Communication a key to surviving tough

times and tough choices

While worries about the global economy still keep Michael Holden, chief operating officer of
GenSpring Family Offices LLC, awake at night, his clients at least get some respite thanks to the
firm's increase in client communications after the crisis.

“We have a high degree of interaction, doing quarterly webinars and updates, but we did them
more frequently in light of the market events,” he said. “There was more communication from
the firm as opposed to just ongoing dialogue on the implications of what we saw and how we
would suggest that they think about the marketplace.”

The firm has been around for 20 years and manages $11.39 billion in discretionary assets. Its
typical client is an entrepreneur or an individual who owns business operating interests and has a
net worth of $50 million or more.

Mr. Holden, whose résumé includes a stint as chief operating officer of JPMorgan Chase & Co.'s
private-banking unit, said the depth and extent of last year's dislocation was unanticipated by
many as were the federal government's actions. But what really caught the firm's attention was
the market havoc and what it meant for equity market valuations.

Michael Holden: GenSpring reassessed client portfolios to ensure they could meet
commitments.Michael Falco

“Early last year, we had the lowest net long equity exposure ever in 20 years, but it wasn't that
we weren't in the markets,” he said. The firm raised exposure in commodities and — for some
clients — sought managers who used non-directional strategies that were both long and short on
the market.
The firm also went back to reassess the cash flow and planning behind each portfolio. “There
were situations where clients underestimated or overestimated their need for income; others had
commitments to lifestyle choices,” Mr. Holden noted.

When times were rough, clients began to see how difficult it was to have certain commitments,
such as using a portfolio as collateral to back up a loan and then having the value and liquidity of
that portfolio dry up, he added.

Nevertheless, investment opportunities have come up in the form of quality debt that's available
at a deep discount and, in some situations, distressed real estate, Mr. Holden said.

“If they have the long-term nature of those types of investments and the type of capital to put up
against them, can they deal with the illiquidity and the longer time horizon?” he asked.