The term “family office” is hard to define because it appears in so many different forms. There’s a well-known saying, “Once you’ve seen one family office, you’ve only seen one.” Some family offices are comprised of nothing more than a financial advisor. This advisor coordinates services with external tax experts, insurance providers, bankers, brokers, and perhaps internal key personnel to manage the array of complex needs of a wealth owner. Other family offices are more formally organized with several professional staff members.
No matter the state or structure of your family office, there are pitfalls and best practices that unite most, if not all, family offices. One very common issue that many family offices face is siloing of service lines. For example, in such a situation, wealth management and tax and accounting teams might not have a way of functionally integrating their services. As a result, the departments within the family office may miss opportunities to collaboratively work together. This in turn may negatively impact investment performance, cash flow, and tax planning.
Private Client Services: The Family Office Quarterback
One effective solution for this issue is the creation of a Private Client Services (PCS) team. With so much going on in family offices, things can easily slip through the cracks. The PCS team contributes to a well-functioning and flourishing family enterprise in three ways. First, it builds the relationship between the family office and family. Second, it minimizes the risk that a service provider misses important dates or obligations. Third, it coordinates communication between family office departments for fully integrated services to the family.
PCS is the quarterback of the family office that helps ensure there is proper communication between each department of the family office. For example, PCS may coordinate among wealth management, tax and accounting, security, and family governance & education advisors. It also can serve as the primary point of contact with family members and external service providers. These might be wealth owners, beneficiaries, or the property manager for your commercial real estate.
How Does Private Client Services Operate?
Here is an outline of the structure of a model PCS team. First, the Director of Private Client Services leads and is responsible for the general training and oversight of the department. Second, Private Client Managers (PCMs) are primarily responsible for relationship management. Third, Private Client Associates (PCAs) assist the PCM with the daily tasks associated with providing direct services to the family and keeping the department running smoothly. Finally, an Administrative Assistant (AA) helps manage the department’s calendars and keep the lines of communication open between the firm’s other departments.
Structuring the PCS department this way allows tasks and activities to be pushed to the lowest level personnel competent to do them. This saves the family office money and is an excellent way to train up PCAs to become PCMs. This structure also gives the family the realization that they have a “deep bench” of professionals (a team) who are able, willing, and ready to take care of their needs or wants. It is a great feeling for family office staff when the family brags to others about their family office “team”, while recommending they take advantage of the same services.
PCS also should schedule and host periodic standing meetings with the family to discuss top of mind issues or projects underway. The other firm departments certainly have a place at the table, and reps from those departments will come and go to present concepts or materials as needed, but it is PCS who runs the agenda and meeting. Again, this focuses the family on PCS as the primary point of contact, as having so many other professionals in the firm may leave a family wondering who to call when something comes up. PCS will always be there to direct the call to the appropriate department if needed.
Every morning, the Smith Family Office’s PCS team holds a 15 minute “Family Office Check In”. At this short meeting, PCS and the other family office departments discuss the day or week’s inter-departmental activities. This raises awareness of any actions that connect departments.
For example, Bob and Mary Smith wish to acquire a new vacation home. This touches not only PCS, who will be responsible for coordinating with realtors, title companies, and banks for providing or signing legal documentation, but also Tax and Accounting Services (TAS), who will enter the acquisition on the family office budget and manage the bill-pay process, and Family Wealth Services (FWS), who may be tasked with raising funds from one of the investment accounts, whether by selling positions or making use of margin loans. Timelines are discussed and tasks are assigned. As deadlines approach, the daily Family Office Check-ins (quarterbacked by the PCS department) ensure everyone is on the same page. In the end, Bob and Mary smoothly acquire the home in a way that is consistent with their financial plan. No deadline or paper was missed!
This structure of having Private Client Services serve as quarterback for services and communications will greatly professionalize your family office. Not only will team members feel the difference, but also the family will notice a more responsive, integrated, and consistent level of service. And that, after all, is the most important thing for a family office.
To learn more about structuring a family office, contact us at The Grupp Law Firm LLC for a free consultation.