“Should be easy, right? I built a successful business before and now my next successful one can be managing my wealth.
I did all sorts of internet searches, I talked to people I know, I talked to my banks, I talked to my lawyer, I joined a family office group and I bought at least 6 books. I was looking for a tried and true plan about what my family office should look like, who I should employ, what should these people do, what tools do they need and what services are key?
The family office is a complex business and all I researched confirmed that. There are many players and relationships, lots of inputs and lots of outputs. So, I had to think hard about exactly what it is I wanted. The family office will be a cost center in my new business of managing my wealth and needs to be effective but lean. Do I just take my CFO from my old business and get them to create the office structure? My wealth is a different business and I shouldn’t be guessing, I need to learn from others at not make the same mistakes.
I found that there are two large disconnects:
1. The existing family offices I talked to had smart people in them but didn’t have the structure or tools to really add value. From the outside the image is one of proper controls and risk management, but on the inside it’s a patchwork, with band-aids and people making heroic efforts to fill the gaps
2. There is no manual, how-to guide or “dummy” book about what a family office should look like and what are best practice operations. There are several great books and resources, like the Family Office Exchange and Family Office Association, where you can get guidance on the “family” side but nothing really about the nut-and-bolts of the office itself
I’m a logical, process person and my family office needs that. My company sold for so much because of the intellectual capital embedded in how it was structured and how it was run. It didn’t really need me to operate!
I wanted the office to provide these services:
1. Investment Strategy and Implementation
2. Wealth Transfer Planning
3. Lifestyle Support/Management
4. Integrated Financial Strategies
5. Trustee Services
6. Recordkeeping and Reporting
7. Cash Flow Planning and Management
8. Coordinating Advisors (e.g. attorneys, CPAs, insurance brokers, etc.)
9. Liability and Risk Management
10. Strategic Philanthropy
11. Family Education
12. Family Continuity
Knowing this gave me a good idea about the skill-set of the people I needed to help me manage my family office. Now, apart from general office tools, what did they specifically need so that I could run a lean office?
When you go to the next level down and look at how these services will be provided you see the office will be dealing with:
1. Entities of all types
2. Relationships of all types
3. Documents of all types
4. Investment transactions
5. Accounting transactions
6. Project management
The office inputs for all of these are data and documents and the office output are reports.
I didn’t want my family office structure to re-create the people/Microsoft Excel/QuickBooks combination I had seen in so many other offices. These aren’t the tools to manage wealth and the end result is something that relies on key people to sustain it. Like in my previous business I needed tools that:
1. Automated Dealing with the Data – complex and from multiple sources in multiple formats
2. Provided a Single Systems of Record
3. Enabled Risk Management and Data Security
4. Embedded Operational Knowledge
5. Minimized integration
Ideally, I wanted an all-in-one platform for my office, similar to other industries. As I said, I was committed to automating processes and implementing efficient systems to ensure the office was as lean as possible. The office needs operational efficiency because that will be the key to securing the future sustainability of the family office. It provides more time to tend to the needs of the family.
Did I find a tool for my family office that will help me be successful in managing my wealth now, and in the future for my family?
I was in the right place at the right time. A large family office I met and a consultant company I knew both recommended I look at a relatively new software platform built specifically for a family office.
Now, my office is lean, probably with half the staff of comparable offices I saw using Excel/QuickBooks. I get the reports I want when I want them. I have real risk management in the office, with true segregation of duties and a full audit trail. My staff are focused on service and have time for value-add analysis. I know the data and communications are secure and I can access information 24/7/365.
My focus on getting the family office to work the way I want has taken a huge worry off my mind.”