Expertise for Foundations and Family Offices

Manager Analysis Services LLC (MAS), founded in 2003, provides customized services and expertise to benefit non-profits, Family Offices and Institutional Investors.

Professional governance services: MAS principals serve as Board directors for endowments, foundations, and nonprofit organizations. We serve on many boards, are experts at governance processes and fiduciary considerations, and bring the resources of our extensive network of financial industry and legal talents to the clients we serve.

Family office and trust-related services: We are experts for fiduciary matters for trusts and estates, and we serve as trustees and advisers for families. Unlike many trustees who specialize in one area such as law, investments, tax, or family experience, we have an exceptional capability to integrate all these considerations into a cohesive and comprehensive advisory approach. We can ensure that families’ investment strategies and service providers are appropriate and calibrated to the families’ needs.

Expert Portfolio Evaluations: MAS has performed 2,000+ investment manager evaluations, and each of our 3 principals has 25+ years of experience in investment management, risk, and portfolio analysis. We can assist with any client requesting help with specialized investment-related projects for any type of investment. Our credentials include JD, CFA and FRM designations.

MAS’s website has 20+ short policy papers posted on a variety of current Governance, Investment Management, Family Office, Portfolio Construction, ESG/Emerging Manager, and related topics so the reader may gain a sense of our range of expertise and focus.

Would a fresh look by expert practitioners help your Foundation or Family Office?

Please contact Chris Cutler, Tom Donahoe or Safia Mehta at 917 287 9551.

© 2020 MAS, LLC

Preventing Wire Transfer Fraud at Foundations and Family Offices

It’s a daily danger

Your email/firewalls are constantly being pinged. Although your cyber-security filter may stop 90%+ of the attempts, some still get through. Be especially alert around bank holidays. With international
clients, the attempts are especially focused when US/European/Asian holidays are not synced. The scammer wants to prevent your ability to “voice verify” the authenticity of a wire request since the requester’s office is closed due to holiday.

Check the email source thoroughly

The easiest manner for a scammer is to slightly change the email so it looks close to the authentic email source. E.g. versus the authentic If you’re in a hurry, you might miss this.

Beware new wire instructions

Scammers sometimes will spend weeks within your email system. They may learn the proper formatting that you use internally for wire requests. They may mimic personal information or style that your SVP or senior person might use. Moreover, double check the destination account numbers as well as the bank routing numbers to ensure that they are correct and consistent with what you know to be true. You may want to have a second person review wire instructions above a certain threshold as a standard control mechanism.

Use your privacy settings on social media effectively

Scammers are quite adept at integrating information from Facebook, etc. with Linked-In, with your firm’s own website and other information sources. You want to prevent scammers from building a profile that
would enable them to better impersonate you or send instructions that would contain sufficient personal information to lull the recipient into thinking that they are dealing with the “authentic” you.

Passwords need to be high quality

People often lapse into using a consistent pattern with their passwords. Using social media, scammers can learn of your connections to schools, delivery services, clubs, who often have minimal or no security. They use these insights to “hack” into your own account.

Beware any sense of urgency

The scammer is reliant on your inattention, complacency, or alternatively placing enough perceived pressure that you shortcut the controls that are in place. They may dangle the threat of material late fees or “deal/offer will be withdrawn” if the wire transfer is not completed immediately.


Currently, the only failsafe way is to pick up the phone and verbally confirm details with the authorizing person, ideally you call a published company phone and not a Cell Phone. This only works if you know the person and the person’s voice. Remember that company logo’s and other official looking references and information can be lifted from Websites and placed within an email. You should be guided by what is in the “four corners” of the email but supplemental validation is critical for new wire instructions, large amounts, urgent requests, or any request that seems different.

Tom Donahoe has served as a Foundation CEO and on 6 Boards. He can be reached at 973 452 3992. This and 30+ related briefings are available at Founded in 2003, his firm
advises non-profits on governance practices, investment due diligence, outsourcing investment management, and crisis management.

Article published in Exponent Philanthropy, MAY 2020

Services for High Net Worth Investors and Family Offices

Case Study B Longstanding Brokerage Links


  • A family office came to Manager Analysis via a referral from a Family Office that we assist. The family leader had managed wealth carefully, and he benefited from the stock market’s long-term performance. However, because he had kept portfolio management considerations away from his children, and because the entire family wanted to plan for an orderly transition of responsibilities, the family asked Manager Analysis to review the family’s portfolios and identify any material threats to the assets.
  • The next generation was generally pleased with their current holdings, comprised primarily of liquid, larger cap equities, and muni bonds, and they did not want to alter the strategy. They also valued their operationally conservative profile and comparably simple legal structures. Virtually all of the assets were held directly and so the family was in a good position to control the timing of transactions to avoid unnecessary capital gains taxes.


  • The broker was attempting to gain discretionary control of the family’s portfolio through sleight of hand.
  • Buried within a simple “principal transactions agreement” was a commitment for the family to a second agreement, granting the broker full discretion. The family did not to sign the form because of our strongly delivered advice.
  • While portfolio turnover was low, the broker was charging commissions of 1% to 2% on large stock trades. He was seeking the opportunity to liquidate the entire estate’s liquid holdings to receive a $1 million commission. Comparable commissions would be about $125,000.
  • We also conducted reputational reference checks on the broker and found that he had been placing clients into the highest commission investment products permitted by his brokerage firm.


  • We assisted the family in establishing accounts at other brokerage firms, who charge zero or near-zero commissions on equity trades, and we are currently in the process of moving their holdings.

Want to learn more? Please contact Chris Cutler, Tom Donahoe or Safia Mehta at 917 287 9551.

© 2019 MAS, LLC

Broad Study of Endowment Returns -NYU/GU – A Reasoned Response

WSJ: “Why Charities Have Been Such Bad Investors” – A Reasoned Response

An important new study of Endowment Investment Performance was released in Nov. 2018. Its two immediate lessons are: Don’t believe what you read about the “success” of large endowments’ strategies, and don’t trust self-reported performance numbers!

The authors found four key conclusions:

  1. Smaller endowments convincingly outperformed larger endowments in 2009-2016–This observation runs counter to the widely-held belief that sophisticated private strategies of larger endowments create an insurmountable advantage over smaller endowments.
  2. Actual IRS reported numbers fall well short of self-reported numbers in industry surveys–this observation creates broad questions about the integrity of data that is self-reported in compiling the NACUBO return benchmarks.
  3. “Investment wisdom of top universities is largely a myth” 2
  4. Higher fee investments have resulted in higher fees paid.

Smaller endowments have shown that with focus, proper dedication of internal resources, and intelligent outside advisory assistance, they can retain control over their endowments and get to a better investment destination.

When you get past the WSJ’s hyperbolic [click-bait] title, you’ll find a quite thoughtful study was performed on Endowment investment returns. The study finds “non-profits returned an average of 6.65% annually, even below [long -term] Treasuries” for the period 2009-16.

The study (first release) was created by two professors, one from Georgetown and the other from NYU. 3 The survey is important because of its large scale, 28,000 institutions. It’s based on actual IRS filings from 2009-16. Using submitted tax filings reveals dramatically less flattering results as compared to the self-reported returns of Endowments that form the basis of innumerable past industry surveys.

This response will provide you with the following:

a) A summary of the key conclusions of the professors’ work
b) Recommendations as to how the professors can strengthen/qualify their arguments.
c) Recommendations of additional cohorts and displays that will provide clarity for readers

While we feel that the professors arrived at quite logical conclusions, some of these are somewhat overstated. This weakens the persuasiveness and distracts from the overall usefulness of their study. While we are comfortable with the direction of the study’s findings, the methodology should be changed to better conform to actual investment industry practice. It remains an important study but is hampered, in its current version, by material over simplifications.

a) The study’s key conclusions (as quoted in the paper’s Abstract) are as follows:

  • “Endowments badly underperform market benchmarks”
  • “Smaller endowments perform better than larger ones”
  • “Higher education endowments, the majority of the $700 Bn asset class, do significantly worse than funds in other sectors”
  • The study finds mean returns of 6.65%, Long Term Treasuries 7.96% and US Equity 13.7% 4

We believe that these specific points are somewhat overstated. By revising some of the methodological approaches, the arguments can be made more compelling. By better reflecting actual market practices, the endowments’ underperformance will remain material but not as dramatic as the WSJ headlines would imply.

b) Recommendations to strengthen or qualify the study’s methods and conclusions:

  1. 2009-2016 return period covers only a rising market cycle not a complete cycle -comments Model portfolio composition should use the global equity ACWI and NOT the US S&P500.
  2. Observations on calculating approximate returns from the 990 tax filings.
  3. Present additional return tables that focus on the returns of Yale and other “Ivies”
  4. Competency of Investment Committees requires additional background and context
  5. High fees paid versus returns achieved should trigger review of structural governance conflicts


The time period was determined by the electronic data that the IRS released by court order. 5 It happens to cover the years of 2009-2016, which you, gentle reader, know coincided with a sustained bull market in US equity markets.

We must accept the time period selected. Going back further in history likely would mean that the IRS data would be both less accessible and less reliable. Moreover, only with the GFC (’07-’09) did many auditors prioritize testing of valuations of illiquid/structured investments. (Older data is more tenuous.) When we layer in a static asset allocation, as did the authors, we are dealing more in the academic world as opposed to a diversified portfolio that gets rebalanced over time. (see comments below.)


The study used a model portfolio with the S&P500 Index as the exclusive equity index. This favors large cap and tech names, so growth and momentum strategies are rewarded. It also evidences a “home country” bias (USA) although more than 2/3 rd’s of world equity market values are outside the USA.

Moreover, endowment portfolios are built for perpetuity. So, a material percentage of the typical portfolio provides diversification and performance when equity markets are not performing as well. Finally, it is a static allocation that ignores diversification goals and simply cannot directly measure portfolio re-balancing effects.

The 60% S&P/40% Bond mix performed well. In fact, the Fed kept rates low (artificially) and engaged in quantitative easing. This also helped reduced volatility to quite low levels. In early 2019, we are only now observing more realistic levels of implied volatility in the markets. So, 2009-16 was a unique time.

To improve the analysis, we would recommend that reference index be recalculated using the MSCI ACWI in order to eliminate the home country bias as well as to better reflect a common benchmark used by Endowments. Certainly, since we do not have access to reliable, detailed asset allocation information (nothing GIPS compliant here but demonstrably more reliable than self-reported returns in industry surveys), so there are real data limits to the IRS numbers. Moreover, Fiscal year-end positions (on Form 990) could vary materially from those held intra-year.


The reality is that the 990 does not provide return numbers directly. Even if they did, one would have to determine whether it was a rigorous calculation. E.g. similar to a GIPS compliant standard. Given those impediments, the indirect calculations laid out in the paper make sense, given the limited information available. We have reviewed the methodology with auditors who specialize in the E and F space and they agree that calculating returns as outlined in the professors’ paper is a sound and highly defensible approach.


For additional granularity, we recommend the authors add the following two tables to buttress their

  • YALE by itself
  • CHORT of all 8 Ivies Schools (and perhaps also just the 7 Ivies alone?)The existing cohort of top 20 (or so) Endowments while helpful, as presented, is subject to change given its link to US News rankings. Moreover, there is a dramatic difference in endowment size between number 20 ranked and the top 4 or 5 of the US News cohort.

Another benefit would be to highlight the difference between self-reported versus actual IRS 990 numbers. Finally, so much past ink has been spilled in tracking the Ivies’ performance that industry participants (as well as Boards) are very attuned to the Ivies’ performance returns and it is what the report’s audience would be quite keen to know.


Staff/OCIO/Investment Specialists/Investment Committee (or a combination) could be the parties directing the actual asset allocations within an Endowment. Typically, there is no specific required background required to be an investment committee member. (Contrast with Audit Committees where the Chair is typically a CPA holder.) Given Board term limits, the composition of the Investment Committee could have changed materially during the study period.

There has been an explosion in the outsourced investment office model. Some surveys indicate that as much as 50% of Endowments between $25 mm to $500 mm in AUM have now adopted the outsourced model for part or all their total endowment management. Indeed, the actual investment decision-making process could have changed as well.

Many colleges allow Trustees to serve 7 – 9 years, some longer. This study covers 8 years and assuming staggered terms, well over ½ of the Investment Committee members could have changed. We do concede that the role of IC Chair does tends to be a role is held for an extended number of years. The more the actual IC compositions have changed during the study, the stronger is the authors’ argument that there is a material structural governance issue amongst Endowments.


The paper’s authors point generally to high fees paid in some instances. This can occur when investments are directed specifically to high fee alternate investments. Many IC members work in the investment sector as professionals which the report points out is especially true for Endowments based close to financial centers. There is a common conceit to believe that since you do it for a living, you know better than your peers how it should be done. There are additional sources of dysfunction on IC committees (see Vanguard website for extensive research on the topic as well as recommended best practices.)

There is always the temptation to direct business to specific alternative investments or hedge funds that will provide additional fee income for those favored funds. One also has the issue of co-investments as well as excess business holdings where investments are concentrated in higher risk biotech start-ups or venture capital positions. That is beyond the scope of the authors’ paper and the writer mentions these situations simply to highlight their existence and potential impact on the returns that were observed in the study.

In summary, the study provides useful insight into a broad segment of the endowment investment market. The paper highlights some of the data deficiencies and approximations that exist given the crude structure of the IRS 990. There is less uniformity in reporting compared to other asset managers.

Given these material handicaps, the authors do succeed in shining much needed light into the vaguer corners of the endowment investment world. With the integration of the 6 recommended observations that are proposed, and the additional charts/tables as outlined, an updated version will attract more readers and advance the insights achieved by this study.

Want to learn more? Please contact Chris Cutler or Tom Donahoe.


  1. Jason Zweig. “Why Charities Have Been Such Bad Investors.” Wall Street Journal 11/27/2018.
  2. Sandeep Dahiya, David Yermack. “Investment Returns and Distribution Policies of Non-Profit Endowment Funds.”
    Report 11/27/2018. Page 18 OR
  3. Ibid.
  4. Ibid., Page 3
  5. Ibid., Page 4

File Name — C: Governance – A Study of Endowment Returns: A Reasoned Response-


MAS’s Comprehensive Process for Evaluating Emerging Managers

Manager Analysis Services’ (MAS) Emerging Manager selection process has been distilled from hundreds of searches conducted globally across asset classes and investment strategies. MAS’s EM searches have the following parameters: Manager AUM of no more than $ 2 billion at time of hire and include minority, women, veterans and disability certified managers. Our process focuses on 4 key areas of analysis:


MAS carries out a comprehensive line of inquiry which includes:

  • Background research of managers’ key personnel; both to validate their talents and to detect any warning signs from previously in their careers,
  • Analyzing a manager’s prior track record, both quantitatively and qualitatively,
  • Evaluating business risk; e.g. does the manager have a sustainable business model, what is the ownership structure of the manager and are their incentives aligned with that of the client?
  • Does the manager have appropriate talent and expertise to be successful?
  • Have there been any legal or ethical violations on part of the organization or its personnel?


MAS believes picking the right strategy is as important as picking the right manager, diligence involves:

  • Assessing which strategies are most attractive and compelling in the current macro environment and what fits well with client’s investment objectives,
  • Evaluating the manager’s execution of the investment strategy to understand if a manager’s strategy has a “material edge”,
  • Modelling a manager’s performance versus benchmarks to understand the manager’s risk profile and alpha/beta characteristics over different market cycles.


MAS prefers managers who exhibit strong portfolio construction skills with respect to risk management. Diligence focuses on:

  • Establishing risk and return expectations specific to the manager’s investment strategy and asset class,
  • Conducting stress tests, analysis of leverage, liquidity, betas, alphas, volatilities, correlations, sector and regional exposures,
  • Review of ISDA agreements, usage of any financial instruments and margin to assess counterparty risks,
  • Identifying the risks embedded in a manager’s investment process helps MAS guide clients on how best a manager fits in their portfolios.


MAS’s objective is to understand a manager’s unique business risks which include operational, financial and personnel not only at time of initial investment but on an ongoing basis. MAS reviews:

  • Arrangements with administrators, prime brokers, auditors and other service providers to help ensure that appropriate safeguards are in place,
  • Valuation policies and practices to help clients assess the quality of their portfolio’s market values,
  • Fees and any redemption terms to assess liquidity considerations/needs of clients,
  • Manager’s business, investment and operational processes on an ongoing basis to ensure any changes have not eroded a manager’s “material edge” or affected their business sustainability.

Manager diligence lies at the heart of MAS’s consulting business, and MAS’s principals have reviewed
over 2,000 managers since 2003. Our experience includes manager diligence in both traditional and
alternative asset classes. We have evaluated core and specialist managers who invest with a specific
focus on sector, industry, market cap or geographic factors. We help investors source, analyze, assess,
invest in, monitor, and terminate investments in managers.

Want to learn more? Please contact Chris Cutler, Tom Donahoe or Safia Mehta at 917 287 9551.

What Family Offices Should Never Miss!

Many Family Offices place a premium on discretion and refrain from engaging expertise that does not emanate from a “close(d) circle” of advisers. The downside to this approach is that a Family Office exposes itself to the pernicious practice of being exploited, which occurs all too frequently across the wealth management industry. Families who are most comfortable with their “close(d) circle” of advisers are often the most exposed. Few cases are as severe as the Leslie Wexner case or the myriad losses from Madoff. The most frequent cases that we encounter involve excessive fees or efforts to misdirect trust proceeds.

The parties involved with these activities may not be the usual suspects. We have seen service providers play a material role in jeopardizing families’ legacies. Some examples include:

  • Health care providers for the elderly harassing elderly family members to change their wills and trusts—we have seen losses of 25% to 90% from these misdirections.
  • Trust and estate attorneys charging fees for settling large, yet simple estates as a percentage of assets rather than using a fair hourly rate, and poorly disclosing, if at all, that practice to families when they are facing tragedy from the death of a loved one.
  • Brokers charging commissions of up to 2% on equities trades when many firms charge little or no commissions for equities trades.
  • Collaboration or collusion among law firms, brokers, and accountants to maintain high fee schedules and discredit competing service providers in the eyes of family members. Conflicts of interest may be difficult to detect but can be devastating financially to families.
  • Private bankers charging all-in fees of 3% to 5% per year, when we believe a fair fee would be in the range of 1.5% per year. Since family offices are “sophisticated investors,” they do not have many of the legal protections of a retail investor. Family offices must work harder to uncover and understand “hidden” and poorly disclosed fees, long-term lockups, and other vulnerabilities in their investing process.

It is critical that a Family Office obtain a clear understanding that their fees are reasonable and that they obtain high quality, unconflicted services. Significant conflicts of interest are often overlooked or missed, not only at brokerage firms and private banks, but also among law firms, accounting firms, brokerage firms, and private banks.

Families face this predicament since they lead busy lives and their expertise often lies in running businesses outside the realm of institutional investing. Even when a family member does understand financial markets, the breadth and depth of challenges remain substantial. Too often, navigating institutional investing strategies distills down to over-reliance on a narrow set of trusted relationships, without properly assessing the performance of legal, tax, and accounting advisers that a family may utilize.

Family Office Services Provided

Manager Analysis can help families tap into skilled expertise that could help them ensure fair treatment, enhance their service levels, and reduce fees. Given our extensive experience assessing fee levels, commitment terms, portfolio construction, and overall quality of investment managers and service providers, we can address those factors that create the greatest vulnerabilities for families, while providing timely and thoughtful counsel to your family.

Performing a comprehensive review of your portfolios typically leads to enhanced communication with all service providers, stronger levels of support, potential material changes in investment managers (as needed) and improved and timely responsiveness to portfolio changes and market conditions.

Investment Portfolio Services Offered

  • Assessment of Key Service Providers (including asset managers, private banks, custodians and
  • multifamily offices)
  • Evaluation of Fees Paid (compared to market practices and value added)
  • Portfolio Analysis (with reconciliation to your family’s investment goals)
  • Assessment of Investment Strategies
  • Operational Due Diligence
  • Reviews of Partnership Agreements
  • Assessment of Investment Managers

Portfolio Management Services

  • Analysis of All Investments
  • Portfolio Construction Review
  • Manager Selection and Monitoring
  • Complex Real Estate Strategy Analysis
  • Risk Management
  • Liquidity Planning
  • Tax Analysis for Portfolio Holdings

Integration Services

  • Trust/Estate Documents Review
  • Disinterested Trustee Services
  • Financial Education of Family Members
  • Financial Planning and Budgeting
  • Expense Management
  • Contract Review
  • Staff Review and Career Development
  • Service Provider Coordination: Audit/Administration/Tax/Investments

Want to learn more? Please contact Chris Cutler, Tom Donahoe or Safia Mehta at 917 287 9551.
© 2019 MAS, LLC