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News: New Standards prove popular with families

A majority of families agree with a set of Standards, launched in September, designed to promote responsible wealth management and protect private wealth holders. To date 62% of people surveyed said they agree with the proposed Standards as they are, 30% said they agree with them but would like to refine them, while 8% said they did not agree at all.

The Standards, launched by the Institute of Wealth Management Standards (IWMS) in the wake of the Madoff fraud, are currently under consultation until mid-December as the founders gauge the opinions of the ultra high net worth community.

Charles Lowenhaupt, co-architect of the Standards, said: "Worldwide people are seeing the need for principles-based standards. There is growing recognition that the problem is trust and the solution is process."

And it was the loss of trust that occurred throughout 2008 and early 2009 that prompted Lowenhaupt, along with fellow Standards creator Don Trone, to begin developing the principles on which the Standards are based.

"Part of what I saw happening in 2008 was a complete loss of trust in financial service providers," Lowenhaupt explained. "And if you don't trust financial service providers you have to micromanage them."

The Standards are based on principles that Lowenhaupt believes are essential for proper wealth management. "There are certain fundamental principles that every wealth holder should be observing. They are not aspirational, they are fundamental, such as the separation of custody and management, the diversification of managers, the need for independent accounting and a basic understanding of how compensation is designed," he explained.

From identifying the principles, Trone created a set of Standards that are intended to provide a framework for wealth holders in four key areas: governance, risk management, investment and oversight and monitoring.

The Institute for Wealth Management Standards was launched in September as an independent, non-profit organisation aimed at developing and promoting the Standards.

The first step in this process is the consultation period, in which Lowenhaupt and Trone hope family offices, trusted advisors and wealth holders will comment on the Standards.

"Once we get through the comment period the next steps will be to incorporate the comments and then immediately begin to develop the revised Standards into training and certification programmes," explained Trone.

By providing a structure by which wealth holders can more efficiently monitor their wealth and investments, Lowenhaupt and Trone hope the Standards will encourage wealth holders to keep a closer eye on their investments.

But the Standards are not all about monitoring investment strategy and introducing process, for Lowenhaupt they are also about freedom from wealth. "It's ultimately about letting the wealth holder lead their life. It's about the capacity to delegate with ascertainable measures, standards and rules," said Lowenhaupt.

The Standards have sparked much comment and debate during the consultation period so far, but overall seem to have been well received. When asked why he thought this was, Lowenhaupt said: "The Standards are a tangible, easily understandable, and user-friendly tool for process. That so many are engaged and want to play a role in building and commenting on the Standards reflects what I am seeing and hearing."

Visit to read, review and comment on the Standards.

For more articles on the Standards and interviews with Lowenhaupt and Trone click here

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