What is a family office?

The most famous family office, and the first to be formed, was opened by the Rockefeller family. Traditionally, a family office was formed by an affluent family to manage all their financial requirements and other personal needs. The family office would hire professionals to take care of their accounting, investment management, and bill-payments. They would also book appointments, hire care providers and coordinate all other arrangements needed by family members.

Today, the term “family office” has evolved. The multi-family offices has become popular as an alternative for families who would benefit greatly from the services offered in a family office but are not yet “Rockefellers”. A multi-family office makes available to clients a full-range of services including all those listed above at a more affordable price. The simple reason for this is the multi-family office services many families, as opposed to just one.

How is a family office structured?

There is no such thing as one size fits all when it comes to a family office. It is important to find a family office that understands that clients have different backgrounds and each family has their own unique goals and interests. Some families have common investment and philanthropic goals, while others have members with distinctive and sometimes contradicting investment approaches and interests.

For this reason, each client’s needs are completely unique when it comes to tax accounting, wealth planning and financial management. For one client, they may need simple bookkeeping and reporting, while another client may require many more services such as investment management, bill-pay, accounting, tax planning, and succession and estate planning.

Choosing a family office formed within an existing financial services firm can grant the greatest benefits of all. Your tax accountant works directly with your family office professional to simplify the tax return preparation process. With all your financial information in one place, your accountants have an in-depth knowledge of your finances, enabling them to create a personalized tax strategy that provides maximum value. Your wealth advisors are in constant contact with the family office to ensure all your investment goals are being met.

What services are offered?

The basic services offered by a multi-family office are personal accounting services and bill-pay. Personal accounting refers to creating personal financial statements to record all your monthly bank, credit card and investment activity. A balance sheet, profit and loss statement and statement of cash flows are created and updated regularly. This gives a clear view of investment performance, tracks income and expenses and categorizes everything so that you can truly understand your finances.

Bill-pay service takes the time-consuming, administrative task of receiving and paying bills each month off your hands. An approval process is in place to ensure clients can monitor all the payments and no payment is made without proper approval. This is an invaluable service which frees up your time and provides peace of mind.

Another service offered by multi-family offices is management of privately-owned businesses of high-net worth families. Families that own and operate companies may prefer to have their family office oversee the accounting to ensure processes are streamlined and everything is up-to-date.

Who would benefit from a family office?

It’s not always a dollar amount that determines whether a wealthy family will benefit from using a family office. Each family needs to analyze the complexity of their financial needs and goals, as well as the amount of time involved in the current system. An individual with investments in numerous accounts and entities, multiple residences, a trust, and charitable commitments, may benefit from outsourcing. For such an individual, it is important to find a place that offers family office services in addition to tax, accounting and wealth management services.

Children caring for aging parents may also look to a family office to handle the bill-payments and accounts of their parents. Parents who oppose having their children take over their financial management may be less resistant to using a third-party professional.

Affluent families may need help with estate planning, wealth transfer policies and succession planning. A family office can work with your wealth advisors to develop and coordinate distribution schedules to heirs and annual gifting. The next generations can benefit, as well, with the help offered by a family office to manage and maintain the wealth they have inherited.

Choosing a family office

When choosing a family office, it is important to seek a firm that employs tax, accounting and wealth management professionals. These departments can work together to provide the family with a holistic view of their financial life. To discuss if Family Office Services is right for you, please contact familyoffice@bernathandrosenberg.com

  Chana Striks, CPA, Manages the Family Office Services Division at Bernath & Rosenberg. She assists clients with their complex financial lives and finds solutions for their unique needs and challenges. Click here to view a copy of the Family Office Services brochure.

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