The term ‘family office’ is becoming more familiar to the layman, and is even being used loosely by a variety of financial service providers. It’s generally understood that family offices are wealth management firms that cater to the affluent, managing their investments and revenue streams; but in this interview we hear what services an authentic family office really has to offer.
Our interviewee is Richard Kluska, CEO of IP Private Wealth. IP Private Wealth is known for its trademarked 360° approach to the family office model.
You can also listen to the full interview on the IP360° podcast here.
IP360°: Richard, tell us what a family office is, and what it’s meant to do.
A Family Office is essentially a board of advisors that manages the wealth and finances of an affluent individual or family. A family office provides a centralized hub of cohesive, coordinated advice for all aspects of your financial and life goals. It is a very old concept, previously reserved for families like the Rothchilds and Rockefellers.
IP360°: Is the family office model still only available to the richest of the rich?
Richard: No. In fact, IP Private Wealth is a boutique wealth management firm that specializes in high net worth individuals, primarily in small to medium size enterprises. We’ve developed an expertise on the frustrations and solutions that business owners face on a regular basis through the evolution of business cycles. We help business owners identify key frustrations, issues, objectives, and coordinate all of those activities with their professionals, to realize a very efficient and effective methodology to deal with those goals.
IP360°: What experts make up an authentic family office?
Richard: Typically a family office includes expert advisors for tax, accounting, legal, finance, investing, insurance, banking, et cetera. Then, at IP Private Wealth, we also advise on your lifestyle goals, your estate planning, and your philanthropy.
IP360°: If I work with a family office, does that mean I have to give up my current accountants, lawyers, etc?
Richard: Not at all—we simply complement your existing advisors. We respect the fact that business owners have developed relationships with professionals; these people have a history, and that history cannot be ignored. It’s really about the coordination of the advisors and focusing the discussion.
IP360°: I hear from business owners, talking about all their different advisor meetings. It seems really fragmented. Is the family office intended to answer that problem?
Richard: Correct. It’s very common that the client first goes to the accountant for a discussion, goes then to the lawyer for a discussion, goes to the banker, then the insurance person…they go to all their people and they start getting really confused. I call it the professional Bermuda Triangle. It’s a vortex that just sucks people in and also sucks in a lot of time, money, resources and frustrations.
So, we have to pierce that professional Bermuda Triangle, through a proper discovery process and a methodology to create an agenda that allows all advisors to focus together.
IP360°: What do people often do wrong when talking with individual advisors?
Richard: Your advisors are well-meaning and they can be excellent. But the question is, are you asking the right question? You will get back a very precise, educated answer to the question asked; but it may be the wrong question. Often when our team completes these agendas, you can see the light bulb go on in the boardroom and all the advisors go, ‘Wow, that’s really good.’ So the family office process allows for efficiency and effectiveness.
When do people usually realize they should be working with a family office?
Richard: Traditionally, a family office was reserved for someone who has $100 million or more. Not many businesses have that, but we recognize that many business owners have the need for a Family Office concept. So IP Private Wealth works with a wider range of clients.
We’re a referral business, so we get called in a lot by outside accountants, lawyers and other clients to talk to people. We sometimes get brought in during a crisis, and we can do that. But the last thing you want to do is develop a battle plan in the middle of a battle. Develop your battle plan before the battle. So hopefully we don’t get involved in a critical issue. We try to get in on a proactive issue and coordinate all of the advisors. The last thing you want to do is be around a board room and the business owner normally goes, “I just sold the business,” and one of the advisors says, “I wish I would’ve known that. We could have saved you a bucket load of tax.” It’s not a good conversation to be in.
IP360°: What makes the family office model particularly valuable to small- and medium-sized business owners?
One thing a large public company has that a smaller independent company doesn’t have is a board of directors. We don’t need that board, but it would be very efficient to have a board of advisors. These are the same professionals you’re used to dealing with, but in a family office methodology, they’re dealing with the agenda on a proactive versus reactive basis.
IP360°: It seems like there’s a gap in our education, and there’s no one really walking around teaching business owners how to be good at business.
Richard: That’s correct. Business owners don’t have that expertise. Even I started that way, when I started my business. We start with a concept, a thought, a motivation. Businesses are successful because of their passion–because when you do the analysis, you’d know you should never get into business and you’re going to fail. But the passion, the sheer drive, makes your success happen.
When you hit your point of success, that’s where you need to start getting professional people involved to help you accelerate your continued growth. Otherwise it hits a wall. This is very close to my heart because I’m a business owner, and I work with business owners, and I’ve made these mistakes myself.
IP360°: How does a new client even know what to ask their family office about?
I mentioned the word ‘discovery’. The discovery of your needs and situation is paramount. Nobody spends time on that blue sky thinking; everybody’s dealing with tactics. Nobody’s spending the time to back up, take a breath, and ask you where do we want to go? How do we want to get there? Why do we want to go? What’s our timeline? Where do you want to be five years from now? Nobody asks the business owner that question.
When you can’t sleep at night, what is it that keeps you up, thinking, “Oh my God, I hope this happens”? Or, “Oh my God, I hope this never happens”. We need to uncover those drivers–and sometimes business owners don’t even know what they are, because they’re so busy in their business they don’t even have time to reflect.
IP360°: Based on our conversation, it sounds like this is a prime time in history for the proactive support of a family office.
Richard: With 2020 behind us, we need every good advisor to be working on a coordinated basis and not offering siloed solutions. We need a coordinated approach, and one based on the individual’s philosophy and requirements are, as well as their timetables. And that’s why we’re talking today: to tell people there are solutions, whether it’s with IP Private Wealth or firms like ours; these solutions are available today. It just takes a methodology to do it. You just need a process.
What is IP Private Wealth?
IP Private Wealth is a Family Office—a team of wealth advisors that operates as a round-table board of advisors. Our 360° approach to examining your goals, wealth, and future needs is what makes us the first and only choice of family office for our clients. If you’ve been looking for a way to manage your wealth more effectively, reach out to us.
