Alumni Profile:
Kathleen Lahey '82
“In my work in the Goldman Sachs Family Office, accounting skills provide a central organizing discipline for managing the assets and the financial decisions of our clients,” observes Isenberg School accounting graduate Kathleen Lahey ’82. One of the world’s leading investment banks, Goldman Sachs also offers trading and asset management services to corporations, financial institutions, governments, and high net-worth individuals. Kathy’s Family Office clients—thirty Goldman Sachs executives and their families with assets ranging from $25 million to over $500 million—are a discriminating group. They are active and retired Goldman Sachs partners; a third serve on the firm’s management committee. “We provide financial management and planning across six disciplines: income taxes; estate taxes; life insurance; property and casualty insurance; employee benefits; and cash flow planning for retirement,” notes Lahey.
From her firm’s Manhattan office, the Isenberg School alumna manages a team of five professionals, including three attorneys. She also works with outside attorneys, public accountants, investment professionals, and insurance specialists. “I’m essentially a financial planner with a core background in accounting and taxes,” she observes. “We are, in effect, the personal CFO for each client; we pull all of those resources together to help our clients define, refine and achieve their financial goals.”
How does Lahey identify those goals and guide a client’s decisions? “It takes strong listening and presentation skills—that’s for sure. You also must understand the client’s financial picture holistically,” she emphasizes. To that end, creating client-specific financial statements—balance sheets, income statements, and cash flow statements—is indispensable. “You might ask, for example, what a client owns and what his children own outright,” she says. “Using a balance sheet, you can tease out those answers as well as financial relationships like the interaction of loans due to cross-family financial entities.”
In estate planning, CPAs have certain advantages over lawyers. “In drawing up a 20-page will, an attorney follows a very specific structure following the client’s stated preferences,” notes Lahey. “But oftentimes neither the attorney nor the client have a good idea what the numbers look like on an after-tax basis. Children may inherit very little liquid assets after estate taxes are paid combined with real estate that may be too expensive for them to maintain. You have to run the numbers to see that.”
It’s critical, Lahey continues, to understand each client’s unique preferences. “Some clients want to leave their children enough wealth to allow them to do whatever they want. Others, while securing their children’s financial future, may impose more restrictions. Some clients may seek to maximize the value of their estates, while others place greater emphasis on philanthropy. Should a client name an offspring as the manager of the family’s philanthropy fund or have it managed outside the family? Clients have different goals; different self-defined ideals. Then, markets change and life events occur such as births, deaths, divorce or marriage. Many variables create a constantly moving puzzle.”
Now in its fifth year, the Goldman Sachs Family Office enters into a growing market of financial services available to ultra high net-worth families. Although that market took off five to ten years ago, the nation’s wealthiest families, like the Rockefellers, have had their own private family offices since the 1800s, observes Lahey.
“Our Goldman Sachs Family Office was created when Goldman acquired the Ayco Company in 2003," Lahey explains. "Ayco offwers comprehensive financial planning for 12,000 executives at 375 Fortune 1000 companies. The business rationale is that if a company pays for comprehensive financial planning for its top executives, those key employees will have more time to focus on company business. Our family office combines Ayco's best practices with Goldman's The new business is still in the "beta" testing stage. Still, if we can succeed with Goldman Sachs' demanding top executives, we should be competittive anywhere."
The employee-focused goals of Lahey’s group, she continues, dovetails with Goldman-Sachs’ wider culture. “Goldman Sachs was a partnership until it went public in 1999; it remains a relatively close-knit organization that values employees as its greatest asset,” she observes. “The culture emphasizes long-term commitment and, more recently, an employee-friendly appreciation for work/life balance. The firm today encourages employees to manage their careers similar to a marathon, not a series of sprints that may lead professionals to burn out,” emphasizes Lahey, who lives in Manhattan with her husband, Gus, and their two children.
Lahey joined Goldman Sachs in 1986 as a senior tax professional in what is today its corporate tax department, where she initially prepared federal and state tax returns for the firm and for its individual partners. (Today, Goldman Sachs outsources all of its individual tax preparation work to public accounting firms.) During the next decade, Lahey assumed managerial responsibility for internal tax services, including its teams for federal partnership tax compliance, state and local tax reporting, and tax compliance for some of Goldman Sachs’ employee investment funds. During her career, Lahey enthusiastically participated in special projects. “I was lucky enough to have managers who appointed me to tackle special projects. Working on special project teams gives you exposure to employees in different departments and divisions. Special projects also allow you to be creative beyond the day-to-day routine and to understand more about the business from other people’s perspectives.” In 1994, she earned an MBA degree from Columbia University.
As an undergraduate accounting student, Lahey was smitten from day one by taxes. “I always found tax intrinsically interesting; taxes can be a large percentage of the economics that influence all sorts of other financial variables and decisions. My tax professor at UMass Amherst was Jim O'Connell; I loved his lectures and even looked forward to his exams. On campus, I also applied my accounting skills as a part-time bookkeeper for the UMass Women's Studies Program."
After graduation, Lahey—a native New Yorker who aspired to return home—faced a new challenge: "The Isenberg School had strong recruiting relationships with public accounting
firms in Boston but not in New York," she recalls. "Fortunately, my sister was seated next to someone at a dinner party who knew about an opening at a small New York public accounting firm, which I joined in October 1982 as a staff accountant.” Two years later, Lahey joined Price Waterhouse, where she worked for another two years as a senior tax consultant for some of the firm’s top corporate clients before joining her present employer.
“I come from a family of educators. My mom and both brothers were teachers,” remarks Lahey, who attended the Bronx High School of Science, where she acquired a love for mathematics. “Because teaching and education were always central in my family, I wanted to be an educator myself. Today, I consider myself to be just that—a financial educator with a remarkable group of clients. And I get to pursue that role in the company of two of my favorite loves—exceptional people and taxes.”