I attended the AICPA Engage conference in Las Vegas from Monday 10 June to Thursday 13 June. The conference offered hundreds of sessions across technical and non-technical topics and was attended by about 4,000 accountants, mostly from the USA. I attended two sessions where the Family Office concept was discussed and met a number of firms offering this service. The conclusion I drew was that this is a big deal in the USA.
So what is a family office? What I learned from my discussions in the USA is that it can mean many things and the scope of what is covered can vary enormously. You can have a single family office or a multi-family office. A single family office is dedicated to one family, perhaps with multiple households. It may serve the matriarch and patriarch (generation one) but often the second or third generation.
Some of the services a family office might provide include virtual CFO for the family, investment review and management, estate planning, tax planning and compliance, concierge services and just about any financial, accounting and tax service you can think of. Concierge services can vary enormously in scope and I noticed that a lot of family offices did not provide this option. In essence a family office can provide a single source of compliance, advisory and planning services for a family. Insurance and risk management will typically be a part of the brief and dealing with succession is often key.
A multi family office does the same as a single family office but as the name suggests handles more than one family’s affairs. I met the owners of one firm that looked after 50 families. They were their only clients – just those 50 families.
One family office person I spoke with said “I sacked the maid yesterday” indicating a very high level of involvement of the day to day life of the family. Another family office person I spoke with said “we look after 3 planes for the family”. Of course they are not out there maintaining or flying them but they are managing the people who do.
At one of the lunches I sat next to a lady who was the tax leader for a family office. This office looked after a single family and when I asked how many on the team she said about 30! Then she added “oh, and there are nearly 100 for the foundation – who would of thought you needed more people to give away the money as opposed to making it”! So 130 people solely focused on looking after the interests, including philanthropy, of a single multi generational family! The family had made billions from oil and just wanted to know they were being looked after. We don’t have a huge number of billionaires in Australia but what I did learn is that the family office principles are being employed with families probably down to about $50m in assets. There are plenty of those in Australia.
I think it could be said that many firms in Australia now offer some element of family office services. That said, I think with the growing wealth in Australia there may be an opportunity to follow the USA and do more in this space and get more sophisticated in terms of the offering.
What do you think – is this a growth area for accounting firms in Australia?