From: Richard C. Wilson <clients@familyoffices.com>
Date: Thu, Oct 7, 2021 at 9:41 AM
Subject: 6 Stages of Private Investor & Family Office Development [Free Checklist]
To: <stevescott@techacq.com>
Since 2007 we have helped set up 100 family offices and we are currently helping create family offices for $25M, $600M, $70M, $50M, $65M, and many $5-$20M net worth families. We do this to be helpful to passive investor clients of our InvestorClub.com and Doctors Investor Club platforms - and have found if we had unusual value in helping someone formalize their virtual or single family office, we can work with them productively on placing capital into direct investments which are aligned with where they are trying to go.
6 Levels of Family Office Formalization: Here are the 6 levels of family office formalization to consider if you are asking yourself if you need or should have a family office solution in place, these lists are not exhaustive but they are hopefully helpful to you as an investor or for those looking to add value to investors at these stages of net worth.
Level 1: $5M-$15M - Virtual Family Office (Light)
- Establish your one-pager Virtual Family Office Dashboard for managing your balance sheet and wealth at a 10,000-foot level
- Identify your wealth creation story, values, mission, and objective
- Confirm your service providers are helping you scale and not holding you back
- Identify a wealth advisor who can re-gear your wealth portfolio for passive income or to meet your objectives based on your long-term goals, this is often not the same brokerage or wealth advisory firm you started with.
- Conduct your own proactive tax planning, your CPA most likely just tells you what is due vs. optimizing your approach to handling bonus depreciation, cost segregation, "real estate professional" status, etc. type options.
There is no excuse not to have at $60K-$70K+ a year executive assistant at this point to help you move faster
- Study what a strategic chokepoint could be that you could acquire, and see what media assets or positioning could grow your net worth faster
- While many investors at this level go to angel investor events, and business owner club groups, attending family office events can help you see how family offices strategize and source deals
- Cut out anyone who is slowing you down, causing extra friction/stress/drama to allow the team to move forward faster in a more aligned fashion
- Now is a good time to read my book How to Start a Family Office, let us know if you need a copy.
Level 2 - $15M-$30M - Full Virtual Family Office
- Consider adding a part-time team member or engaging with a group who can work with you monthly on due diligence next steps, strategy, negotiations, deal sourcing, and structuring of investments.
- Review where you are playing offense in your portfolio and ensure you balance that with lower risk cash flowing hard assets, real estate, and a sophisticated wealth advisor who ideally specializes in virtual family office solutions
- Build a data set of 10-30 assets you would like to acquire and start systematically reaching out to them to uncover more opportunities
- You may want to start organizing 1-2 family meetings a year with extended family members depending on how old your children and/or grandchildren are
- Develop your own unique strategy of business so you keep score and move pieces around your unique gameboard
- Develop a single sentence describing exactly what you look to invest in most often so you are known for that, and get sent those deals first and exclusively
- Identify at 3 choke points you can acquire this year, and create a plan to obtain those positions or assets
- You may consider forming an LLC for your family office if your tax attorney or CPA can guide you on doing that to more easily write off valid expenses and travel managing assets and reviewing deals
- Ensure even if you don't have full-time employees dedicated to the family office that your CFO is strong, and that you have an $80k+ a year executive assistant to save you time
- Ensure you have best in class resources vs. many consultants, brokers, and wealth advisors, look to upgrade who serves you
- Now is a good time to read my book The Single Family Office to review interviews with 30 single family offices and how they operate their teams.
Level 3 - $30M-100M - Virtual Family Office or Single Family Office
- Consider hiring a part-time or 1-3 full-time professionals and hold them accountable by giving them very specific roles and responsibilities and upside on deals for as long as they stay employed by your organization.
- At this point you are squarely in the ultra-wealthy category and should be attending family office events and industry association conferences to connect with peers, adopt new structures and strategies, and source deal flow
- Consider hiring a CEO or Head of Direct Investments for your family office
- Name your family office so that you attract more deal flow that exactly fits your strike zone, create a 3 page website and a one page PDF describing your strike zone
- Consider expanding your one-page Virtual Family Office Dashboard to a full-fledged 7-12 page Charter Document for your family office
- Typically families at this size or larger or holding 2-4 family meetings a year
- Review how you are tracking deals and consider a full fledge data aggregation software if something simple such as Excel or Asana is no longer cutting it
- Formalizing your deal sourcing processes so that you are targeting 200-400 assets within a data set, and have your team working that list to uncover direct investment opportunities that nobody else is looking at right now so you are not in an auction situation every time you negotiate a deal
- At this point we would recommend reading Centimillionaire Strategies - Turning the top 6 challenges of $100M+ net worth families into points of strategic advantage. Even if you are not worth $100M+ yet or serving clients at this level, the strategies apply really to anyone worth $20M-$30M+
Level 4: $100M-$200M - Single Family Office
- At this point you will most likely have at least 1-2 full-time professionals and perhaps as many as 4-7. Some of this will depend on how many of these people are hired within your operating businesses but effectively leveraged for your family office
- Ensure you have institutional quality accounting, family office wealth management, trust and estate planning, and other services and make sure you are not paying a "family office tax" meaning you should be able to negotiate down rates in some cases based on the size of your account with an organization
- Typically the most effective families at this level do not give in to the temptation to create 5 or 10 divisions and focus on just 1-3 things internally while outsourcing the rest to best-in-breed solutions and service providers so they can play a stronger offense and be very effective at what they are strong at.
- Make sure if you haven't already you watch our webinars and workshops on investment structures and tax strategies, and our content within our Private Investor Advantage Workshop would also be helpful
Level 5: $200M-$500M Net Worth - Full Fledged Single Family Office
- At this level, you can afford top talent on your team in every seat - and it can help to look for those who can wear multiple hats. For example, a CEO that can help structure investments but has a tax background.
- Building out your direct investment team for deal sourcing, structuring, negotiation, and integration of acquisitions you are closing on whether it is real estate or operating business assets can help greatly
- All major decisions that could have major 7 figure impacts should be verified by non-biased parties, and second opinions. For example, you may be taking a certain regulatory stance, or tax move, it is wise at this stage and even earlier to pay the extra money for multiple opinions as you are large enough to make it very much worth coming after you for a small mistake, overlooked detail, or structure not formed correctly.
- If you did not already start traveling privately typically families at this stage own at least one private jet or are into a few membership programs, sometimes they buy a jet due to the bonus depreciation write-off while doing so while also needing to save time
Level 6: $500M+ Institutional Quality Single Family Office
- At this stage you are large enough to do just about everything in-house if you want to, but most still use outside solutions for many areas.
- If you have not already looked for more ways to work with publicly traded companies, the heads of the largest real estate brokerage houses nationally, and partnering with corporate venture capital groups within large corporations can be productive
- Many times family offices with $50M-$100M in assets have excellent deals but not as much experience with structuring those investments, or they need capital to complete large transactions, you can potentially partner with these groups
- With this level of resources, you can aggressively acquire strategic chokepoints, media platforms, sources of deal flow, and other ecosystems and platforms in your industry to give you a strong edge in your marketplace
- If you need help setting up a family office, formalizing your family office further, accessing our Virtual Family Office Dashboard, or working with a virtual family office wealth advisory who can play quarterback for you please let us know and we can work together to get that into place. The first step is emailing me directly at Richard@InvestorClub.com on what you are trying to accomplish and where you are at currently, and registering on HTTP://InvestorClub.com or Doctor's Investor Club depending on your background.
If you are not an investor but you work with them or raise capital from them, I hope this list, our Charter Member portal, recorded investor mandates, and our many live investor summits a year are helpful to growing your business.
Richard C. Wilson
Founder and CEO
Team Help Line: (305) 503-9077
Family Office Club
11445 E Via Linda Suite 2-623
Scottsdale, AZ 85259
http://FamilyOffices.com
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