Jess S. Morgan & Company, Inc

Business Managment & Invesment Advisory Services


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Family Office Formation Considerations

By: Jeremy D. Stahl, CPA |  (0) Post comment »  |  Read comments »

Earlier in the year I described what a family office is, namely an organization created for the purpose of supporting the financial needs of a specific family.  Over the last months we have spoken with several wealthy families who have asked us if it would be more appropriate for them to form their own office or to rather become part of an existing family office that already has an established infrastructure to operate and administer family activities.

The answers to these questions are usually based on the size, type, complexity, activity, revenue of the assets, and sophistication of a particular family.  Generally, the larger the overall asset size (usually in excess of $100mm), the more complex the investments, ( i.e. real estate & active businesses vs. more passive market investments) the more likely it  would be that a family would opt to set up its  own family office with many of the required professionals and associated costs ( i.e.  accountants, investment professionals,  real estate administrators and other experts capable of managing the specific assets of the family).  Clearly, families with comparable asset and revenue profiles could combine efforts in an attempt to synergize and economize associated costs.  But this can become a difficult endeavor because often privacy concerns come in to play. So the result is to go it alone or outsource some  of the less specific activities to an outside organization such as an existing multi-family office or business management firm with an expertise in many of the areas needed.

Families with a less complex and smaller revenue generating asset base (i.e. under $100mm and more passive type investments), may want to focus on a multi-family office for their family office endeavors.  This would include a family with very large but passive assets ( i.e. $250mm plus investment portfolio and/or concentrated positions) as well.  Privacy concerns aside, this usually is the most efficient and convenient way to go because costs of formation, management and administration, etc. have already been spent.  In this circumstance, the family desirous of a family office can consider becoming a member or even a client of an existing multi-family office.  A multi-family office of course being a family office that handles the affairs of many or several families at once.  The benefit is that established multi-family offices have the infrastructure, financial management experience, and often long serving professionals to handle the diverse needs of a family including sensitivities to privacy, discretion and intra-family issues.

Perhaps the best first initial step for an aspiring family office family is to discuss their family profile with professionals from an existing multi- family office or business management firm to explore what makes sense. The professionals at Jess S. Morgan & Co., Inc could certainly be one such first step.


When to engage a Business Manager when getting divorced

By: Jeremy D. Stahl, CPA |  (0) Post comment »  |  Read comments »

A divorce is not only complicated in separating two intertwined personal lives, but the financial separation can be just as complicated if not more so.  Most married couples engage the same business manager to assist with taxes, financial planning and overall financial needs during their marriage.  This makes sense while their lives are joined together in marriage, but it makes less sense to continue that arrangement once the marriage is in the process of ending.  When a divorce is set in motion one of the parties should engage a new business manager to assist in their divorce proceedings so that they have their own financial representation.


Engaging the new business manager as early in the process as possible is our recommendation.  Having a personal advocate to assist in understanding your financial situation during this difficult process is well worth the costs.  This is especially true if you are the spouse who is not the primary wage earner.  Having to start over personally as well as getting your arms around your own finances and managing them can be difficult and overwhelming.  The business manager will also be very helpful to the divorce attorney in combing through personal assets to ensure all are represented as well as assist in their valuation and submission to the court in the divorce proceedings.


Upon finalization of the divorce the new business manager will be able to you get your finances in order.  This will be done by reviewing your investment strategies; implementing tax planning, reviewing insurance needs, setting up budgets, and assisting with payment of bills as well as making sure any child support or alimony payments are collected timely.


Having a financial professional on your team can make all the difference in understanding your position financially pre and post divorce.  This is especially true for the non-wage earner.  As difficult as the process can be having a good business manager can help make that process feel much smoother.


If you have any questions or need assistance during a divorce please feel free to contact me.


Why Hire an Investment Manager?

By: Jeremy D. Stahl, CPA |  (0) Post comment »  |  Read comments »

This is a question often posed by investors of every category, be they large, small, individual, sophisticated, those with concentrated positions and even sometimes institutional ones.


The reasons to have a competent investment advisor on your team are almost as many as there are types of investors.  However, in many individual and family situations it really boils down to simply the common sense need for discipline, guidance and a second opinion.  The investment environment can be a highly charged emotional landscape to operate in, filled with many, many choices, temptations, opinions, numbers, hot tips, etc. and much too involved for any one person to fully analyze on their own.


The goal of a competent investment advisor should, first and foremost, be to remove as much emotion and speculation from the investment process as possible for the client.  Investing in this day and age is complicated enough.  Many former widely accepted beliefs regarding investments and risk and return have virtually been thrown out the window by the financial crisis of 2008.   The only rule that truly remains and has survived the test of time is diversification – perhaps boring but true.   And while even diversified portfolios took a hit in 2008, they did much less so than non-diversified ones.


Your advisor should therefore assist in setting investment guidelines and objectives appropriate for your personal situation and then help construct well diversified portfolios populating it with major asset and sub-asset classes that have a low correlation to each other (this means assets that don’t move in lock step with one another).  Your advisor should then periodically review your portfolio to ensure that it remains appropriate given your personal situation and the guidelines previously set.


So the next time you question what you are paying your investment advisor or are reluctant to hire one because of perceived cost, the value of your advisor should not be measured in what absolute returns they have achieved for you, (preferably though what risk adjusted returns they helped achieve), but rather whether the advisor has prevented you from getting into hot water, kept you from making abrupt speculative decisions, has helped in keeping your goals and objectives on the straight and narrow, and like a good physician has provided you with a valuable second opinion and has helped manage your emotions in a turbulent investment world.


The Importance of a (Family) Wealth Plan

By: Jeremy D. Stahl, CPA |  (0) Post comment »  |  Read comments »

Over the last years, as the financial, legal, business and economic landscape has become exceedingly complex, more and more clients come to desire a comprehensive wealth plan. Clients are often seeking the assistance of a trusted advisor, such as an investment advisor, CPA/Business Manager or even an attorney.


The motivation to initiate this process are manifold and are usually the result of a particular life occurrence or realization, retirement, sale of a business, taxes, divorce, marriage,  birth of a child, concentrated wealth issues, illness and incapacitation, family conflict,  legacy and multigenerational concerns, establishment of a new business or financial windfall,  etc. or just simply a bout common sense.  Setting and achieving financial goals can be the fulcrum of any wealth management strategy and can lead to a greater sense of security, confidence, and even personal freedom about one’s financial future.


The wealth planning process for wealthy individuals and families in today’s complex world is multifaceted including not only quantitative concerns but initially really focusing on qualitative and philosophical questions.  This is referred to as the Values Based Planning portion of the wealth plan where many questions of intent and desire are openly addressed. These conversations can be lengthy as they may involve the “buy in” of spouses, children, business partners, trustees and others to finalize a vision.


However, once this vision of the values based planning portion is finally articulated, the next step is to review what is possible within the realm of a client’s actual financial situation.  This is where matters of asset allocation and investment management, wealth transfer, insurance, charitable contributions, etc. are determined.   Finally, the process moves from establishing values and financial objectives to setting a strategy, implementing solutions, and continually reviewing the progress.


All the while and within this process, it will be the financial advisor or business manager who will be crafting and ultimately providing you with a comprehensive financial plan document  that includes asset and cash flow forecasts, budgets and even a so-called “Monte Carlo” analysis for various assumptions and contingencies.


It has been our experience that clients who have taken the step to move forward with a comprehensive wealth plan find themselves in a much stronger position to deal with the unexpected and most importantly have a greater sense of security and confidence about their future.



When Is the Right Time for an Artist to Hire a Business Manager?

By: Jeremy D. Stahl, CPA |  (0) Post comment »  |  Read comments »

I am often asked “When is the right time to hire a business manager? I think this is an important question for those people working in the entertainment industry.  It is usually asked around the same time as the question “When is the best time to setup my loan-out company?” 


I think these two questions should go hand in hand as the answer to the second question will help answer the first question.   The right time to set up a Loan-Out company is when the entertainer is earning in the range of $100,000 to $200,000 annually.  Since there are costs with setting up the company, as well as costs associated with maintaining the company, it is in your interest to make sure you are earning enough money to pay the costs and be able to reap the tax benefits afforded by using the Loan-Out company.


Since setting up a loan-out company has accounting, insurance, tax and various other requirements this is usually the “right” time to bring in a business manager.  The business manager will guide the artist through the process of setting up the right type of entity, get bank accounts setup, provide the  required bookkeeping and tax preparation services, put the proper insurance in place, and make sure that the loan-out is providing all of the advantages that it was intended to provide.


I have seen too many Artists create Loan-Out companies without proper guidance and accounting assistance.  If the proper maintenance and filing requirements are not done these newly formed companies will become disqualified to do business.  This could keep the studios and other companies from paying your entity as well as create tax and penalty problems as you try to get your company back in good standing. 


Having a professional like a business manager guide the artist through this process is always worth the costs of doing so.


If you have any specific questions about setting up a loan-out company or hiring a business manager please feel free to contact me.  Look forward to hearing any comments or questions on this blog.



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Office Details:

5900 Wilshire Boulevard
Suite 2300
Los Angeles, CA 90036

Tel: 323.634.2400
Fax: 323.937.6532