Family Office Practice Group
A family office serves the vital roles of protecting, preserving and enhancing family wealth. As a single business resource for a prosperous family, the family office can plan, execute and manage all financial affairs from financial planning and strategy development to simple accounting and record keeping to bill paying. Further, family offices often need fiduciary services, such as trust management and accounting. Our advisory and CFO consulting services support the needs for family office services to complement the experience and understanding of those handling the wealth. The number of households in the US with $5 million in investable assets — excluding their primary residence and collectibles — was about 1.1 million in 2011, according to a report in Financial Sense prepared by SMU Law School Professor Joseph Dancy. In Silicon Valley, we’ve witnessed an upsurge of recently affluent individuals from various high tech IPOs. They are unprepared to manage their new wealth and the management needed to both effectively utilize as well as maintain it. There is a desire to maintain their new lifestyle, spread the good fortune through philanthropic pursuits, make good investments to retain their wealth all while ensuring an efficient transfer of their assets across generations. They seek expertise from trusted advisors.
The CFOs2GO Family Office Practice group provides the required knowledge and proficiency in structuring a family office and a deep bench of talent to administer and maintain it. Our advisory is flexible, based on onsite or virtual services needed. We provide technical excellence, individual and personalized solutions and responsiveness, while maintaining the highest level of discretion and integrity.
Practice Leaders – Doug Kennedy and John Welch
Doug Kennedy has extensive knowledge and hands-on experience in building robust foundations for family offices and serving the role of trusted advisor. Doug has a keen understanding of the dynamics of a generation wealth and the positive impact that a family office can provide. Doug performs business advisory services and financial consulting work for a variety of family-owned businesses from start-ups to mature successful enterprises. He often coaches new leaders of the family-owned enterprise, mostly on financial issues, as they transition from one generation to the next and until they are fully up to speed and comfortable in their new role. A major portion of his experience was been spent in a family dominated publicly owned company and with high net worth individuals working on their special needs in areas of estate planning, wealth management, succession planning, leadership transition and risk mitigation.
John Welch is deeply dedicated to meeting the needs of family-owned businesses. As a CPA, attorney and a business advisor with a doctorate in international business management, John helps family offices with a full spectrum of support. operations? Family-owned businesses have unique challenges which need both legal and financial advisory support, both of which John brings.
With more than 25 years of experience helping clients, John assists family office executives in designing strategies to meet their financial goals through income tax planning, estate plan design and implementation, fiduciary services, financial management, and insurance planning and implementation. He is a trusted partner for helping to make day-to-day decisions necessary success.
John’s credentials include degrees and certifications as Attorney at Law, CPA, MBA, CLU, ChFC, AEP, CPCU, and a Ph.D. in International Business Management.
Who We Serve
A family’s wealth may have grown through business expansion and/or investment productivity and eventually requires outside counsel and direction. We work with families to successfully sustain your wealth across generations.
Newly minted internet millionaires are often ill-prepared to deal with their newfound wealth. They tend to be young, busy and unaware of the process of how to manage great wealth. We advise on a range of services from accounting for and reporting on financial assets to the use of various trust structures and family limited partnerships to protect assets while achieving tax efficiency.
Families often create a foundation to promote a philanthropic goal or goals that they cherish and use as a focus of their contribution back to society. We perform financial planning for endowments and can advise on how to assess, select and evaluate potential recipients as well as establish structures and guidelines for operations.
CFOs2GO assists family offices by designing unique and valuable solutions from basic bookkeeping to proven Consulting CFOs.
- Client administration including periodic reporting of assert levels, investment performance, new activities undertaken and opportunities examined but declined.
- Cash Flow management and reporting to provide details on how cash has flowed into the family and what uses have been made of it as well as cash levels maintained and why.
- Tax planning to achieve tax efficiency in all activities and the filing of returns plus management of tax audits plus resolution of any disputes that may arise as a result of the audits.
- Wealth education to enable all family members but especially younger members to learn the key elements of financial decision making and risk management including the relevance of risk adjusted rates of return.
- Business succession planning to assure that family office managed activities continue without interruption due to the disability or passing of a key family member who occupies a leadership and decision making role.
- Family governance including a family mission statement to insure that all members have a clear and unambiguous understanding of the family’s approach to management of its wealth and the key objectives that govern their decision making vis-à-vis their assets.
- Coordination of all advisors to insure that a uniform set of decision criteria are applied to all family wealth decisions.
- Philanthropic advisory to assist family members in making philanthropic decisions that are consistent with the family mission statement and the needs of recipient organizations.
- Insurance evaluation and coordination to assure that risks to family assets have been appropriately addressed and that those risks that are not self insured are covered through an appropriate level of third party risk coverage.
Successful Client Engagements
- Constructed a “calendar year based” statement of cash inflows and cash disbursements to show client when income is received and when bills are due for payment to enable client to avoid vendor late payment fees and bank overdraft charges. Engaged bookkeeper to execute the monthly bill payment process and to reconcile bank statements. The bookkeeper’s work was supervised by the consulting CFO. Results achieved included a clear understanding by family members of the cash flow issues they faced and when key events affecting cash flows took place as well as when and how bank fees and overdraft charges were eliminated.
- Put in place an additional process, executed by bookkeeper and supervised by consulting CFO, to prepare quarterly a comparison between the annual cash flow budget and actual results to monitor family’s progress versus annual budget. Consulting CFO reviews the report with client quarterly to maintain a dialogue with client on financial issues. Result achieved was a current understanding of cash flow impact issues that affected the family and how decision making had to be altered to factor in these matters. Confusion among family members was reduced and greater clarity in why certain decisions affecting cash flows had to be made in certain ways was achieved.
- Worked with family’s CPA firm and our bookkeeper to prepare the tax package info the CPA requested in order to prepare the annual family tax filings. The result achieved was that the information to prepare tax returns was received on a more timely basis by the CPA and that the quality of the information the CPA received was much superior to that previously obtained thereby eliminating time the CPA had to devote to the return preparation process and thus tax return preparation costs were reduced.
- Worked with family leader and other stakeholders to develop a net worth statement and put in place procedures for monthly update of statement by bookkeeper. Consulting CFO meets regularly with family leader to review statement and look for other opportunities to assist family with financial goals. The result achieved was a greater understanding of what the family’s financial position and true net worth was and thus uncertainty was eliminated about what the family’s financial position consisted of and what the driver’s of ROI and investment productivity were.
- Worked with family leader and key banker to review statement to assure banker that it met their needs. Result was that the bank was assured that the statements they received were accurate and the family was in compliance with loan covenants.
- Worked with family business leader and investment advisors to develop written investment policy statements to make explicit the mission of each investment advisor and how they are to go about the task of investing the funds they have in their custody. The result was a clearer understanding by the family of the role of each investment advisor in the management of their wealth and how and why returns were either appropriate for the manager’s mission or where performance was not within expected ranges and why.
- Worked with family leader to help them understand how their investment accounts, in the aggregate, are allocated among investment classes including fixed income, equity and alternative investments. The result was a clearer appreciation by the family of how and why assets were diversified to mitigate risk and to achieve a rate of return on their wealth consistent with the risk tolerance of the family such that it would sustain and grow their wealth over time to enable them to meet intergenerational wealth transfer objectives.
- Worked with family leader and investment managers to have the managers run back tests (Monte Carlo simulations) of their portfolios to see how they would perform over a range of economic circumstances to satisfy family leader that risk was being appropriately managed in the family’s investment portfolios. Result was a clear understanding of why financial assets had to be allocated to certain assets classes and why, over time, such an allocation was appropriate for their situation and financial needs.