By Maria Neary and Jon Persson
Geller Family Office Services LLC
Today, the cost of talent and technology has pushed the break-even point closer to $250 million and climbing. Many former single-family offices have therefore grown into multi-family offices, offering unrelated families the ability to share a CFO, CIO, tax professionals and experienced administrative staff as well as valuable intellectual and technology resources.
In many ways it has parallels to the emergence of fractional jet ownership as people ask, “Given my needs, would I rather own all of a single engine plane or a share of a private jet? And, would I like to pay someone else to worry about hiring the people to fly it and care for it, handle security, do the safety checks, update the insurance and all the other hassles of maintaining a group of personal employees?”
Similarly, contracting for a share of the staff at an established multi-family office often can securely provide access to talent, processes, intellectual capital and systems that simply cannot be justified at lower asset levels.
Wealth Management Services
Currently, there is no widely agreed-upon definition of a multi-family office. Recent surveys have listed typical characteristics: a broad range of services with a high level of personal attention and the ability to think more strategically.
Services can include those of a wealth management firm (financial, estate and tax planning, investment consulting and manager selection) along with those of the traditional family office (bill paying, financial reporting, tax compliance, trust monitoring, charitable consulting, family counseling, and concierge services).
Fees range from hourly charges to monthly retainers to asset-based charges and/or some combination thereof.
Before you entrust your personal data to an organization you don’t know well (and sign a number of forms giving the multi-family office various levels of authority over the movement of your money and securities), you need answers in five broad areas:
What services will the multi-family office provide?
Who are the entities and/or people who will provide those services?
Does the firm have clients whose profiles and issues match mine?
How does the firm protect its clients' privacy?
What possible conflicts of interest are there in its advice?
The scope of services can range from simple cash management and bill paying to intensive family counseling on values and mission statements. A written agreement covering all the services to be provided, including those by third parties, will avoid confusion later on.
Handling Your Personal Finances
The people providing these services are often the most critical factor in client satisfaction. Meeting the marketing people is not enough. You want to know the people who will be involved in the day-to-day handling of your finances, their experience and how much capacity they have to take on an additional client.
For those services that are outsourced, you should understand the criteria that were used in selecting those providers. You also need an understanding of the firm’s culture, ethics, size, longevity and financial strength.
* Maria Neary, CPA, CFA (mneary@gellerco.com) is managing director and Jon Persson, CLU, CFP (jpersson@gellerco.com) is director of financial planning at Geller Family Office Services LLC in New York.
