Advisors offer suggestions for navigating the family office

F. Scott Fitzgerald was right about the very rich. They are “different from you and me.” Some of them even have family offices.

And sometimes that creates challenges for financial advisors who are used to dealing directly with clients.

In that literary vein, Jon Foster, CEO of Angeles Wealth Management, says dealing with intermediaries for a family instead of working with them directly can be “the best of times, or the worst of times.” 

“For many of our families, we act as lead intermediary, coordinating activity between family members and important service providers for tax prep, trust and estate planning, and sometimes concierge services,” said Foster. “I think we are a great partner with other professional services providers because we believe in open architecture and open dialogue. We also work with numerous families where we have excellent, collaborative relationships with a lead intermediary.”

Foster says situations often become challenging when a lead intermediary ferociously limits access to the end client. This could be a family office director, a business manager, CPA, or even a wealth manager. He believes that this type of territorial behavior to control one’s "franchise" does not benefit the end client, and he will not work with these constraints. 

“A true fiduciary must operate in the best interests of the client, not themselves. You keep a family as a client by being great at your job and opening doors to opportunities, not by limiting direct access to other talented financial professionals,” said Foster.

Foster tells the story of taking a car ride with a client who had a very controlling CPA. The client pulled into a gas station and couldn’t use his credit card because his bills went to the CPA’s office, and he didn’t know the zip code. 

“I don’t think infantilizing clients protects your franchise, I think it hurts your franchise. We all work for them, they don’t work for us,” said Foster. 

Homer Smith, managing director at Integrated Family Office, says single-family offices usually seek outside experts for specific solutions, such as insulating intellectual property while mitigating taxes or structuring a rainy-day fund to avoid all future taxes on investment income. They are managed by private wealth industry professionals who have a relationship with the family, of which they are very protective.

In contrast, Smith says when he works with ultra-high-net-worth families, he spends a lot of time learning about the results they want and empowering them to make smart decisions by helping them think through viable options and helping them develop a plan for their entire financial picture.

“We often become the coordinator of the other professionals that would be needed to help them get the outcomes they are looking to achieve,” said Smith.

Eslewhere, Frank McKiernan, senior private wealth advisor at Procyon Partners, says family office clients are unique in that they usually aren’t dealing directly with the principal or the primary decision maker on a regular basis. You work through someone who manages the family’s advisors including financial advisors, CPAs, and attorneys. 

“You become naturally inclined to working with and servicing that person as if they were your client,” said McKiernan.   

McKiernan adds that even though both are considered ‘ultra-high net worth’ clients, family office clients tend to be larger, have longer time-horizons, and more aggressive investment objectives. For instance, an ultra-high net worth individual could have up to 20 percent in alternative investments in their portfolio. A family office client, on the other hand, could have upwards of 50 percent in alternatives like real estate, GP investments, hedge funds, and private equity.

“This all impacts how the financial advisor interacts, services, and ultimately adds value to that family office client,” said McKiernnan. 

Patrick York, partner at Premier Path Wealth Partners, says he balances the structured needs of the family office with the unique preferences of each family member. 

“Collaborating with the family office feels like being part of an extended family, where we contribute to the long-term vision across multiple generations,” said York. “Directly engaging with our clients allows us to form meaningful relationships, where advice is tailored to the individual aspirations and personal vision.”

Rudy Rake, partner and co-founder of Diagonal Investments, a partner of Sanctuary Wealth, says working with a family office differs significantly from working with individual clients in several key ways. In his view, the complexity of the relationship is heightened when dealing with a family office due to the involvement of multiple parties, including lawyers, accountants, and tax professionals, all of whom must be coordinated to ensure everything runs smoothly.

Adding to the complexity, family offices often focus on long-term goals that extend beyond the current generation, making family governance a top priority, according to Rake.

“While building a strong portfolio is crucial when working with a family office, it’s only one piece of the puzzle. In contrast, for private clients, portfolio construction is usually the primary focus,” said Rake.

Finally, Josh Gully, managing director at NewEdge Wealth, likens family Offices to “snowflakes” with each one being unique. And he says financial advisors that work closely with family offices often face very different challenges.

“On one hand, working with multiple decision makers within the family office adds complexity and may slow down the decision-making process. On the other hand, working with dedicated professionals that are experts in wealth strategy, tax, investments, charitable giving, reporting and operations can be a tremendous benefit and facilitate better decisions for the family,” said Gully.