The modern concept of a family office has been around for well over 100 years, going back to the days of John D. Rockefeller in the late 1800s. If this is the first you’ve heard about family offices, they are a team of professionals who manage the wealth, business interests, taxes, risk, and even aspects of successful business owners and ultra-wealthy families’ personal lives.
For most of their existence, family offices have naturally overlooked a significant demographic: successful closely held business owners and affluent families who are not considered ultra-wealthy by single-family office standards.
Only recently have appropriate options begun to spring up for this overlooked demographic. Previous options either lacked the expertise needed to deliver the sophisticated services required to optimize the lives of these underserved clients or operated under a financial model that was still not financially feasible for these clients.
The breakthrough model that has successfully bridged the gap for clients with a net worth between $25 Million and $250 Million is the “Middle-Market Family Office” model developed by P. J. DiNuzzo, Founder and Lead Consultant of DiNuzzo Middle-Market Family Office and author of the Wall Street Journal bestselling book, The DiNuzzo Middle-Market Family Office™ Breakthrough: Creating Strategic Tax, Risk Cash-Flow and Lifestyle Options for Successful Privately-Held Business Owners and Affluent Families. “The Middle-Market Family Office model uses a combination of the best of the family office offering with the flexibility needed to not carry the costs of the entire staff of specialists on the full-time payroll, which makes delivering the appropriate level of value financially feasible to more people,” says P. J. DiNuzzo.
The People: Whom Do Middle-Market Family Offices Serve?
Middle-Market Family Offices serve successful, closely-held business owners and families having a net worth of more than $25 million, earning an income of $1 million per year, or quickly approaching either of those milestones.
Are your income and net worth at that level? If so, do you feel underserved and concerned about your family legacy and independence? If so, a middle-market family office might be a solution to consider.
“Many business owners and affluent families want to ensure that everything they worked for is on a successful trajectory and durable enough to last for generations,” says Mike DiNuzzo, Head Consultant at DiNuzzo Middle-Family Family Office. “On top of this, they want a career and retirement that enables them to fulfill their dreams, reach philanthropic goals, and avoid certain pitfalls like scammers, taxes, mismanagement, and headaches.”
That’s what middle-market family offices help you achieve. The first step you may want to consider to protect you and your family is to undertake a “Middle-Market Family Office Check-Up.”
The Pieces: What Goes Into A Middle-Market Family Office Check-Up?
A Middle Market Family Office Check-Up is a 90/120-day process that identifies risks and opportunities and develops a strategic plan commensurate with your wealth and goals.
This ideally would include an analysis of the four foundational areas of your world:
- Tax Mitigation: tax planning overview and potential tax-saving strategies
- Wealth Planning: lifestyle enhancement, cash flow maximization, health and wellness optimization, preparation of personal balance sheet and cash flow statement(s), financial independence/retirement planning, personal insurance, risk analysis, investment strategy overview, “honest conversations” discovery and alignment exercise, and potential advanced planning strategy recommendations
- Risk Management: personal risk planning, risk strategy, and insurance protection
- Legal and Asset Protection Consultations: at least two consultations with you for (1) discovery, and (2) a high-level review of potential trusts and estates and asset protection
The Process: How Is A Middle-Market Family Office Check-Up Executed?
A Middle-Market Family Office Check-Up should begin with an initial “Pre-Discovery” conversation with your family office consultant and other relevant core team members. This call initiates the process of analyzing everything you have in place to identify gaps, holes, and opportunities:
- Tax Mitigation: last three years of tax returns
- Wealth Planning: bank, brokerage, and retirement account statements, life insurance documents, commitment and participation of both partners/spouses (if applicable)
- Risk Management: auto, homeowners (all residences), umbrella/excess liability, valuable personal property, and any other personal insurance policy documents
- Legal and Asset Protection Consultations: Wills and all related documents, trusts, and any relevant legal structure strategy documents relating to personal assets
The Desired Outcome: How A Middle-Market Family Office Check-Up Can Help You And Your Family
“During a Middle-Market Family Office Checkup, hyper-specialized legal, asset protection, tax, financial, and risk management professionals should evaluate all of the information and documentation,” explains P. J. DiNuzzo. “You then meet with each specialist for additional discovery. When all the information is gathered and compiled, the analysis begins.”
Ideally, your Middle-Market Family Office Check-Up would conclude with an easy-to-understand “One-Page Plan” (with supporting documents) that details the findings, action items, and the pros and cons of each of the recommendations your family office consultant believes could be valuable for you.
After you have had a chance to review your “One-Page Plan,” your family office consultant should schedule another call with you and your partner/spouse (if applicable) to discuss the findings and options. On that call, they should answer any questions you may have so you can make informed decisions about which potential option(s) you may want to move forward to implement if any.
Together, the Middle-Market Family Office Check-Up gives business owners and affluent families a “single-family office”-type 360-degree evaluation of their taxes, wealth planning, risk management, and legal and asset protection. It leaves them informed and confident to take specific steps to secure their legacy, support their aspirations for future generations, and enjoy the life and retirement of their dreams.
RUSS ALAN PRINCE is the Executive Director of Private Wealth magazine (pw-mag.com) and Chief Content Officer for High-Net-Worth Genius (hnwgenius.com). He consults with family offices, the wealthy, fast-tracking entrepreneurs, and select professionals.
