Clearing Up the Confusion Regarding Family Offices

A true family office comprises a team of full-time professionals that entrepreneurs can afford

It’s hardly news that B.C. is home to wealthy business owners ranging from successful mom and pop entrepreneurs to billionaires. But Cindy David, president of Cindy David Financial Group Ltd., says that “a growing number of wealthy businesspeople are falling into the $10-to-$50-million category, with that parameter defining what their business is worth.”

This becomes noteworthy when these entrepreneurs decide to sell their business and require professional services in order to properly manage their family wealth during retirement. Up until recently, they had two choices, both inappropriate: to retain the services of a traditional banking institution (which, despite evolving, can be in the habit of pushing propriety investments onto their clients), or retain the full-time administrations of lawyers, investment advisors, and other professionals—whose cost is often beyond what they can afford.

That’s why the term family office is becoming increasingly familiar within the financial advisory field, but David warns that confusion surrounds what these offices actually do. “Strictly speaking, a family office is the full-time team of professionals that the upper echelons of entrepreneurs can afford; but with the middle range of successful entrepreneurs growing, more and more financial professionals are pooling their resources and offering their services as a family office for hire—although they aren’t necessarily marketing themselves as such. So the distinction is blurred.”

David goes on to remark, “Family offices for hire are ideal for entrepreneurs in the $10-to-$50-million bracket. The team running each office allows clients to avoid the undesirable scenario of selling their business, only to assume the full-time job of managing their wealth. The clients get best-in-class advice without the price associated with traditional family offices.”

For the past decade, David has been part of family office-for-hire teams, and she believes the number of these teams will continue to grow “and fill a niche that at present is quite big and has been underserved. Whether clients want to spend their retirement travelling, or pursuing philanthropic endeavours, or ensuring that their wealth grows and is passed onto younger family members, the professionals comprising family offices for hire will be able to cater to their needs—simply because each of them has spent decades honing their skills in their specific areas of expertise.”

But given that the term family office is currently so loosely defined, David says people seeking the services of a family office for hire have no choice but to practice due diligence. “If they’re ready to retire and need that higher level of financial concierge service, they will have to vet a wide range of companies before settling on one that can serve their needs best.”

David, who represents Raymond James Financial Planning Ltd., and consults to group employee benefits brokers, and investment consultants such as Bull Wealth concludes, “Don’t be afraid to do research. A lot of family office-for-hire professionals are available, including myself. And we have the experience necessary to protect your best interests.”

_{Disclaimer: Cindy David is the President of Cindy David Financial Group and Senior Estate Planning Advisor representing Raymond James Financial Planning Ltd. (RJFP). This article expresses the opinions of the author and not necessarily those of RJFP. It is for information purposes only. It is furnished on the basis and understanding that RJFP is to be under no liability whatsoever in respect thereof. It is provided as a general source of information and should not be construed as an offer or solicitation for the sale or purchase of any product. As with all planning strategies, you should seek the advice of a qualified tax advisor.}