Jess S. Morgan & Company, Inc

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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.



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

In this and subsequent blogs I will  initially  address the concept of the ” Family Office” an often heard but not always fully understood concept in the high net worth community.


Traditionally and historically the family office was organized to manage and administer the affairs and fortunes of a single wealthy family.  The focus was on managing and coordinating  investments, trusts, legal affairs, accounting, taxes, insurance, real estate,  foundations, philanthropic endeavors, wealth transfer to future generations and much more.


Typically the complexity of such activities required the hiring of extensive professional and support staff and even legally  organizing in the form of an LLC or corporation.  Clearly such  level of activity required an operating budget at least in excess of half million to a million dollars and  certain minimum levels of family wealth (ca. $50mm- $100mm) or  several million in revenues to make such an undertaking feasible.


While there are many families operating their own family office with assets/revenues in this  size range or indeed much larger there are those that have found that consolidating activities of several families into one office can produce many synergies.  Such arrangements are referred to as “multi-family offices”  consisting of up to a dozen families often organized by the families themselves.  Alternatively, “ multi-family offices” have come together as result of one or two smaller families employing the  services of  professional services providers such as larger accounting firms, asset managers or business management firms.


Indeed it is actually the more traditional business management firms (those that have historically  simultaneously serviced  numerous large entertainment clients on the east and west coast)  that have the experience,  pre-existing infrastructure and the multitude of professionals (CPA’s trust, investment, etc)  to attend to the service requirements of wealthy families who are considering a family office structure but who do not want to go it alone.  A family  may not want to go it alone because the matriarch or patriarch of the family may not have the knowledge, business experience, energy or confidence to assimilate the pieces for an effective office or co-equal members of a family can simply just not agree which path to take.


This is where the existing “multi-family” office could certainly assist. I look forward to your comments and please check back for subsequent Family Office related blogs.



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