When we talk about business endeavors managed through a family office, we think of “old money” structures where members of financial dynasties control sizable assets. The DuPont and Rockefeller families come to mind in this regard, but we should not think of family offices as simply wealth management organizations; in many cases, they are genuinely dynamic enterprises. In this article, we’ll further examine the role of family office advisors and how they can assist you.
The Role of Family Office Advisors
The United States Securities and Exchange Commission defines family offices in the most traditional way, a financial entity set up for wealth management services, estate planning, and taxation accounting. As long as the services provided by these entities only benefit family members, there is no need to register them under the Investment Advisers Act.
A family office is not necessarily defined by the total value of assets under management. Some people believe that $100 million is the minimum to set up such a structure, but that is not the case. Let’s say a woman who lives in Ansley Park inherits $1 million that her parents kept in a compound interest savings account for decades. These are highly liquid assets, and if she wants to keep them in the family while making the most out of them, she should consider retaining the services of family office advisors.
In essence, family office advisors provide everything from bookkeeping to accounting and wealth management to estate planning. In our example above of a woman who inherits $1 million in cash, a passive income-generation strategy under the current interest rate climate may not be the adequate option. Seasoned family office advisors would likely focus on asset protection, reduction of tax liabilities, and long-term sustainability.
What Family Office Advisors Can Do For You
The financial goals of family offices are entirely up to the individuals who decide to set them up. Some people like the idea of investing as a continuum; others prefer to treat family wealth as an estate that should be preserved as much as possible. Then you have investors such as James Dyson, who makes family wealth grow through business profits. Family offices can be set up as working capital to fund business ventures.
Family office advisors counsel clients on the best ways to accomplish their goals; everything starts with bookkeeping and accounting; this crucial process can be facilitated by implementing software solutions such as QuickBooks, Sage, Xero, and others. Family office advisors can review transaction ledgers to get a picture of cash flow, profits, and losses.
As can be expected, family office advisors do quite a bit of accounting work. Reports have to be reconciled, and tax returns must be filed. Compliance issues need to be looked at. Along the way, CPA firms that serve as advisors to family offices can also serve as chief financial officers if the entity is being run like a business or investment fund.
Learn More About Our Wealth Management Services
At Fusion CPA, we believe that family offices have great potential beyond wealth preservation. Family offices can be highly profitable; more importantly, they become efficient organizations where assets can continue to appreciate. Not everything about family offices needs to be business-related; if you have ideas for creating endowments, making grants, or creating special-purpose trusts for succession purposes, we can certainly help. Please get in touch with our office today to discuss your family office options.
This blog article is not intended to be the rendering of legal, accounting, tax advice or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.