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LARRY McGINITY Art as a Derivative V – Single Family Office
I’ve been working on this series over the last two years. In the process, I’ve discovered some really revealing studies about family business wealth. The series fuses topical tips on how to run your SFO effectively, as well as academic discourse on family conflict resolution and contested inheritance. It’s the interplay between these dynamics that I find fascinating. As with my previous AAAD series, I research and gather numerous references to my subject from experts and commentators across the globe. I then assemble the most varied and telling verbatim texts to narrate the story in bright, colourful, themed paintings. "This relatively unknown form of organization – the "family office" – may prove to be one of the more important means available to wealthy families for maintaining their social and economic position in society.”
The series provides a platform for analysing the nature of family business structures and good governance within the family office. It also explores notions of legacy and personal fulfilment in the context of extreme affluence. "Wherever there are families of significant wealth – and we all define it differently – there are attractions to creating a single family office: it gives you control, privacy and customization.” This project has required analysis of opinion across a wide array of specialties: taxation planning, behavioural economics, the sociology of family structures, conflict theory and psychotherapy. "The number one reason for any breakdown of family business – and why only 15 percent survive – is internal conflict.” Each themed painting addresses a different aspect of the Single Family Office jigsaw and brings to light much that, up until now, has been either overlooked or left hidden. Bringing together rarely cited sources from multiple spheres of research, Art as a Derivative V – Single Family Office provides a comprehensive analysis of this critical aspect of finance. "The rise of elite dynasties, economic inequality, and the vast concentrations of global wealth in recent times, means that the role of the 'family office' in our society demands scrutiny.”
Single Family Offices are complex. In fact, each office has its own polity and agenda, but there are structural commonalities. The question of whether to outsource certain functions, due to cost factors or the need for certain expertise, should be viewed and reviewed in relation to the changing fortunes and circumstances of the family. People, both in finance and in art, have often asked me how the pieces are made. So, here is a little technical information about the process I adopt for my AAAD paintings… Each painting is on a gesso-primed board measuring 105cm x 105cm. For this new series, all the paintings have a background design that suggests an architectural drawing of an office, over which the text is laid. “I am often struck by how overwhelmed families are by the complexity and sense of burden that comes with managing wealth across generations.” These texts, their typefaces and layouts are designed on a computer in my studio, and then taken to a specialist stencil-maker. When the stencil is placed on the prepared board, the letters are exposed for the text to be spray-painted, all the other parts being masked off. In this way, I progress down the board, selecting and blending the colours for the texts according to the content of the wording, the underlying background and overall aesthetic I am looking for. Each individual quotation has its own typeface and colour. To borrow a term from finance, every word is positioned, coloured and shaped so as to gain maximum leverage for my chosen subject. “The judiciary in the low-tax jurisdictions that one typically works in are, generally speaking, very alive to the need to make these structures work, so there are considerable opportunities there.” During the research phase of Single Family Office, I contacted a number of specialists in behavioural economics and taxation planning, and psychotherapists who work with the ultra-wealthy. I am grateful to a number of them for bringing certain published, as well as their own about-to-be-published, articles to my attention. “Large single family offices with liquid assets may wish to appoint different investment managers to manage each pool of assets and to segregate them from one another in a structure which they control.” “Lenders are exploring the possibility of securitizing art loans as a way to lower the financial risk of carrying art on their balance sheet. Securitization could take the form of Art Collateralized Debt Obligations (ACDO) or an Art Credit-Default-Swap (ACDS)...” Art as a Derivative V – Single Family Office will be a comprehensive analysis of this worldwide and rapidly expanding aspect of private wealth management: a unique study, with a unique place in the contemporary art landscape.
“The act of passing on high value works of art is about much more than wealth preservation, it's about creating a meaningful legacy that reflects the family's values.” “When it comes to communication between family members, nothing in wealth management is more critical – or complicated – than family governance.” I value all my sources whatever opinion they express – and, to cite the 17th century French essayist Michel de Montaigne, “I quote others only in order the better to express myself.”
The titles of the twelve paintings are: As with all Art as a Derivative series, a comprehensive list of acknowledgements will accompany exhibition of the artworks. Larry McGinity, 2020 |
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