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Accounting Firms
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From tax return preparation to investment advisory services, the role of the accounting firm has grown dramatically in the last ten years. However, the most common accounting services utilized by FOX family office members are tax planning, tax return final review, and partnership accounting. Most family offices have staff dedicated to tax compliance work, but many rely on an outside firm for final review prior to filing. We continually track service providers used by FOX members, and, while many use the Big Four firms, the majority rely on a local accounting resource. The accountant is typically the team's lead on tax issues. Where the family still owns an operating business, the accountant often has a comprehensive understanding of the tax issues for the business and the family.
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Bank or Trust Companies
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The banker owns the understanding of the client's cash and credit positions. Most families of wealth recognize credit as an essential tool in managing the interrelationship between investment portfolios, tax and estate planning, and cash flow requirements. The banker's role is to get creative with his/her array of alternatives to allow for the implementation of the team's plans.
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Family Business Advisors
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At times it benefits the Family Office to turn to outside resources who specialize in matters related to intergenerational wealth. These experts may be called upon for support in areas such as governance planning, strategic planning, leadership development, educational programming, conflict management, generational goal assessment and risk assessment.
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Insurance Providers
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The role of the insurance provider is to identify, evaluate and recommend the best ways to protect the family groups' assets. Insurance services range from auto, home and life to fine art and personal security. Many family offices serve as the intermediary between the family members and the insurance provider, pay premiums and monitor coverage. The insurance provider may work in conjunction with the accountant, attorney and/or money manager to employ creative uses of life insurance in the wealth transfer/estate planning process.
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Investment Services
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Sixty-five percent of U.S. family offices rely on an investment consultant for a variety of services, including strategy development, asset allocation, manager selection, performance measurement, and periodic strategy review. Investment consultants have access to databases and research on managers in any number of asset classes, have typically invested in the technology needed to provide custom asset and investment performance summaries and have staffs of trained professionals who can educate family members about their alternatives and the performance of their assets. Family groups will find investment consulting services inside many organizations. There are several independent consulting firms, who do nothing else, as well as investment consulting groups within accounting firms, banks, brokerage firms, etc. The role of the investment consultant on the team varies from advising about strategy to implementing and monitoring the strategy, depending on his/her relationship with the client.
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Law Firms
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Attorneys are involved in the wealth management process from the creation of the entities that house the wealth through the estate settlement process. Attorneys advise family groups about how to structure their operating companies, how to avoid taxes, how to protect their assets, how to give the assets away with the best long-term tax benefit, and more. While most family offices participate in the wealth transfer/estate planning process, they usually do so in conjunction with an estate planning attorney. Very few family offices draft documents. Knowledge of who owns what and how it is owned is one of the greatest contributions the attorney brings to the team.
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Money Managers
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Family offices typically employ an arsenal of investment managers in a variety of asset classes, from U.S. equity to real estate. The job of the investment manager is to deploy the family group's assets in ways that allow the maximum growth of the assets allowed by the family group's risk tolerance. Family offices typically look for investment resources who can tailor investment strategies to meet individual family member needs, who understand the tax implications of their investment decisions and who can consider each individual's strategy within the context of the family's macro investment management plan. Thus, the investment managers are critical members of the team who are responsible for implementing the investment strategy considered and developed by the group
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Multi-Family Offices
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This is the most comprehensive form of wealth advisory firm, offering business owners and multi-generational wealth inheritors a broad array of services coupled with the highest levels of client and strategy implementation. MFOs use an inter-disciplinary approach to identify and create customized solutions designed for increasing and preserving wealth, and are the most proactive in implementing strategies to meet their clients' goals. They offer integrated wealth planning, oversight of fiduciary services, risk management, lifestyle management and assistance with strategic philanthropy, family continuity and governance.
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Philanthropy Advisors
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Families wanting to improve the impact of the their philanthropy frequently turn to external experts for advice. These consultants and organizations focus their services on the specific philanthropic needs of families with wealth. These services may include consulting on philanthropic mission, structures and effective grant-making, outcome management and Foundation governance and administration.
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Specialty Services
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As the private wealth industry has emerged, so have these specialized service offerings. Family Offices typically seek to outsource personal services such as bill paying, property management, personal security, public relations, travel and concierge tasks. The use of outsourced personal services can greatly enhance the value delivered by the Family Office in that the experts within the family office can stay focused on the business of managing the owner's wealth.
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Technology/Software Firms
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Communications and reporting are central to the management of personal wealth. To make sound decisions, wealth owners rely on software or technology services to integrate and provide information, and monitor transactions and performance. Today's technology firms provide a variety of platforms and service offerings.
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Wealth Management or Advisory Firms
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Wealth advisory firms commonly evolve over time to a multi-service platform in response to client demands. In addition to investment strategy and policy development, they offer asset allocation, manager selection, performance measurement and analysis, and investment risk management services. They also offer sophisticated tax and estate planning, and add the oversight of tax compliance, fiduciary services and tax sensitive asset management to the service array. The willingness to get more involved in the financial well-being of their clients distinguishes good wealth advisory firms from other firms.
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