Family offices are teams of professionals, including tax specialists, administrative staff and lawyers, who service the wealth management and lifestyle needs of a specific wealthy family. The typical wealth requirement to launch one is $100 million and up.
For that reasons, Multi-Family offices were created to service the needs of several affluent individuals under the same roof. At that level, the minimum requirement stands at $20 million and up, per family.
Just recently, yet another model was developed. They are structured as Financial Intermediary Offices (FIOs) providing similar services to Affluent family below the $20 million range, and starting as low as $2 to $3million in assets. They coordinate everything from estate planning to helping transport yachts and horses around the country. Typical services consist in having someone acting as a trusted adviser that pays bills, hires domestic help, works on pre-nuptials or divorces, manages assets, moves assets, works out mortgages, shops for insurance to make sure you're getting the best deal. They operate using an open-architecture model, allowing them to work with your existing advisers or to readily refer professionals from their network. These Intermediary Offices have managed to provide High Net-Worth families with comprehensive financial management and lifestyle services while offering the confidentiality available from larger multi-family offices. While all the benefits of FIOs are not yet evident, families who participate find they have most of the advantages of dedicated offices.
These FIOs are using partnerships with concierge services companies and the use of technology to streamline operations and thus offer competitive pricing without sacrificing quality. For example, our firm here in Atlanta uses a technology platform with a dedicated client page where their financial information is updated overnight, and featuring an online safety vault (i.e. an online safe-deposit box), as well as various add-ons such as calendar alerts for important meetings, up-to-date net-worth statements, and collaborative tools allowing other accountants, attorneys and investment advisors to upload relevant information available to the clients. The page is also conveniently PDA accessible from Palm, Blackberrys and the likes, keeping the information at the clients’ fingertips wherever they may be.
So far, here is what we have observed:
· Participating families have access to a wide network of professionals under the coordination of a centralized intermediary.
· They benefit from a menu of services that are not collectively offered anywhere else.
· Families participate in the cost savings and the benefits of group purchasing power.
· These families find they maintain more direct family control over financial matters thanks to the overall centralization.
· They have the assurance of confidentiality in the management of financial and personal affairs.
· They have the satisfaction of affiliating with an organization whose size is better aligned with the attention required by their family.
Value Added by Financial Intermediary Office Concept
· Financial quarterback supported by specialists in each field
· Teams of qualified professionals who can collaborate
· Continuity of service if quarterback leaves
· Elimination of the need for a personal assistant in certain cases
· Better risk management policies and procedures
· More comprehensive information systems
· Relationship pricing for inter-disciplinary services
· Reduction of overlaps and redundancy in advisory practices
FIOs are mostly fee-based in order to maintain their impartiality and refrain from selling you products. The reality is that a person with $5 million in assets may very well have a busier lifestyle than one with $20 million. FIOs thus operate with client activity volume in mind, which is ultimately a fairer assessment. Under a percentage model, the $20 million client is charged a higher fee just for being wealthier. I strongly encourage you to take a look at this model, especially in an era where the Bernie Maddoffs of the world abound. Having an added layer of oversight will definitely help you sleep better at night.
For that reasons, Multi-Family offices were created to service the needs of several affluent individuals under the same roof. At that level, the minimum requirement stands at $20 million and up, per family.
Just recently, yet another model was developed. They are structured as Financial Intermediary Offices (FIOs) providing similar services to Affluent family below the $20 million range, and starting as low as $2 to $3million in assets. They coordinate everything from estate planning to helping transport yachts and horses around the country. Typical services consist in having someone acting as a trusted adviser that pays bills, hires domestic help, works on pre-nuptials or divorces, manages assets, moves assets, works out mortgages, shops for insurance to make sure you're getting the best deal. They operate using an open-architecture model, allowing them to work with your existing advisers or to readily refer professionals from their network. These Intermediary Offices have managed to provide High Net-Worth families with comprehensive financial management and lifestyle services while offering the confidentiality available from larger multi-family offices. While all the benefits of FIOs are not yet evident, families who participate find they have most of the advantages of dedicated offices.
These FIOs are using partnerships with concierge services companies and the use of technology to streamline operations and thus offer competitive pricing without sacrificing quality. For example, our firm here in Atlanta uses a technology platform with a dedicated client page where their financial information is updated overnight, and featuring an online safety vault (i.e. an online safe-deposit box), as well as various add-ons such as calendar alerts for important meetings, up-to-date net-worth statements, and collaborative tools allowing other accountants, attorneys and investment advisors to upload relevant information available to the clients. The page is also conveniently PDA accessible from Palm, Blackberrys and the likes, keeping the information at the clients’ fingertips wherever they may be.
So far, here is what we have observed:
· Participating families have access to a wide network of professionals under the coordination of a centralized intermediary.
· They benefit from a menu of services that are not collectively offered anywhere else.
· Families participate in the cost savings and the benefits of group purchasing power.
· These families find they maintain more direct family control over financial matters thanks to the overall centralization.
· They have the assurance of confidentiality in the management of financial and personal affairs.
· They have the satisfaction of affiliating with an organization whose size is better aligned with the attention required by their family.
Value Added by Financial Intermediary Office Concept
· Financial quarterback supported by specialists in each field
· Teams of qualified professionals who can collaborate
· Continuity of service if quarterback leaves
· Elimination of the need for a personal assistant in certain cases
· Better risk management policies and procedures
· More comprehensive information systems
· Relationship pricing for inter-disciplinary services
· Reduction of overlaps and redundancy in advisory practices
FIOs are mostly fee-based in order to maintain their impartiality and refrain from selling you products. The reality is that a person with $5 million in assets may very well have a busier lifestyle than one with $20 million. FIOs thus operate with client activity volume in mind, which is ultimately a fairer assessment. Under a percentage model, the $20 million client is charged a higher fee just for being wealthier. I strongly encourage you to take a look at this model, especially in an era where the Bernie Maddoffs of the world abound. Having an added layer of oversight will definitely help you sleep better at night.
1 comment:
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