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%.
If money doesn’t grow on trees, then why do banks have branches?
~Anonymous
Progress is cumulative in science and engineering, but cyclical in finance.
~James Grant
Banking is very good business if you don’t do anything dumb.
~Warren Buffett
Disclosure: The opinions expressed are those of Running Point Capital Advisors, LLC (Running Point) and are subject to change without notice. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Past performance is not indicative of future results. Forward-looking statements cannot be guaranteed. Running Point is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Running Point’s investment advisory services and fees can be found in its Form ADV Part 2, which is available upon request. RP-23-25
