• Anthony Glomski

A Single Family Office Option for the “Merely Affluent”

Updated: Mar 3

“The nature of the virtual family office enables a wider array of families to benefit from the same synergistic approach and extensive expertise of a single-family office. When done right, a virtual family office can provide you with not only coordinated solutions that are in accord with your wants and needs, but a much broader array of high-impact solutions.”

- Anthony Glomski, “What Is A Virtual Family Office?” Forbes


In my book Liquidity & You, I discussed the massive value created by using a collaborative wealth management process. Although there is certainly some overlap, the family office concept is more customized and addresses the needs of entrepreneurs and their families as they experience significant success. Increased success brings increased opportunities and complexities. Once they understand the value created by a virtual family office and learn that it’s accessible to them, they say, “I want that.” We’re spending more and more of our time building family offices around entrepreneurs to access the best solutions and optimize their financial worlds.



Key Takeaways:


  • Virtual family offices offer products, services and expertise traditionally available only to the very wealthiest families.

  • A coordinator—often a wealth manager—is at the center of a virtual family office and facilitates the efforts of various specialists.

  • The professionals associated with a virtual family office must have expertise, integrity, professionalism, and personal chemistry.


The single-family office is often the preferred way for the exceptionally wealthy among us to coordinate the full range of their financial and personal affairs—from the mundane to the deeply complex.


As seen in Exhibit 7, the expertise provided by single-family offices tends to be vast and all-encompassing.


Looks great, doesn’t it? There’s just one problem: It can take an awful lot of wealth—we’re talking hundreds of millions of dollars—to qualify for a full-fledged single-family office.


Fortunately, virtual family offices are becoming an increasingly viable option for families who are “merely” affluent. Like the Super Rich (families with $500 million or more), these families get results tailored to their wants, needs, and preferences. Unlike the Super Rich, they don’t have to pay an exorbitant amount for first-rate service and expertise.


But how? Virtual family offices don’t have all the expensive overhead that single-family offices do. Instead, they make extensive use of outsourcing to keep their actual in-house staff flexible and cost-effective. Virtual family offices work with outside specialists and call on them as needed.


According to Jason Trenton, a top trust and estate attorney in the Los Angeles office of Venable LLP's Tax and Wealth Planning Practice, “We continue to see a surge in the demand for the formation and support for family offices. This demand has been driven by our clients who quickly see the enormous value created by utilizing a family office structure. The virtual family office model is one approach that can produce massive benefits that were previously only available to billionaires.“


Here’s a closer look at virtual family offices—how they work and whether they’re the most effective way for your family to manage your wealth.



How a Virtual Family Office Operates


At the center of a virtual family office is the client family itself, supported directly by a coordinator—a person or team of people who:


  1. Provide a particular expertise.

  2. Coordinate and facilitate other professionals on behalf of the client family.


The coordinator is typically a wealth manager who delivers high-end investment management products and services. He or she then draws on the skills and expertise of a broad array of specialists to deliver advanced planning products and services that go beyond investing—such as asset protection, tax compliance, and other functions (see Exhibit 8).



Increasingly, accountants and trusts and estates attorneys are beginning to take on the role of coordinator.


Regardless of who it is, the coordinator stays in close contact with the client family to make sure the various specialists are delivering as promised, and desired results are achieved.


Important: A family’s specific needs will depend on its particular situation. To assess those needs, coordinators use a process to understand their families on a deep level known as the Total Client Model. It’s one of the most effective tools we’ve seen.


The Total Client Model is based on extensive research on the rich and Super Rich (those with $500 million or more), coupled with the best practices of leading trusted professionals. It’s instrumental in developing a deep understanding of the successful and the wealthy. The profile highlights a client family’s needs, wants, facts, figures, attitudes, perceptions, preferences, goals, concerns, agenda, and thought processes.


In the Total Client Model shown below, the information is organized into a seven-sector framework:



Values

  • What are your guiding principles?

  • Can you give me an example of an opportunity you turned down for ethical reasons?


Goals

  • What do you want for your loved ones?

  • What professional obligations are most important to you?


Financials

  • How are your assets structured?

  • What are your liabilities?


Relationships

  • What family relationships are really meaningful to you?

  • What professional relationships would need to be addressed if something were to happen to you?


Interests

  • What are your favorite activities?

  • Are there any philanthropic causes that are very important to you?


Advisors

  • Who is managing your money?

  • What is your banking relationship?


Process

  • How do you prefer to communicate? In person, by text, by phone?

  • Who else should be in the meetings we have?


By using the Total Client Model, a wealth manager or other type of coordinator will get a thorough understanding of a client. From here, he or she can leverage the expertise of specialists to deliver targeted results.



Virtual Family Office Specialists


The specialists who are part of a virtual family office “fill in the gaps” by providing services outside the coordinator’s expertise.


This is an important point, because no one professional—not even the smartest investor or tax attorney on the planet—will have all the knowledge and connections needed to serve the complex needs of affluent families. Instead of trying to be jacks-of-all-trades or to pass themselves off as having expertise that they don’t, virtual family office professionals do what they do extremely well—and then work with other specialists who are true experts in their specific areas of financial and lifestyle management.


What to expect from the specialists:


  • Specific expertise. The specialists involved with top virtual family offices are some of the very best authorities in their respective areas (such as estate planning or concierge medicine).

  • Integrity. The highest ethical standards are indispensable for all the professionals involved in a virtual family office.

  • Professionalism. In every way, from responsiveness to inquiries to perpetual learning, the specialists embrace professionalism.

  • Personal chemistry. There is a strong level of comfort and appreciation among everyone involved with a virtual family office. All the expert knowledge and skills are meaningless unless there is strong rapport among the specialists and with the coordinator.

There are times when these specialists work directly with client families. Other times, they will play a more supporting or behind-the-scenes role by addressing issues in coordination with the wealth manager. In those cases, the family may not need to be involved at all.



Is a Virtual Family Office for You?


Ultimately, the nature of the virtual family office enables more families to benefit from the same synergistic approach and extensive expertise that single-family offices provide the wealthiest among us. When done right, a virtual family office offers not only coordinated solutions in alignment with a family’s wants and needs, but also a much broader array of high-impact solutions.


Contact AG Asset Advisory at info@agassetadvisory.com to set up an exploratory meeting to see if a virtual family office makes sense for your family. We’d love to help.


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Anthony Glomski is Founder and Principal of AG Asset Advisory (AGAA), an SEC-registered family office. Some of the information, data, and opinions contained herein were not authored by AGAA and do not constitute investment advice. Content is provided solely for informational purposes only and therefore is not an offer to buy or sell securities, and is not warranted to be correct, complete, or accurate. Additionally, neither the author nor AGAA are engaged in rendering legal, medical, accounting, financial, consulting, coaching, or other professional service or advice in specific situations. This publication should not be utilized as a substitute for professional advice in specific situations. Neither the author nor AGAA may be held liable in any way for any interpretation or use of the information in this publication. Investing carries an inherent element of risk, including the risk of losing invested principal. Past performance is not indicative of future results.


Portions of this article came courtesy of my friends and colleagues at AES Nation, LLC.


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