Family Office Mindset

A very successful estate planning attorney asked me once if I meant BILL PAY when I mentioned the term FAMILY OFFICE. No, no, no. Not at all.

When I look around at what financial service institutions are doing right now, services like bill pay are being added under the umbrella of Family Office Services.

For me, a family office offering is an optimized client service delivery process and mindset, and not a laundry list of services.

Family Office Framework

In my view, a family office framework is best organized using a process where relationship managers or quarterbacks coordinate services for a small group of families.

• These quarterbacks need to have the capacity to provide services at a high level. Someone with their hair on fire running around for many dozens of different clients at the same time, trying to be a jack-of-all trades, with no ability to delegate, or be accessible or responsive is a not a suitable quarterback!
• Ideally, each family would have a professional quarterback for investment advisory services (to include insurance, private equity, traditional investments, retirement assets, financial planning, and comprehensive reporting) and a professional quarterback for tax and estate planning services (to include legal, tax, family business records, trust administration, and accounting services).
• An optional quarterback to be a lifestyle coordinator or a family business advisor are also possibilities.

No More One-Stop-Shops

Some families still want the convenience of a one-stop shop for professional services.

• The problem with a one-stop-shop is that it is not possible for the best and brightest minds to all reside in one firm.
• And, putting all your eggs in one basket means you are now stuck with whatever is in that one basket at whatever the cost, expertise, and service level that may be.

Hoarders

Professional advisors hoard work to protect client access and fees. I see this every day. Divorce lawyers doing Estate Planning. Estate planners doing Litigation. Bookkeepers doing Tax Preparation. Clients for some reason allow it perhaps to avoid hurt feelings or having to deal with finding someone else. It can be so damaging to a client’s affairs. If your advisors are trying to be a one-stop-shop, it is your family who will ultimately suffer.

Selecting a Quarterback

Instead of looking for a one-stop shop, a better practice is to identify and use independent / open source quarterbacks and let those quarterbacks coordinate products and services, giving them permission to source the best of the best from the landscape of specialists and products as needs arise.

In the investment advisory role, that means finding a firm that will bring in best-in-class third party products. In the estate planning role that means finding an attorney or CPA that can access subject matter experts for a project from any number of different firms.

• Advisors who are unwilling to let anyone else in or play nice in the sand box are not suited to be quarterbacks!
• Families unwilling to let their quarterbacks know the whole story or the full picture will not be able to benefit from having a quarterback. For example, that investment advisor quarterbacking needs to know your entire balance sheet.

Process

Some families do not know how to work with advisors. They may try to coordinate the advisors themselves creating silos. They may not properly interview or vet their advisors creating skills gaps. And, they may spend time either DIYing or neglecting stuff that requires an expert causing disasters. Embracing the process of entrusting a set of skilled quarterbacks who can take ownership of projects, coordinate specialists, and shop service and product offerings is life altering.

Family Office Mindset

Delivering services with a family office mindset means that the family is priority, quarterbacks are taking ownership of information and projects, information is organized and shared, projects are managed, communication flows, advisors are coordinated, and the staffing allows for a higher level of day-today services with more subject matter expertise.

A family office mindset ensures a family will have access to:

• A Coordinator of a Set of Services
• An Advisor Doing More for Fewer Clients
• A Professional Organizer
• Proactive Advice & Issue Spotting
• Sophisticated Planning With Subject Matter Expertise
• Professionals in Alignment With Family Goals
• Day-to-Day Assistance and Responsiveness
• A Communication Leader
• A Project Manager
• Regular Monitoring to Avoid Mistakes

Each family’s service type needs are different. Some will in fact need BILL PAY, and some will not. The service offerings are not what’s important, the process and the advisor network is.

Complexity Not Net Worth

I see so much information about who is wealthy enough to gain access to a family office platform. While some investment advisory firms are marketing a “democratized” family office platform and others have raised their minimums, I do not see net worth as the measuring stick, but complexity. If things are getting out of control and people are not communicating, it’s time to bring in those quarterbacks!

Pricing

A family office has traditionally been part of a family’s business office. So, these professionals are often paid like employees. Now investment firms, accounting firms, and law firms are getting into this arena. Fees for family office services are all over the map. Each family is different in terms of their needs. Finding that sweet spot where value is perceived for excellent products and services regardless of the pricing model is the goal!

By: Elyse W. Germack
Attorney & CPA
Tax | Estate Planning | Family Office Advisor
Law Offices of Elyse W. Germack, PLLC
Located in Birmingham, MI