Why do some families feel a need to hire CPAs, bookkeepers, financial advisors, trustees, insurance advisors, and estate planning attorneys? The short answer: Such a family is undoubtedly wealthy.
A family that engages such a range of professionals probably also owns a business and constantly juggles numerous financial balls in the course of creating and preserving wealth, filing tax returns, etc. If this is you, you know the extensive time demands involved. And you understand the underlying fear of losing or running out of money. To feel and remain in control and maintain a semblance of normalcy and balance in your family life, you hire a team of professionals. Which seems like a smart move.
But there’s a problem with this scenario. All these professionals you have hired and pay a king’s ransom to: They have other clients! Sorry to say this, but to them, it’s not all about you. Most of the time, none of these professionals know or have even met each other, let alone spoken about your financial situation to one another. They all work in their own silos.
Now, if you’re fortunate, maybe you have the time to be your own quarterback and coordinate the myriad financial decisions you have to make with these professionals. But have you phoned your CPA on April 1 and gotten a return call? Has your wealth advisor ever asked your CPA for your business or personal tax return, company formation documents, or trust documents?
For a busy family of wealth, every dropped ball, every email not answered or phone call not returned costs you time. Precious time. Time that equates to lost hours with your family, opportunity cost, or simply extreme frustration.
The Family Office Alternative
What if you only had to make one call or hold one meeting with your team of professionals? What if, after the meeting or call, all your financial needs and actionable steps were implemented? And meanwhile, you’re able to spend time with your family, secure in knowing that everything was taken care of.
Is this even possible?
The ultrawealthy call this a family office. The concept of a team of professionals all working together under one roof for such a family has existed for generations.
Imagine it: You’re ultrawealthy. You give your family office CFO a call to discuss an investment idea or whether to buy or sell a property. The call concludes, and the CFO then coordinates with your in-house CPA, who then collaborates with the bookkeepers and the estate and business attorney. Presto. Idea or action implemented. All the pieces of the financial puzzle come together. An idea leads to action, which leads to reality, with one call or meeting. That’s what the ultrawealthy do.
But the kind of wealth we’re talking about here is $250 million or more in assets. We’re also talking about setting up the infrastructure, hiring and paying for your own advisory professionals, and managing this dream-team family office. Super expensive, and not easy to set up.
The Multifamily Office Alternative
Why am I even talking about this dream if only the superrich can afford to create financial nirvana?
Because there are family offices for families who are wealthy but not uber wealthy. They’re called multifamily offices. As the name implies, a multifamily office works for multiple families. It’s a diverse group of advisory professionals with deep skills and a range of specialties who provide a wide array of bespoke advice to their family clients. They’re all within the same organization, working as a team for each family client.
A multifamily office can be more economical then engaging multiple advisory professionals separately. But more importantly, since all the professionals work as “one family, one team,” a tremendous amount of time and frustration can be saved. Missed opportunities become opportunities gained.
Unfortunately, multifamily offices are rare. That’s because the services within a multifamily office are very different businesses to operate: tax, estate, investment, bookkeeping, insurance, trust services … yes, they’re all financial, but each is distinct. A firm that has aggregated these financial services under one roof and provides seamless service to a family is a family’s financial nirvana.
I should point out that not every family that engages a multifamily office engages all or even most of these services. It’s a la carte. You can utilize exactly the services you need. But rest assured: The professionals you work with will work diligently together on your behalf.
If you’re a family currently engaged with a financial planner, investment advisor, CPA, estate planning attorney, wealth manager, and insurance advisor—and are happy with your results, don’t change. You’re doing what works for you. On the other hand, if you want to gain more time and experience less frustration and fewer dropped balls … if you want to take advantage of coordinated opportunities, be able to focus on your business and spend more time with the family … I encourage you to seek out a multifamily office. It could change your life.
Jim Schlager, CFP
Jim Schlager is the founder and managing general partner of Running Point Capital Advisors, a multifamily office based in El Segundo, California. If you’re interested in exploring the advantages of a multifamily office, contact firstname.lastname@example.org; 424-502-3500.
Disclaimer: This should not be considered investment advice or an offer to sell any product. Running Point is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about Running Point, including our investment strategies, fees and objectives can be found in our ADV Part 2, which is available upon request. RP-21-35