CHICAGO (Reuters) - Baltimore financial adviser Lyle Benson describes his work as that of “Personal CFO” or chief financial officer.
His boutique financial planning firm manages money, but it also does everything from bill paying to estate planning, even assisting clients’ adult children negotiate terms for their first automobile purchase or mortgage.
“We coordinate and work with all of our clients’ advisers” including attorneys, accountants and insurance agents, says Benson. “We make sure everyone is on the same page and working together.”
The services necessary to quarterback a client’s complete financial life, often referred to as family office services, are not just for the ultra-rich. Benson says anyone with investable assets of more than $2 million can benefit from such comprehensive oversight. At his firm, those services are used by more than 30 percent of clients.
“The family office piece evolved,” says Benson, who charges clients an annual fee - typically $6,000 to $30,000 based on the complexity of their financial picture - to manage their comprehensive financial life. In addition to investment management, tax services and estate planning, those responsibilities include strategic planning for the long term, education of and communication with family members, the administration of trusts and family foundations, and general hand-holding where needed.
Traditionally, family offices - both single- and multi-family - were set up with the sole purpose of handling financial affairs for ultra-wealthy families. But the sustained economic downturn sparked interest in those services at all levels of wealth, prompting more advisers to provide some of these offerings, says New York consultant Hannah Shaw Grove, an expert on private wealth management. In part, that is because having someone watch their backs boosted clients’ general comfort levels amid the instability of volatile markets.
“Clients are very interested in having a family office-type experience, one that feels more personal and customized in nature,” she says, noting that demand for these services has not waned. “Wealthy clients are very receptive to the idea of one centralized team. That’s where the opportunity exists.”
For those financial advisers who cannot afford to bring experts in specialty areas like tax preparation or bookkeeping in-house, they can start by developing a network of providers to whom they can outsource those services, Shaw Grove says.
Over the years, she has identified specialists who take care of everything from museum-quality storage of clothing and collectibles to closing down second homes in the offseason, even those who provide research on specialty healthcare services such as drug rehabilitation and geriatric care.
“They add a lot of value,” she says, adding: “Make sure you find the providers you’re comfortable with because they’re a reflection on you.”
Often, first-generation wealthy clients do not realize how the inclusion of family-office services can simplify their personal lives, says Susan Tillery, a certified public accountant (CPA) and financial adviser who began offering family office services shortly after forming her firm in 2006.
With offices inside of CPA firms in Washington D.C. and surrounding areas, the firm typically helps successful entrepreneurs and other self-made types by providing services that include investment and estate planning, as well as the coordination of outside providers such as attorneys, CPAs and investment advisers.
“We provide family office services for those who don’t qualify to be in a multifamily office,” says Tillery, whose background includes working in a traditional multifamily office on behalf of ultra-high-net-worth clients.
Tillery, who does not manage assets, charges a fee for a full-year engagement that ranges from about $6,000 up to $30,000. During the first year, she meets with clients once a month as they develop an overall financial plan, including estate and investment planning.
In order to meet increasing demand for family office services, Gene Diederich, CEO of St. Louis-based Moneta Group, a financial services firm, added his own internal accounting firm that now includes 16 of his firm’s 240 employees.
He also hired an internal estate-planning attorney and started a trust company in conjunction with his firm’s trust partner, National Advisor Trust Co. These days Moneta provides family offices services to about 35 families with $50 million or more in assets. Diederich often flies around the country to facilitate annual family meetings.
“They (clients) wanted a ‘one-stop shop’ where they could go and get everything done,” Diederich says.
Editing by Linda Stern and Matthew Lewis