BUSINESS INSIGHTS | SUMMER 2010 EFFECT

A Personal Approach to Managing Your Family Office

by Merv Kiryluik

For many people, especially as they reach retirement age, managing the details of life can be tedious and even overwhelming. Things get put off or slip through the cracks. For instance, an older doctor client, who had been widowed, let all of his personal matters fall to the wayside. Unclaimed checks, stock certificates, bills, and more stacked up throughout his house. For him, it was too much to handle, so he simply didn’t. After sorting through the finances and organizing his home office, we ended up finding more than $1 million of liquid securities he didn’t even know he owned—they were purchased by his long-deceased wife.

People want or need things done but simply don’t have time to do them, or they would rather spend their time with family, doing hobbies, or traveling. This seems especially true for the aging Baby Boomers. Time is precious, and there doesn’t seem to be relief on the horizon for our jam-packed schedules and growing to-do lists. In response to today’s lifestyle, concierge services have become increasingly popular in a number of areas. Today, you can choose to let go of control for a little bit of extra personal time by hiring someone to make your travel arrangements, deliver your groceries, do your income taxes, renew your subscriptions, review your credit card bills, or even clean your home.

An offshoot of this concierge trend is family office services, which evolved in response to the growing demand for assistance with managing personal and family finances. Offered by private companies, accounting firms, and others, these organizations provide a menu of services for a wide variety of family and financial situations.

Can a family office work for me?

A traditional family office manages a family’s finances, including investments, taxes, charitable giving, trusts, and legal matters. It also can facilitate the transfer of wealth across generations. Providers offer an assortment of products and services tailored to clients’ diverse wants and needs. These generally fall under two broad categories: wealth management and administrative services.

Wealth management services are your more traditional investment services. They include estate planning, financial planning, asset growth and preservation, and managing capital assets. On the other side, administrative services help you execute your day-to-day activities. These may include bill paying, tax records accumulation, philanthropy, and property management.

Do your homework

If this type of assistance appeals to you, the next step is finding a firm with good chemistry. Look for the following:

Trust and integrity	You can’t just trust anyone to manage your personal business, finances, and investments. Look for an office with a track record of ethical behavior and reputation built on a foundation of trust and transparency. Do your due diligence. Make sure the relationship isn’t “too good to be true.” Ask around, check with the Better Business Bureau, and even Google the company to see what people are saying.
Experience	Search for an office environment that has experience with families and people who have needs similar to yours. Ask them about their clients before telling them your situation. Find out about their locations, size, assets managed, awards, and recognition. Is the business growing, even amid a recession? But remember—years in business alone does not make the experience sound.
Knowledge and expertise	Supervision of assets and associated issues calls for unique capabilities and service. Tax management is a core tenet of investment and financial strategy. A firm with professionals who have up-to-date credentials will assure you of their abilities. Look for designations like certified public accountant (CPA), chartered financial consultant (ChFC), and/or a certified financial planner (CFP). If you want to be even more particular, ask about continuing education, recently published research, or speaking engagements.
Linked network and global perspective	Your providers cannot know everything in this changing world, but having a network of specialists is key to meeting your distinctive needs. You may instinctively look for a specialist with a small-town feel, someone who knows the ins and outs of the place where you live and do business. Maybe you’ve lived and owned a business in the same town your whole life, or perhaps you need oversight over multiple properties in multiple locations, or even in multiple countries, currencies, and languages. Regardless of your situation, it’s vital to have a family office service provider with both a local network and worldwide alliances and connections.
Client focus	Look for people who take time to understand your needs and wants as opposed to doing what they think you need. They should take the time to get to know you, your lifestyle, and your values. They should listen more than they talk, offer you options more than instructions.
Personal interaction	A firm that fits your family will share an approach to matters large or small that is similar to your own. The age and net worth of families is decreasing as successful Baby Boomers are spreading their collective net worths across their families. As tax and financial advisors, we’ve built relationships with the families of our clients. For example, a client used to call me to meet for breakfast on occasion, even on weekends, to discuss all sorts of family and business matters. Now, because I know the details of their situation, his son does the same thing. That level of trust makes my work that much more satisfying and personal.