Many of our friends and colleagues have asked us why we launched Fi3 Family Office. The answer is simple: We want to meet the evolving needs of our clients.
Liquidity events for entrepreneurs and corporate executives are driving a renewed need for family office services. These individuals must provide for the legacy of future generations of their families, while educating their heirs to become prudent stewards. Moreover, they want high-performing teams and up-to-the-minute advice on issues that affect their portfolios and their over-arching family goals.
With the tremendous growth of the extremely wealthy, and as family finances and transactions become more complex, we believe that a family office model will be the best platform to serve our clients. Why? Because a family office is focused today on what will impact you tomorrow.
What is a Family Office?
John D. Rockefeller established the first family office in 1882 to manage his family’s wealth. Today, there are some 3,500 family offices in the U.S. providing professional and personal services to very wealthy families.
Most family offices provide wealth management services, including oversight of investments, tax planning, estate planning and philanthropic planning. A family office is essentially an organization that assumes day-to-day administration and management of a family’s affairs. This means that the family office provides more than just the standard wealth management functions and may also include:
• private equity due diligence
• private real estate due diligence
• tax compliance work
• oversight of private banking relationships
• private trustee searches
• document management and recordkeeping services
• expense management
• bill paying
• accounting support services
• family member financial education
• generational continuity
• family support services
• family governance.
In some instances, there is also an inclusion of lifestyle management, whereby the family office handles travel arrangements, household employee selection and coordination of family health and private security needs.
Who Typically Uses Family Office Services?
There are two types of family offices: single-family offices and multi-family offices. A typical single-family office has professionals (financial, legal, tax) that work for one family. In contrast, a multi-family office provides similar services, but are engaged with a number of unrelated families.
As you can imagine, the costs to have dedicated support for these services can be significant. Complexity and the amount of your wealth are the biggest drivers to both the costs and whether to build your own single-family office or engage the services of a multi-family office. There is no set rule, but most industry experts would suggest a family consider establishing their own single-family office at an asset level north of $500 million. As you might imagine, the dedicated attention and service offered within a single-family office can quickly add up to $1 million or more per year.
If your assets are between $25-250 million, consider a multi-family office. Several families sharing the costs of dedicated services can put a family office within reach. You will still have access to talent, counsel, intellectual capital and systems, but you won’t be paying for a level of service that your wealth doesn’t justify. We believe the flexibility and customization of a multi-family office is the ideal model for serving the fast-paced and evolving needs of our clients.
How Can a Family Office Help You?
1. Family Leadership Aligned with Your Values
A family office can help the next generation of leaders in your family with a financial education that aligns with your values.
At Fi3, our Family CFOs work with clients to create a family governance strategy to guide decisions. Then we lead discussions with all family members on the philanthropic, stewardship and other goals for the family. We help all family members understand the values that make the family unique.
2. Wealth Planning for a Lasting Legacy
A family office will have a comprehensive view of your family's wealth management needs and can apply this perspective to every detail. Consider including Certified Public Accountants in your family office strategy, who understand how a tax compliance solution in one area can impact wealth transfer in another. Our clients rely on our multi-disciplined team to take all aspects into consideration allowing us to navigate the best course of action.
3. Investment Consulting to Achieve Your Goals
One of the advantages of working with a family office is the ability to establish a fiduciary relationship. It is important that your advisors, particularly those managing your wealth, are established to act as your fiduciary. This means they are required by law to put your interests ahead of their interests. A fiduciary will help you preserve your wealth, as well as help you identify and evaluate opportunities across both public and private markets. At Fi3, we act as a Fiduciary by law, operating in the best interests of the family.
4. Lifestyle Management Solutions
Your family office should offer more than wealth management. A holistic approach includes oversight of your family's day-to-day and ongoing financial needs, including private banking, private trustee searches, document management and recordkeeping services, expense management, bill pay services and accounting support services.
Perhaps the family office’s greatest strength is its ability to deliver coordinated services tailored to your family’s specific needs. Contact us to learn how Fi3 Family Office can provide unique advice to empower your family. We will work with you to make the best decisions to ensure your family’s legacy for generations to come.