reason, Mundo has gathered a group of experts in various areas to cover all the angles of a perfect financial strategy. From immigration by investment to UK bonds, from gold purchase and storage to a high-end platform to trade forex and vehicles. The conference includes prime advice on these topics in depth. 

Next, you’ll find a full transcription of the Mundo conference concerning asset growth and protection for wealthy families. 

Mundo conference on how to create your family office 

Host- Welcome to our Mundo conference on how to create your own family office. Mundo is pleased to have a world-class panel of presenters and the advice you will get here would have cost you thousands of dollars in legal advice not to mention the invaluable investment products we have gathered. So, without further ado, I would like to present our first speaker who is an international lawyer specializing in family office establishment and who has appeared as a speaker and writer in top publications like Escape Artist and International Wealth. He has taken part in live investment conferences and has been a consultant to numerous high-net-worth clients and family offices.

He is also the author of a recently written book Avoiding death and taxes under his nom the plum Eugene Freeman. 

Host - Eugene, Welcome to Mundo. As our time is limited, I would like you to open this conference by speaking about the upcoming global depression, which I believe is one of the topics in your new book Avoiding Death and Taxes.

Eugene – Natalia, thank you very much for having me here. I wrote the book Avoiding death and taxes actually under a non the plume around ten years ago and basically, many of the predictions that are happening today were in the book. So, the book is about the way governments, society, and empires manipulate the financial and legal systems and how that monetary manipulation and social manipulation will turn out within the next decade or so. Now, what is it that we can see already and maybe I can start the presentation if you don’t mind? What we can see already in terms of the dangers that are faced by wealthy families, it’s what (and I’ll come to him later) the famous economist called Nikolai Kondratiev predicted would be an upcoming global depression. Now, this depression will obviously lead to massive political unrest like many of the financial depressions in history had led to. Obviously, as we can see now in topics like the Panama Papers, the Paradise Papers, and all of this there is almost a vilification or hunting of wealthy families and of wealth itself. Wealthy families are basically being targeted and in the course of all of this wealthy people are vilified, people are saying “offshore is a bad place”, but really all of this is caused by governments themselves and by the empires, the modern empires today. You can see that also basic freedoms will begin to erode, and these freedoms, you know, we can see that for example in Australia with the closing of the borders and the basic Covid crisis and the basic breaches of human rights. So, now if we go to the front of this in terms of Nikolai Kondratiev, there was a famous economist called Nikolai Kondratiev and basically, there’s a saying by Voltaire that history doesn’t repeat itself, man does. Well, Nikolai Kondratiev was a famous Soviet economist and he basically studied historical cycles of wealth and historical cycles of financial upheaval, depression, and rise of the empires. Now, he looked at that and discovered a pattern, a cyclical pattern in a 60-year pattern of birth, growth, decay, and death and these patterns repeat themselves over history. For example, according to his theory, he predicted that the American empire would not have died at the time that others predicted, and also, he predicted that the Soviet empire had the capacity to collapse. Now, for these predictions, basically, Stalin had him assassinated. Now, what is the interesting part of his theory? It says that during mega-death cycles which we see like black swans but with the writing on the wall we see massive social collapse, we see, like a tsunami, massive destruction in the financial system. Let’s look at some of these and by no means, this is very brief, and historians may argue with me as to the exact date when this happened but there’s no doubt that these things did happen.

For example, let’s look at the collapse of Rome. Now, Rome collapsed because of a combination of economic conditions similar to today. During its final days, we witnessed hyperinflation, super high taxes, civil wars, political destruction of basic freedoms and basically the creation of the military and police state. We can also see how in Rome, towards the end of the Roman empire, there was a huge rise in bureaucracy, the coins in Rome were turned from gold into basically mixed with led so there was hyperinflation, there was overspending on the army and many of the wealthy families were basically killed publicly in order to steal their money because they would vilify them as the enemies of Rome. You can see all this hysteria in the press today where wealthy families are being blamed for the financial system and its collapse. Now, we see also, let’s go back to the 1600s, if you move back up, we have similar forces with the Spanish inquisition basically being given the power to take away wealth for reasons of heresy, there was no right of defense, and in the end, these conditions were caused by a weakening in the Spanish economy and the collapse of the financial system and this led to basically the death of Spain and the European civilization. In the end, the Moors took over Spain and generally Spain collapsed as the financial empire that it had been in all this time. Now, again, those forces were the forces of a hyper mega death cycle of the economy, and we saw all the same things that we see today. Now, something in modern history, we look at the 1930s with the rise of Hitler, again, we see hyperinflation, we see the collapse of the German economy, we see the fact that Germany lost the first world war, we see depression and all of these financial forces that began the rise of powers like Hitler that basically created further human right breaches, wars, confiscation of wealth. Of course, the greatest confiscation of wealth in modern history was the confiscation of wealth from the Jews, the concentration camps, etc. 

Now, what I’m saying in my book is that the same forces that Nikolai Kondratiev predicted are happening today and in fact very close to his prediction. Because he basically said that the same things are now going to happen in a megadeath cycle. What is worse is that this death cycle is becoming even larger because of the money printing that’s happening. So, with the money printing and the inflationary politics of America, there is the possibility that basically, the American dollar will collapse. Also, it’s not so far from the cards that even America itself as an empire will collapse, and many economists and thinkers, and even shamans are predicting this. When it happens it’s a different story, but all the forces are there, American debt is so high that it can’t be repaid even in a whole generation. So, what is the risk? We see that today the risk to the wealthy families is that they’re being targeted, their accounts are being frozen, banks, for example, are using any excuse to freeze funds and they can use these funds to generate more money while the people have to prove the source of the funds. There’s actually no or very few legal mechanisms left if your funds are frozen and there is a general attack on wealth through all sorts of rises in taxation. 

So, what is the solution to this and, again, the solution to this is set out in my book Avoiding death and taxes, it was a solution used by many of the world’s wealthiest families and still so used. For example, Baron Rothschild, arguably one of the wealthiest families, at least historically, in the world, used this strategy which he called “the five fingers” or “the hand”. This is a biblical reference, but it’s now referred to as “the five-flag theory”. We call it, in Mundo, the Forever Free or the Perpetual Family Office. This family office legally has protected families for over 600 years, and it’s designed as a perpetual mechanism to protect them forever. It removes all legal, political, financial risks, tax risks, inheritance risks, and it makes it virtually impossible for creditors, courts, or claimants to seize the assets because everything is set out in specially constructed trusts. 

Now, traditionally the five steps were part of Baron Rothschild’s diversification plan. He put his family members in five different separate jurisdictions and used five separate complex structures. I won’t go through what he did I’ll just simplify and say how, in modern days, it’s used. We call it “the five steps to freedom” but we’ve added the sixth, so, let me move on to the first step. 

Ok, so, the first step is that your Family Office in Nevis begins with a passport. We concentrated on Nevis but of course, you can basically obtain a passport through any of our jurisdictions like Vanuatu, any of the Caribbean countries, Malta, and there are others. Why do you need a second passport? Well, basically, a second passport allows the family to move to a jurisdiction with tax residency and citizenship with has no wealth tax, no inheritance tax, no tax on foreign income and where they will be protected, in the case of Nevis, by British law. So, it also allows you to travel to 132 countries. But what’s more important is that having a second passport is an insurance policy. For example, now many countries are seizing their citizens’ passports, sometimes denying them nationality and you can see that happening more and more in various conflicts, so, a second passport gives you, in a sense, an insurance policy, and protection for you and your family. You’ll begin to be treated as a citizen of that country. 

Now, what’s the second step. The second step, once you have your passport or at the same time, is your multiform foundation or your trust, one or the other, now, again, for the purposes of this conference we’ve chosen Nevis. The foundation basically gives you massive benefits. First of all, it functions exactly like a family trust. It allows perpetual passing on of wealth and some of the advantages include, first of all, no court will ever be allowed to set aside a foundation, after two years. So once it has been established for two years it can’t be attacked no matter what the beneficiaries do. This means it will protect you from creditors, it protects you from divorce proceedings, from inheritance taxes, and from all types of attacks, even attacks by governments. 

Now, the other advantage is that the Nevis foundation can elect to be a tax resident of Nevis which means it has a 1% taxation on its profits, but since it’s a resident it fulfills the requirements, at least at this stage, of the OECD. So, basically, you can say that since we are paying taxes we are not just in an offshore zone. Most importantly, also is that the Nevis foundation is fully confidential, there’s no register of beneficiaries, which is very important for many families that want to protect their wealth. So, that would be the second step. 

Once you’ve established your passport and your foundation you move on to step three, which is your holding company. The family Office will have a holding company, you can again elect to have a number of holding companies including Nevis, Singapore, wherever you really wish, but we’ve chosen here again the Nevis LLC, it’s held by the foundation, and it functions as an operating company for your family office. It’s also a look-through structure that pays zero tax which means tax is paid basically by its owner, which is the foundation. And, again, if you have the citizenship, you have the foundation, you have the Nevis LLC, you are basically reporting back to Nevis, especially if you have the following step: tax residency, which means there’s no exchange of information. So, it’s one of the most confidential structures you can have as a perpetual family office. 

Now we move on to step four. Step four is basically tax residency. Now, we can have tax residency in any one of the low-tax jurisdictions, which is physical tax residency for the beneficiaries. That is, when they receive income from the trust, they will have no tax to pay if they live in a place which has no worldwide taxation. So, for example, they can have tax residency in Nevis, they can also have tax residency in Panama, which means all the information will be reported to Panama and there won’t be any tax or in a number of other jurisdictions. There’s many low-tax jurisdictions, Singapore, Malta, Montenegro, we can do them all for clients and family offices. 

And now we move on to step five, which is the bank account. In the bank account, you need a confidential, highly secure bank. We work with a number of banks including Nevis banks. Again, if that structure is set up with an excellent bank account there is no exchange of information. And Nevis particularly is one of the strongest jurisdictions for confidentiality if you are a resident or a citizen of Nevis. 

So, those are basically the five steps. Now, basically, after that, we set up a package for you and I’ll summarize the package. The package is your St Kitts and Nevis passport, your family multipurpose foundation, your Nevis LLC, your tax residency in Nevis or in Panama and a bank account for your LLC, and a personal bank account in one of our partner banks, of which we have around 49. The package can be modified, basically for any individual in terms of his preference. 

Host – Eugene, thank you very much for your presentation. As today we have a number of speakers, and you will be part of our panel at the end of the conference I have to limit myself to only one question. I wanted to ask you, could you please in your own words describe what a family office is and how it works?

Eugene – Ok, Natalia, thank you. A family office is basically a structure set up to protect and manage the family’s wealth and their business. I described it in the five steps but its elegance and its beauty are that it cannot be attacked by creditors. Because of that, it holds the family wealth forever. For example, many families have a real problem, they created the first generation, they created a lot of wealth, but their children are being spoiled they like to spend, they get into bad relationships, they get into problems, and everyone wants to sue them. In this type of family office, it’s impossible to attack the family’s wealth because the children don’t own the wealth, the trust does. So, that’s one use of it but there are multiple uses of this. It also segregates the risks because the foundation or the trust owns different businesses and companies, so, if one business collapses it doesn’t affect the rest and there’s no possibility to attack the trust. So, basically, the family office protects the wealth in perpetuity and it’s really one of the only ways to do it. 

Contact our expert

Host – Our next speaker is Natalia Platonova who is a senior consultant and she will present the next part of our topic which is How to structure your family office.

Natalia Platonova – Natalia, thank you very much for your introduction. Good afternoon, ladies and gentlemen, I’m happy to welcome you to today’s conference. So, today I’m going to tell you about all the citizenship by investment programs in the Caribbean region particularly the program of Saint Kitts and Nevis. Together we’ll discuss this program in detail and compare it with all the other existing CBI programs in the Caribbean. First of all, I’d like to say that citizenship by investment is becoming more and more popular these days because of the events happening all over the globe. The coronavirus pandemic, economic crisis as well as closed borders and lockdowns, all that combined serves as a motivation for all the clients who are thinking about getting second citizenship to finally make a decision and proceed to action. And this is the reason for the high demand for citizenship by investment programs today. 

To begin with, let me briefly introduce our company to those who haven’t heard about it yet. It was established in 1994. We were the first licensed trust company on the island of Nevis in the Caribbean and one of the first companies that were licensed to assist customers in getting second citizenship by investment. Currently, we have more than 25 years of experience in asset protection, immigration services, corporate services, and legal consulting for high-net-worth individuals. The slide shows our geographical presence. 

So, speaking about citizenship by investment we will present all the programs currently existing in the world including well-known Caribbean programs, Malta, Turkey, Montenegro, and Vanuatu. And today we’ll take a closer look at the Caribbean programs and also, I’ll say some words about the Vanuatu program. To begin with, let me briefly tell you about the country which provides this wonderful opportunity to get a second citizenship by investment.

Saint Kitts and Nevis, officially known as the Federation of Saint Kitts and Nevis also called Saint Christopher and Nevis is a state composed of two islands in the Caribbean Sea. Their combined area is 269 square kilometers, the capital is Basseterre on the island of St Kitts and the population is a bit more than 52,000 people, everyone speaks English which is the official language in the country. This is a former colony of the UK which became independent in 1983 and the legislation is based on the English common law. The climate is tropical with average temperatures between 25 and 30 degrees Celsius. The islands are easily accessed from the United States, Canada, and Great Britain. St Kitts’s international airport provides direct commercial flights from Toronto, Miami, New York, Charlotte, Atlanta, San Juan, and London Gatwick, as well as regional commuter flights from within the Caribbean Sea. Nevis airport accommodates direct flights from San Juan, St Maarten, Antigua, and St Croix and St. Thomas. Travel within Saint Kitts and Nevis is provided by several ferry companies from Basseterre in Saint Kits and from Charleston in Nevis. 

And now let’s talk about the citizenship by investment program of Saint Kitts and Nevis which is the oldest one among the Caribbean jurisdictions. Nevis was a pioneer in this industry when it launched its CBI program in 1984. Up to the present, the citizenship by investment program of Nevis remains one of the most reputable and stable programs in the world. So, what are the advantages of Nevis citizenship?

Usually, the investors who can see their updates on their second citizenship are trying to achieve several goals. First of all, there’s the freedom of traveling without the necessity of getting visas all the time, and secondly, they want to arrange a so-called plan B in case of some unstable situations in their countries. So, speaking about Nevis I must say that it perfectly helps to achieve the mentioned goals and it offers visa-free travel to 157 countries all over the world. The most interesting destinations are the Schengen countries, the United Kingdom, Singapore, Hong Kong, and Russia. Besides, citizens of Saint Kitts and Nevis can obtain a long-term touristic visa to the US for ten years. 

Speaking about the application process for Saint Kitts and Nevis citizenship I must say that is rather quick and straightforward. The processing time is from 4 to 6 months and by straightforward, I mean that in order to get citizenship you won’t need to get a temporary residency permit and then replace it with a permanent one, etc. Citizenship is easy: one time for your entire life and then it will be inherited by the next generation. So, the citizenship of Nevis is a very big investment in the future of your family. For those who are in a rush, the government offers an expedited procedure for an additional fee so that the approval process takes no longer than 60 days. You can include in your citizenship application your spouse, children, and financially dependent parents.

The next significant advantage of Nevis citizenship is the tax optimization opportunity, citizenship helps to reduce the tax burden because Saint Kitts and Nevis imposes no income, wealth, or inheritance taxes. Also, for some people is a big plus that they don’t need to visit the country, everything is done remotely and there is no need to visit the island before or after citizenship is granted. 

Now, let’s discuss who can apply for citizenship of Saint Kitts and Nevis. In order to be approved by the CBI unit, an applicant must comply with the following requirements. First of all, it’s the absence of criminal records, the ability to prove the legality of the source of funds, perfect reputation, and absence of refusals in visas obtaining to the countries which are visa-free for The Federation of Saint Kitts and Nevis. I must really say that the most important thing for the client here is don’t try to deceive the authorities, don’t try to hide any information because it will be found anyway and if the client intentionally provides false information, he will be rejected 100%.

Now let’s talk about the investment options. Basically, Nevis offers two options. The first one is the donation. This is a one-time non-refundable contribution to the Sustainable Growth Fund of Saint Kitts and Nevis. For a single applicant, the amount of the contribution is $150,000 and for families up to four members the contribution is $195,000. The second option is real estate investment. There are two types of real estate that can be purchased. The first type is real estate projects approved by the government, these are hotels where investors can purchase a share or a whole unit and the minimum investment in such a case is $200,000 plus additional fees for processing, due diligence, and registration.

The second type is real estate investment in the local market. This can be a villa or apartment that the client has chosen and the minimum investment in such case is $400,000 plus additional fees for processing, due diligence, and so on. So, I must say that this is ideal for investors who want to live on the island and are looking for a project to their own taste. 

So now let’s take a closer look at the investment projects approved by the government. There are many projects, but we have selected the ones we consider the most attractive. The first project is Christophe Harbor. Christophe Harbor is the largest development in Saint Kitts and Nevis, the project includes a superyacht marina and villa, a golf course, a spa, clubhouses, and a lot of restaurants. There are 13 miles of coastline within the development as well as six sanded beaches. The real estate is available for full or fractional ownership and besides, it’s possible to purchase land for the construction of your own villa here. 

The next project is actually located in the territory of Christophe Harbor. It’s Park Hyatt. Park Hyatt is a luxury hotel operated by the world-famous brand Hyatt. The hotel was opened in 2017, it includes 134 suites, and clients can invest in Park Hyatt by purchasing shares in the resort, and the minimum investment is $220,000 with a mandatory ownership period of 7 years before the shared ownership can be sold to new investors who can also qualify for citizenship.

The next project is Four Seasons Resort Estates Nevis. It’s a fully operational five-star resort, it offers a golf course, luxury spa, a beautiful beach, tennis courts, a business center, and various restaurants. Investors can purchase one-tenth ownership shares in three- or four-bedroom freestanding villas here. 

The next project which I’d like to mention is Zenith Nevis. This is a new luxury beachfront villa enclave which offers to purchase a high-quality residence in a stunning beachfront on the islands. As an investment, clients can purchase an existing villa or land or shares in a villa and besides this project offers an interesting option, guaranteed and prepaid rental returns and it is rather flexible, so the investment options may be discussed individually.

So, to discover more about the projects, we will be happy to select the most suitable project for you and your family, and now let’s take a look at the other programs in the Caribbean region.

I must say that the conditions of all the programs are similar, however, each program has its own features that should be taken into consideration while selecting the ideal option for the specific client. 

The first program is Antigua and Barbuda, which also offers two options for investment. The first one is the donation option. The required minimum investment here is $100,000 for a single applicant and $125,000 for a family of five or more. And for the real estate option, the minimum investment is $200,000 for shared ownership and $400,000 for single ownership. So, speaking about the advantages and disadvantages of this program, I must say that for some people the main disadvantage of this program is the requirement to visit the country for 5 days during the first 5 years, however, others want to visit this place, to have vacations here during these mandatory visits. 

Besides, it’s worth mentioning that in Antigua the next generation will have to pay additional investments for citizenship obtaining. For example, if your child is born after you obtain the citizenship of Antigua, it will require you to invest an additional amount of money to get citizenship for your newborn child.

However, Antigua citizenship can be attractive for big families because the donation amount for a family is relatively low here. 

The next program is Granada. The donation option is more expensive here, the investment amount is $150,000 for a single applicant and $200,000 for a family of four members (up to four members). As for the real estate option, for $220,000 you would get shared ownership and for $250,000 you would get single ownership. There are lots of significant advantages in the program of Grenada, for example, visa-free travel to China, which is attractive if you work with China, for example, and besides Grenada provides the opportunity to get an E-2 visa to the United States of America. One more thing, Grenada is the program that allows you to add a maximum number of family members to your application. Siblings of the main applicant and spouse can be added to the same application, so it’s a rather unique program among the Caribbean programs in this context. Speaking about the disadvantages I can only mention that the approval process can take a bit longer here than in the other jurisdictions.

The next program is St Lucia, this is the newest program among the Caribbean and the donation option here is $100,000 for a single applicant and $140,000 for an applicant plus spouse, or $150,000 for a family of four. And for real estate investment, the minimum investment here is $300,000. Also, St Lucia offers a good alternative investment option which is government bonds, and the minimum amount of investment is $250,000. 

The next program, the last of the Caribbean programs, is Dominica. The donation option here is $100,000 for a single applicant, $150,000 for an applicant plus spouse, and $175,000 for a family of four. The real estate investment option is $200,000.

Speaking about advantages, the main advantage of the program is that it offers the minimum entrance fee among the Caribbean countries, and some disadvantages, which I believe are not very significant, for investors planning to live there, there’s relatively fragile economics and infrastructure in the country and also a bad avia connection. 

The last program which I’d like to mention is Vanuatu, this is not the Caribbean however, this program is quite similar, and often investors consider Vanuatu as an alternative to the Caribbean programs. This is a relatively new program which was launched in 2017 and the biggest advantage of Vanuatu is that this is the fastest program in the world. The entire process takes approximately 8 months, and everything is done remotely. Vanuatu offers a donation option only and you can see the amounts of the donation on the screen. 

Host – Natalia, how many CBI programs are there, and which one does the company represent?

Natalia Platonova – So, we discussed all the programs, and I would like to remind you that our company represents all the existing citizenship by investment programs in the world, please feel free to contact us if you want to select the most appropriate program for you the most appropriate real estate option, we will be happy to advise and prepare an individual offer and individual quotation for your family. So, if you have any questions, please feel free to ask. 

Host – So, this means that, essentially, you can have the family office package with any passport of your choice. 

Natalia Platonova – Yes, sure, you are absolutely right, we can add any of these citizenship by investment programs to the family office package. 

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Host – Now we are much honored to have here at our conference the CEO of one of Panama’s top multifamily office consultancies. We will talk about some of the best wealth management options. I welcome Romain Dromard, who has vast experience and background in private banking and wealth management for high-net-worth individuals. Romain, can you please tell us what a multifamily office advisor does?

Romain – Hello everybody and thank you to our colleagues at Mundo for inviting us today.

So, a multifamily office is an independent organization that supports multiple families to manage their entire wealth. Multifamily offices typically provide a variety of services including tax investment planning, objective financial counseling, trusts, real estate management, coordination of professionals, and investment advice. When a family or individual starts to accumulate a significant amount of wealth they typically work with many independent providers such as wealth managers, private bankers, lawyers, accountants, real estate or insurance brokers, but all of these providers act independently and often with their own interest in mind and with no coordination between them whatsoever. A multifamily office provides a far superior solution as it turns all experts to sit down at the same table in order to work in a coordinated manner and always in the best interest of their client. 

Host – Now, we are looking forward to hearing your presentation on how a family office can grow and protect its wealth. So, I give the floor to Romain.

Romain – Thank you, in the next 10-15 minutes, I will give you a review and a sense of a philosophy that came with family office assisting clients in their wealth management services. First of all, a few characteristics that separate us from a typical wealth manager. First of all, and probably the main one is that we invest in the products and projects that we offer. So, K&B family Office was founded by two founding families which trusteeded as of today one of the most significant clients within the family office. And we do invest their capital alongside our clients. Meaning that we do exactly the same thing, in the same conditions that we would do if we owned the capital. Secondly, we are regulated as investment advisers in Panama, thirdly, we are managing over $180 million dollars in assets. And why does this matter, because it gives us a critical size to get access to investment deals. In the world of wealth management, the more impact in terms of the size that you have, the better access you can get to specific deals than what regular investors would access. Further, we focus on alternative investments. With every single wealth manager, we offer you a balanced portfolio of bonds and stocks which is probably not the highest valuable portfolio right now, but we will have access and focus on specific expertise in what we call alternative investments. And that includes a routine which is not the typical bonds and stock portfolio. That includes private debts, private equity, real estate, and many of the things that we have access to as a family office and as a typical wealth manager probably would do. Finally, we have a network of international private banks within reach. We work with more than 10 different banks in various jurisdictions internationally. Nonetheless, we have a very open-architecture platform. We have the capacity to work with any existing bank account, clients don’t have to close a bank account and open a new one with us to be able to receive our advisory services. 

In terms of jurisdictions, 80% of the world’s offshore banking is basically made between the US and Switzerland because of the high professionalism, the high safety, we do work with some of the Caribbean jurisdictions but to a lesser extent. How do we work with those banks? This is a fundamental point. We do not receive registration from banking institutions, our typical wealth manager will refer the client to a bank and the bank will pay him back 50% of what the bank is making with the client, which is useful, because if I’m getting 50% of whatever the bank is making I’m not working in the best interest of my client but I’m working in the best interest of the bank, which is a conflict of interest and something we want to avoid at all cost. Whenever we refer a client to a bank, we ask for a session and that 50% or at least 50% will be transferred to the client as a discount on the regular fees. We know that any client going through K&B accounts will get at least a 50% discount on the regular scaling fee of the bank. 

We do open the accounts for our clients. Today opening a private banking account could be a bit of a hassle. But we do have a dedicated team which is highly experienced and that can make this process less difficult than it should be. 

Let’s talk about banking institutions now. Let’s start with the US jurisdiction. In the US we mainly work with Santander and Safra National Bank of New York. Most private banks will have a fee structure composed of a customary fee, which is basically a small percentage of what they will charge to safe keep the assets plus a transaction fee which is a small percentage of whatever transaction is made in purchase and sales which could range from 0.40% to 1%. On the Swiss side, we work with three different banks. Swissquote is a very good and highly efficient private bank, J.Safra Sarasin, and PKB. Same thing, the fee structure is pretty similar, the only specificity about Switzerland is the Swiss federal tax duty which adds a 0.50% on top of every transaction and that goes to the Swiss government. 

Let’s talk about the timelines. The first step with any client is to choose a jurisdiction and a banking entity in Switzerland, the United States, or the Caribbean. Then we go for a specific bank according to your profile, according to the minimum investment, to whatever you want to do with the accounts, for each specific client there’s one specific bank that we can recommend. 

Then we go over the complete account opening forms, work on the KYC guides with our highly efficient operational team. 

The third step would be for the bank to give us an ok, saying yes, we accept the client based on the information that we received and finally we get the account opened.

This process can take between 2 to 6 weeks depending on the jurisdiction and the banking entity. 

Once we have the bank account opened, we go to the portfolio construction. Depending on the client’s investment profile and risk profile we will construct and customize the portfolio for him. Once we have that we will proceed to fund the accounts to finally place the orders and proceed with investments. 

So, like I said, every single plan and investment portfolio is customary and very unique, but since I have to present something, I created a very general portfolio with a very conservative profile. This portfolio is composed of 7 investment vehicles that give exposure to 500 bonds, 700 stocks, and 5 different fund managers. This is composed of best-in-class money managers specialized in their asset classes. We have one in private debt, one in the equity space, fixed income, H2O, we have some gold and some cash. And with these 8 instruments, we have as a result a complete and diversified portfolio in any asset class from the regular bonds and stocks to alternatives such as hedge funds, private debt, real estate, private equity, precious metals, and of course cash and cash equivalents. 

How did this portfolio behave over the last 3-4 years? This is basically the utmost return of this portfolio which is 7% per year. And as you can see you have to assume such a level of volatility. We actually made a return of 0% in 2018, 14% a year after that, 8.7 in 2020 and so far we are about at 3.4% as of the end of August. 

Another important thing to observe about this portfolio is the maximum drawdown of the portfolio. In a very extreme situation, like we had at the beginning of 2020, the beginning of the pandemic, this portfolio only went down by 3.6% when I recall people that both the equity and fixed-income markets went down by at least 30% at the worst of the crisis. Which is why those kinds of investment portfolios which are highly diversified, which have lots of non-traditional assets are much more resilient to market volatility without sacrificing returns. 

Let’s talk about alternative investments. So, the portfolio that I presented is basically a good base for any investor. On top of that, we will add certain investment opportunities depending on the client’s profile. And then we have access to basically an unlimited world of non-traditional investments and that could range from private equity, real estate, paper real estate, or other types of private debt. 

As an example, we invest and co-invest in real estate venture capital funds, that gives us above 35% returns per year. Those typical investments are accessible at the highest minimum investment, this is for example accessible from 500k dollars, and they are not always available, so, funds they raise capital for a certain amount of time before they say ‘this is enough’, we close the fund and start to invest it. But we usually have a good pipeline of these kinds of opportunities. We also participate in what we call pre-IPO stocks. So, we have access to private equity, stocks from private companies a few years before they get public, which is where most of the money and wealth creation is made as of today, not so much in the public stage of it but in the private.

And that’s where we can actually reach 25% plus expected returns. Those are accessible from very small amounts usually 75-50k.

We also have access to a real estate co-investment fund from other family offices that for example invested in a group of marinas and offer the opportunity to invest alongside with them to unite their interests with ours being confident that they will keep a good eye on our money since they invested in the project. These are only a few of these alternative investment opportunities that we offer, obviously, we could talk only about this because we have a few minutes to give you a review of the services.

Finally, let’s move on to the reporting tools. Once we have the portfolio completed it comes down to the monitoring of the portfolio that we do by a property platform that allows us to consolidate and reformat all the accounts, statements of funds, and banking institutions. We have the capacity to consolidate the banking assets from different banks, we have the capacity to basically structure and give a review of any client’s wealth at any given time with the appropriate tool. 

Finally, let’s talk about how we charge our services since we don’t receive commissions from the banking entities. We charge the services to the client in the form of an annual advisory fee which is a percentage of the assets in the account and this percentage varies with the function of the investments. We start at 0.55% to go down as low as 0.35%. This is charged 100% transparently on closed accounts at the end of every quarter. 

Host - Romain, as far as I understand, as part of our family office package you and your team have agreed to offer a consultation to potential clients, to assess their portfolio and investment goals. Could you tell us, please, about that?

Romain – We have a team of investment specialists with decades of experience in wealth management, so we know for example that certain product banks take their client’s ´portfolio towards the new products or that others limit the client’s investment universe only to certain instruments on which they collect heavy fees. Very often is when we realize that core asset classes such as alternative strategies, private equity, or private debt are completely missing from the portfolio simply because they are not part of the provider’s business model. 

Our objective during this consultation is simple, it’s to bring awareness to people who are miscounseled and therefore are leaving money on the table every year. 

Host - Now, one of the topics that we are going to present today is hedging your family office against global risks. In this part of the family office package, we pay special attention to diversification and hedging as a strategy to protect and grow your investments. Our special guest is Jason, who runs the UK and Western European regional sales office of Exante whose main focus is on institutional clients comprising regulated and non-regulated family offices asset managers and wealth managers. Jason, why would a family office need a brokerage and how does it help diversify the assets? 

Jason – Hello.

Why would a family office need a broker? A family office needs a broker because the broker enables the family office to access the financial markets, it offers them the ability to use us as custody, execution, settlement and clearing, and technology. When you open an Exante account you have the ability to trade 50 markets, 8 asset classes, and nearly 400,000 securities. All of this on one platform, on the web, on a desktop, or a mobile app. We are giving you access and execution on a direct market access system all the way into the exchanges, all the counterparties that we offer. But not only that, it allows you to have custody of the assets, safe custodian keeping with us. We use a large number of counterparties, banks, liquidity providers, exchanges that give us access to these markets and we are giving you the benefit of that. Also, in regard to diversification, diversification of assets, the diversity that we offer is quite incredible and unlike anything else. It ranges from cash equities, IPOs, ETFs, all on a global basis, fixed income, corporate, monies, again, all on a global basis. It gives you the ability to try global FX, and all global FX markets, emerging markets as well. Access to methods, access to funds, futures, and options. All on one platform, multicurrency, and cross-margined. And that’s important, we give you cross-margining, this reduces your exposure and your capital risk, and the amount of money that you have to put in because we are crossing your asset classes giving you the best possible rates. 

Host – Jason, why would a family office need a brokerage and how does it help diversify the assets?

Jason – The large majority of our clients are family offices and high-net-worths. They come to us because they don’t want to go to the banks, because the banks don’t look after them, they charge them a lot of money and the customer service that they receive, in their opinion, is not good. One more thing that Exante offers you is your own personal account manager and in this instance that would be me. I have 20 years of experience in the financial market, I will always look after you and your customers, and I’m available 24/7 by phone or email. 

Host – Jason, what products does your company have especially for family offices and high-net-worth individuals? 

Jason – The products that we offer for family offices and high-net-worths are varied. For a high-net-worth, for example, it would be a platform that allows you to trade the financial markets, like I mentioned earlier, that would be 8 asset classes, 50 markets, and 400,000 securities, all on one platform. All of your money is safe and secure in the banks that we use, only regulated entities all packed with custodians in large global banks. From a family office perspective, we also offer a platform. There’s slightly different aspects to the platform, for example, it has basket trade, a multi-asset tracker, which would enable you as a family office to go and select on behalf of your clients the sub-accounts and you can then go and buy, for example, 10 accounts, Microsoft, you can buy on a NIB basis, on a performance basis, on a position basis, on a manual basis. So, just to retrain, the high-net-worths and family offices have the ability to trade online, directly to the market through web, browser, or mobile app, 50 markets, 8 asset classes, and 400,000 securities all protected, all in a regulated environment, and we have over 40 counterparties that support us.

Host – Jason, could you tell us why a brokerage is safer than a bank? 

Jason – I have worked with brokerage houses and banks over a 20-year period. The only institution that unfortunately ever went bankrupt was a bank that I worked for. Why do I believe that a brokerage is safer than a bank? Brokerage houses don’t take risks, they don’t have risks from their partnership, we don’t take positions, we don’t take loans, we don’t do anything like a bank that can jeopardize our structure, our safety in the market, because we don’t take positions, we can’t be exposed to market risks, we are multi regulated, we are multi protected, and unlike a bank, when you trade and use a bank you are only using their services, we have dispersed that risk across a multitude of counterparties, exchanges, banks that we use, up to 48 actually. So, the chance of anything going wrong is reduced dramatically because of that situation. That’s why I think a brokerage house, especially Exante, is safer than using a bank. 

Host – Today, we are also speaking with Fernando, who runs a family office called Investment Product that provides unique services. Please, Fernando, tell us a little bit about your gold investment options. 

Fernando – Hello, everyone, I’m very happy to be here to explain the opportunities of gold and silver, precious metals, actually. First, let me tell you, right now I’m here in Panama Vaults which is one of the best vaults in Panama where you can put your gold completely secure. Let me quickly show you the options, for example, in gold, we have the 1-kilo bar, which is actually much heavier than you can see, it’s heavy, but it’s very nice, refined gold. Then, you have the same in silver, which is bigger and thicker, but it’s also very nice. We have this smaller 100-gram gold, also refined, this comes from one of the most important private mints in the US. We are legal distributors of this gold. They call this ‘little chocolate’, actually, if you go to Switzerland, at the airport you can buy the chocolate boxes like this exactly. But this is not chocolate. 

You also have a kilo in this style, which is more squared-shaped, and you can see there’s always a number in there and also the design here. All these are security marks, like a gold bar, so this is very difficult, almost impossible, to replicate. And the number is unique. Then, you have this monster, this is almost 3.2 kilos of silver, very thick, very big, very heavy. The same thing. So, you can see the beautiful design of the lion. Anyway, these are different options, you have the 10 grams, a smaller option, you can see the code bar and certification for the Scottsdale mint 10-gram gold. This is a variety of options that you have when you buy silver or gold. It’s really magnetic, it’s unbelievable, but gold and silver are extremely interesting to have in the days we are living today. 

Host – Very interesting. Please tell us why gold and precious metals in general are considered the best hedge ever. 

Fernando – Ok, in the times we live in, with the famous QE (quantitative easing) happening in most central banks in the world, where they don’t stop printing paper money. What they are doing is basically reducing the value of paper money, although we feel it, it’s there, because at the end of the day, up to 1971-2, money used to be backed by gold, but in 1972 that stopped and it allowed the banks to print without the backing of gold which made it much easier to battle inflation for example but you create stagnation and hyperinflation at the end of the day. The best way to be safe is to have precious metals, particularly gold and silver. These have been growing steadily since 1980 at an average of 6.5% per year and gold is definitely the most secure asset that you can have for the last 2,000 years. If you look at all the different empires and ages always gold was there. Gold and land, most have been delivered because of gold and land. The opportunity you have today to have certified gold, not raw gold, but certified, legal, it’s extremely important. You can go to Africa in the worst of times and gold will save your life. I’m not so sure about paper money. Also, gold has always been an extremely wanted asset, it’s extremely liquid, anyone will buy it from you, and also very important, Basel III, the bank agreements of Basel III are telling that in order to have paper gold, which is one of the things we are going to approach also, is that you have to have 80% of that paper, ETFs, for instance, gold ETFs, the 80% has to be really backed by gold. So, the banks are going crazy right now because they have to sell those ETFs immediately or they have to get them back by gold, which means they have to have a major expenditure of money, which is extremely complicated. Banks are trying to adapt to that, which means that gold will go up dramatically. 

Host – If we compare physical gold, why is it preferable to paper gold? 

Fernando – Precisely for that, first of all, physical gold is real, paper gold is not necessarily that real, because the backing of that paper may not be exactly the gold that you are selling. It’s like, when you put your money in a bank, for example, would you open a deposit at the bank, the bank will use that money to offer credit to somebody else and your money is basically a number on a computer, so when you go to the bank to ask for your money, the bank responds because there is a number on the computer, but there’s nothing behind. So, if the bank, for instance, breaks down, you lose your money. This is something similar, if it’s not backed by real gold 100% it means that if something goes wrong you basically lose your money. Now, if you have your physical gold in a vault it doesn’t matter, it’s your gold, you can go, get your ingot, and that’s the value.

Host – So, as far as I understand you store gold in Panama. Why Panama?

Fernando – Panama is one of the safe havens for gold in terms of tax compliance, in Panama, there’s no tax for the increase of capital. If you sell your gold and you make X amount of money there’s no taxes. That’s very important. Remember that there’s no central bank in Panama, it’s a dollarized country, so there’s no, let’s say, central bank corruption in any sense. If you go to other countries in Latin America is much more complicated. They have different currencies, and when you want to invest in different currencies (not extremely solid currencies) you have a major problem because you know when you enter but you don’t know when to exit, because of that currency. The money you make through the investment, you might lose it through the currency. So, with gold and in Panama, that doesn’t happen. You have a major currency which is the US dollar as the main currency for the country and then you have no taxes whatsoever in the transfer of gold or the profit from gold or incoming of gold. Panama is one of the main havens for this, along Singapore. 

Host – Understood, and could you also tell us about your offer of lending against gold. 

Fernando – We have 70-75% and that’s interesting because if you have that physical gold and you want to buy an apartment or property or anything, you don’t have to sell your gold. You can go to the bank, and they will give you a quite high value, 70-75% at least. You’ll have real value in terms of paper money that the bank will offer you and your gold will go from your custody to the bank’s custody, but it continues to be your gold and you are not selling it.

That can be an advantage if you want to invest in something, but you don’t want to sell the gold. 

Host – Today we have one of our partners dealing with a UK bond offer. This is a really exciting family office high-yielding bond product that you usually won’t find through other investment advisors. Tell us a little bit about your partner’s bond and its yield. 

Neil – Good morning, my name is Neil Baskerville, I am the co-founder and director of the Statutory Consultancy, and we are here today to talk about the Pardus fixed-income bond which is available on our platform and also as a direct investment. I’ve been asked today to discuss two questions; number one is how safe is Pardus, and number two, how does the bond work in relation to the investor visa for UK immigration. 

Host – So how safe is Pardus?

So, I’ve been around in the financial services market, offshore for about 30 years and every product that I’ve come across, particularly in the alternative space involves funds being sent somewhere, an accountant or a property fund or a property lawyer or an asset-backed lender. There’s always the element of risk, that where the money goes to and if it’s going to be looked after by those who are receiving it. What separates Pardus from the norm is that Pardus uses a contract arbitrage transaction where the money sits in that bank account, so, instantly, that makes it incredibly unique for a high-net-worth retail investor because the money sits in their account, and nothing leaves. What Pardus do is that they use that balance sheet to provide standby letters of credit or collateral to participate in private-placement trades. So, in short, Pardus’s become aware of an entity or a corporate that has a high-value asset but it’s very difficult to monetize or find a buyer, Pardus will put the buyer together through that large network of contacts then effectively building a margin for themselves in between the buying and the selling price. In order to get to that level, we need to put up the balance sheet to match the value of the assets. So, for example, if it was a 50-million-dollar trade of nickel wire, Pardus would need to have 50 million dollars of their account blocked in order to put the trade to settlement. The account is blocked which means Pardus can’t borrow against it and certainly not withdraw it but what it does mean is that it doesn’t leave the account. When the deal goes through, the block is released, and Pardus move one to the next trade. What makes contract arbitrage the holy grail of investing is that at no time is Pardus buying with the bond holder’s money. All they are doing is putting up a proof of funds and facilitating the real buyer’s money to the seller and the asset to the buyer. So, using the previous example, Pardus might privately feel that nickel wires are not a good investment, but it doesn’t matter because they are not buying it with your money. 

Now, to further increase the security, Pardus have brought in an FCA-regulated security trustee with signing authority on the Pardus bank account. So, if Pardus woke up one morning and decided let’s take 20 million out of the account and go buy a yacht with it, Woodside would need to sign off on that withdrawal. So, Lloyds, in this instance, the bank is not permitted to sing any withdrawals without the securities trustee’s sign-off. The whole of the bond was put together by professionals who are part of the legal counseling Legal 500, very big preeminent corporate lawyers in London, and the first company is putting a debenture and a second guarantee in the agreement as well as incorporating Woodside into the deal. Finally, if, at some point towards the end of the transaction, the buyer suddenly had cold feet for example and pulled out, all of the trading is done in what’s called non-callable terms, so that means that the seller cannot come after the provider of the proof of funds if the buyer backed out. So, the only cost to Pardus would be a few dollars in legal costs and obviously some time but other than that there is no risk to client funds. So, the simple answer to the question is the only risk to client funds with the Pardus fixed-income bond is systemic bank failure, so in other words, it would be the bank going under and taking all the deposit holders with it. 

Host – Do I understand it right that if you invest 2 million dollars in the bond it’s approved for residency by the British government as well?

Neil – Second question, one of the beauties of the Pardus bonds in terms of why it met all of these criteria for the security was that it became eligible as a UK investor visa product. So, how that works is that there’re two ways for an entity or individual and their family to move to the UK. One is the entrepreneurs visa, which is for your doctors and your dentists, and the other is the investor visa route. The investor visa route comprises three levels, a 2 million pounds entry level, 5 million pounds, and 10 million pounds. So, the 10 million pounds would mean that the investment is put into commissionable products for two years and at the end of the two years, the individual and their family, assuming that the dependents were under 18 at the time the visa was set up, would then be eligible for UK passport. 5 million pounds is three years, and 2 million pounds is five years. So, let’s take the latter opportunity in pounds, Pardus would issue the client with a five-year bond yielding 12% per annum and at the end paid quarterly so there’s 3% per quarter paid to the client and at the end of the five years they would then obviously be able to get their capital back if they wish plus obviously, they’d be eligible for a UK passport. The product was signed off by a team who are a very large QC in the UK who are engaged by the UK home office to offer various UK investment visa products. The products all have to be 100% UK, so, in the case of the Pardus bond for the Tier 1 visa, the listing was brought into London onto the Acquis exchange and the trading activity all has to be with UK entities. Otherwise, all of the criteria are met but most importantly every quarter Pardus has to provide a statement showing that the client’s principle remains 2 million pounds and above, and if it ever falls below that the client has to top it up to meet the 2 million criteria. So, there is obviously a huge significant emphasis on the principle being protected at all times. So, there are many other products available for Tier 1 visas, they all have to be active UK businesses, so it’s not possible to buy property, and obviously, anything offshore is not permissible. Up until 2018 the only permissible asset were Gilts but the government felt that they wanted this process to support active British businesses so they stopped activities to Gilts and then brought in ongoing products instead, so, for example, vessels, healthy country clubs, sports clubs, old people homes, that kind of thing where a bond has been issued on the real estate or the balance sheet of that company. Which is what happened here, most of the products are yielded between 5 and 6% a year, obviously, in the case of Pardus, it’s significantly more than that. So, it’s an enormous credibility boost to the product, it has made a lot of our clients more comfortable with the bond on the basis that, clearly there has been a great deal of force on the Pardus bond for them to sign it off as an applicable product. I hope that answers both questions, if you require anything further then please don’t hesitate to get in touch. Thank you very much. 

Host – Now, a question to Romain, how is the structure that you offer different from going to a bank or a financial advisor and why is it better?

Romain – A family office will differ from a private bank or a typical wealth manager in various key aspects. First of all, a multifamily office has aligned interests with its clients, since we charge a percentage of the assets, it is in our interest to make these assets grow. Private banks, on the other hand, make money on commissions, which reduces performance, meaning that they make money whether or not the client makes money. This is the first fundamental difference. And the second one I would say is that a family office has no product limitations. So, again, a typical wealth manager or private bank would have a limited selection of investment vehicles, that are preselected, and on which they make heavy fees, and they will forbid you to invest in any other investments. A multifamily office typically works in completely open architectures, and we have access to a broader range of investments including non-banking assets like private equity or real estate. 

Host – Now, I’d like to open a discussion with our viewers. Our experts are ready to hear your questions.

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