Since 1906, the year the Dow Jones first topped 100 and The Commerce Trust Company opened for business, five generations of high-net-worth families have turned to Commerce to help them achieve their financial goals and protect their legacy. Commerce Trust president and CEO Ray Stranghoener says the company is well-prepared to handle the complex challenges of wealth management. “We really do have a broad range of services, which we divide into four categories: private banking services, investment management, trust services, and what we call financial advisory service (FAS), which would include financial planning for retirement, tax advice and estate planning.” There are different levels of complexity, he adds, depending on the customer. “We cover the full spectrum, from new investors who are just beginning to accumulate some investable assets, to people with several million dollars seeking advice.”
A significant focus for the company has been the development of the Commerce Family Office, a specialized division of The Commerce Trust Company. “We’ve been developing the family office practice for the last six or seven years,” Stranghoener says. “It’s been one of the big drivers of our growth as a trust company. Our team works closely with families— sometimes intergenerational—to ensure that their key objectives are being met.” Recognizing the need to manage the rapid growth of the Family Office, Commerce hired David Krauss in December to manage it as a separate line of business.
Krauss, managing director of the Family Office and senior VP of The Commerce Trust Company, has been working with high-net-worth families for more than 25 years. “I’ve helped them deal with a broad array of issues, challenges and opportunities. It begins with examining their long-term goals as a family. Normally their wish is to ensure that the family’s legacy is preserved and nurtured over the course of time. The challenge is that while we are trying to make sure that a family’s legacy is preserved, we also need to be respectful of the various branches of the family who also have unique and individual circumstances that need to be acknowledged and cared for.”
Describing what Commerce calls the ‘pillars’ of the Family Office, Krauss lists four important areas of service: family wealth stewardship, family CFO services, risk management and investment management. “Through risk management and investment consulting, we can help families manage their wealth and plan for tax and other legal issues that could interfere with their long-term objectives.”
Family wealth management often includes a closely held business with its own particular considerations. “A number of the families we work with will have one or more family businesses,” Krauss explains. “They may still be operating, or they may have sold the business and now they are managing investments. We can help them with management and ownership succession, perhaps planning for a future sale or how to prepare the next generation to take over.” Conflicts may arise, however, if the next generation is either not prepared or perhaps not interested in assuming the role, he adds.
While Stranghoener describes The Commerce Trust Company as a ‘one-stop shop’ for trust services, he says families often bring their own trusted advisors to the wealth management process. “It may be an attorney or a CPA they’ve worked with for a long time, and we’re very collaborative. We work as part of a team with family members, any key advisors and all the resources at Commerce.” Krauss affirms the team approach. “The concept of a family office extends far beyond just helping folks watch their finances,” he says. “It’s very enriching work because at the end of the day you discover that you can indeed provide a long-term benefit to the family and enhance its legacy into the future.”