Kids A Top Worry Of Rich Families, Survey Says
Today’s ultra-wealthy are predominantly self-made innovators with strong values about health, education and philanthropy, but they’re worried about whether their kids will become good stewards, according to a recent U.S. Trust survey.

More than 70% of well-to-do households with more than $10 million in assets have worked for rather than gained their fortunes from investments, said Scott A. Farber, senior vice president and wealth strategist for U.S. Trust.

The “U.S. Trust 2015 Insights on Wealth and Worth” survey found ultra-high-net-worth (UHNW) respondents are most focused on their health—63% are willing to hire a personal trainer, 56% would seek a therapist or counselor and 55% are willing to take advice from holistic or alternative providers. Nearly half are focused on sharing their wealth with the less fortunate and feel giving up some wealth is necessary for a more fulfilling life.

“The ultra-wealthy probably find it easier [to give] since they have more access to wealth,” said Miami-based Farber. “But there is desire across the net worth range. … We’re a society of givers. But not all want their name on buildings.”

The ultra-wealthy are similarly worried about the issues raised by living longer: the staggering cost of health care, outrageous college tuition and the prospect of becoming dependent on children or losing most of their wealth to long-term care. Fourteen percent said they expect to spend 26% more on health when they grow older. And 15% say there is no limit to what they would spend.

Researchers found UHNW parents reticent to discuss wealth with the heirs to their fortunes. Most respondents put the ideal age to start discussing wealth with children at 23 to 35. Some said children should be over 40.

Unlike sheltered trust fund babies of the past, many of these young inheritors are in the public spotlight, Farber noted.

“Thirty years ago you’d never have heard of Paris Hilton,” he said. “Now we hear it all. Everyone around them wants their two minutes of fame. Sometimes it’s not the kids, but friends and spouses” parents have to consider.
—Maureen Nevin Duffy

Citadel Hedge Fund Plans Stock-Picking Business
Citadel LLC, one of the world’s largest hedge funds, is planning to launch a new equities business based on the West Coast that will be run by a former top executive who is returning to the firm after a few years away, a person familiar with the plan said.

Jeff Runnfeldt is scheduled to start in July and eventually head a group of 10 trading teams based in San Francisco, said the person, who is not permitted to discuss the matter publicly because Citadel’s portfolios are private.

The move marks a big development in the life of Kenneth Griffin’s $26 billion firm as it has collected big profits from its stock picking operation and embarks on building a new stand-alone business for the first time in many years.

The Wall Street Journal first reported Citadel’s plans.

The still-unnamed group, expected to begin operations later this year, is expected to put roughly $1 billion in assets to work, making investments in health care, industrials, financials, media and telecommunications, among others.

Runnfeldt left Chicago-based Citadel in 2012, having been one of three executives running the firm’s global equities unit.

The Global Equities Fund has been one of its brightest stars recently, returning 23.4% in 2014, when hedge funds gained roughly 4% on average. Since January, it gained roughly 9%, again beating the roughly 4% gain averaged by funds.

Citadel’s strong performance was reflected in last year’s $1.3 billion payday for Griffin, who launched his trading career from his Harvard dormitory in the 1980s. Griffin beat out rivals as the industry’s best paid manager, according to Institutional Investors’ Alpha rankings.

The performance also underscores how Citadel has come roaring back after the 2008 financial crisis, when its flagship funds lost roughly 50%.
—Bloomberg News