Crain Currency: Family Office Preparations and Responses

March 14, 2023

How family offices prepped and responded to the banking crisis

Running Point and its chief investment officer, Michael Ashley Schulman, CFA, were quoted by New York based Crain Currency in an article — by Steven Weiss and Marcus Baram, How family offices are responding to the SVB and Signature collapses — regarding how family offices prepped for and responded to the current banking malaise.

Remember lessons learned from experience

This current banking crisis — here and abroad: Silvergate, Silicon Valley Bank, Signature Bank, First Republic, Credit Suisse — reiterates lessons learned from the past. Where possible, you want more than one key banking relationship for yourself and your businesses so that you have multiple sources for credit and loans. For some, a savvy multifamily office or fianancial advisor can help run point on arranging credit lines, loans, swaps, and hedges.

We’ve advised our families for over a year to shift personal and business cash out of banks (with meager interest rates and $250K FDIC limits) and into T-Bills earning north of 4%. Along with the higher interest earned, T-Bills are unquestionably guaranteed by the government and income on T-bills is not subject to state income tax whereas the pittance you earn at the bank is.

Quoted article excerpt is below:

That’s a lesson that the multifamily office Running Point Capital is sharing with its clients. “You want, if possible, more than one key banking relationship so that you have more than one source for lines of credit,” said Michael Ashely Schulman, Running Point’s chief investment officer. “I don’t see this current malaise as teaching new lessons so much as it reiterates lessons learned from the past.”

Schulman also said that over the past year, he has been advising clients to move out of cash and into short-term Treasuries, with rates generating returns in excess of 4%.

Family Office Preparations and Responses
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If money doesn’t grow on trees, then why do banks have branches?

Progress is cumulative in science and engineering, but cyclical in finance.
~James Grant

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~Warren Buffett

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