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An Insider’s Perspective on the Modern Family Office

CV TrustCo December 14, 2016

Welcome to our third and final post on Family Offices.  Our first post talked about the basic definitions, while our second post explored traditional family offices.  This post will focus on today’s practical and obtainable version of the family office – the Multi- Family Office (MFO) – what it can offer and who should consider engaging one.

 

Traditionally, MFO’s are an off shoot of the single family office.  Look at the Rockefeller’s – in the late 1800’s they created a single family office to deal with the affairs of their family; recordkeeping, fiduciary, tax management, philanthropy, etc.  What they soon found out is that they had excess capacity and hence started offering family office services to other like minded families to help offset costs and keep staff utilized.  Hence the birth of the MFO.  Today the Rockefeller’s MFO is one of the largest in the US managing the affairs of hundreds of families.

 

What services does a MFO offer?

 

Wealthy families tend to have complicated lives requiring specialized services that are often spread over many service providers.  These service providers are often not required on a full time basis and when employed they must be managed to ensure that “each one knows what the other one is doing”.  As a result, there has been a growing trend of professionals that organize themselves into a MFO where they provide families the ability to pick and choose what services they wish to do themselves and what they wish to out-source.  Today’s MFO typically provides and/or manages the following professional services:

 

  • Inter-generation transfer of your wealth and businesses – Estate planning and trust advisory services.

 

  • Financial administration and reporting – Often a family has several financial managers that need to be “managed” and reported on a consolidated basis.

 

  • Tax affairs – Not necessarily preparing tax returns, but providing oversight of your tax affairs to keep you compliant and maintain efficiencies.

 

  • Records management: Maintain physical and electronic storage of your financial records.

 

  • Fiduciary services: Serve as executor, co-executor, trustee, co-trustee.

 

  • Family governance: Prepare your family for success, both in and out of the family business.

 

  • Philanthropic interests: Planning and supervision with respect to philanthropic affairs.

 

Depending on the MFO, the services are performed in-house or out-sourced and managed by the MFO.

Who should use a MFO?

 

As in our 2 prior posts, we outlined the benefits and costs of an Embedded Family Office and a Single Family Office.  A MFO is a low cost alternative to a Single Family Office and provides a similar level of service, but only when needed – as opposed to full time.  So, who could use a MFO?  A few examples come to mind:

 

  • A multi-generational business that needs these services but wants to keep them arm’s length from the business and their extended family – independence and privacy.

 

  • A business owner who has sold and no longer has the in-house resources to manage their affairs – no more CFO.

 

  • A senior executive of a public company who now has the wealth that prudently requires these services, and who currently obtains them from multiple professionals – a management nightmare.

 

Each family is as unique as their needs.  There’s a saying in the industry: “Once you’ve seen one family office, you’ve seen one family office”.  A MFO provides a professional solution that is both cost effective and requires little management.

At CVTrustCo, we see the need for a Vancouver based MFO and have now begun to offer these services to select families.  Our MFO team has worked extensively in the Single Family Office and MFO space.  If you would like to explore this bespoke offering, contact Steve Ivacko at 604 343-4700 or sivacko@cvtrustco.com.

You can also check us out at www.cvtrustco.com