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Business Leaders Podcast - Bob Roark 6th February 2020
How to Use Outsourcing to Create Your Virtual Family Office
00:00:00 00:51:13

How to Use Outsourcing to Create Your Virtual Family Office

BLP Evan | Family Office Servicing Companies


Coordinating between all the vendors and providers that a company has to work with can be difficult work, but there are a certain subset of companies that have made it easier to do the work. Family office servicing companies can be a huge relief on the shoulders of your company when it comes to dealing with all these external providers. Evan Jehle is a partner at Flynn Family Office and LVW Flynn. He talks to Bob Roark about his experience working at a family office servicing company, and what these companies can offer you. Could this be the best way for your business to move forward?


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How to Use Outsourcing to Create Your Virtual Family Office

We have a guest away from New York City, Evan Jehle. He is a Partner with FFO and has a unique perspective and service offering that I thought was extremely important for us to go over. Evan, tell us a little bit about your business and who you serve.

First, I want to say thank you for having me. FFO is a family office servicing company. What we do is we are a single-family office service provider to multiple families. That's the key to what we do. We're virtual. We can work with a client anywhere they are in the world. There's a lot of different providers that a family would have that they're dealing with, their investment advisor, their attorney. We coordinate between all of those people to make sure that the family is getting whatever services they need. We're essentially the COO and CFO of their personal lives. That's what we're striving to be.

If you were to look across your clientele, what is a client of yours look like? What industries or pursuits do they entail?

We've got an eclectic client group. We do have an entertainment and sports team group of clients. That's probably 20% of our business, but 80% of our clients are business owners. All first-generation wealth creators. It's the actual wealth creator of the family. We don't have multiple generation family offices. We do have some first generation that is now working to pass wealth down to the children, gen two, which is an exciting part of some of the things that we're doing for them. Teaching them about managing money and how they do that. It is across multiple businesses. We have people that are in fashion, we have people that are in the food industry. It's business owners that have a lot of money and need help on the financial side on how to do it and managing all the different vendors, projects and things that are going on. It's eclectic.

What's your background that got you into this field? Weren't you in a family office at one point?

I started at Rothstein Kass, which was a public accounting firm out of Roseland, New Jersey. I did an audit for a couple of years, which was fun. I knew it wasn't going to be my entire career, but I love the firm and I didn't want to leave. I was lucky enough where Rick Flynn, who is my partner in FFO, was a client of Rothstein Kass, then he joined as a partner and started the family office practice. I volunteered to move out of the audit and into the family office group and hadn't looked back. I came up with an audit background where you learn analytics. Why did this change? What's the reason? You're trying to figure those things out. That served me well because when I'm doing budgeting for a client or I'm doing long-term financial planning with their investment advisor, I'm coming at it from an audit mindset. I'm asking questions, "If you spent this last year, what was the reason it was less this year or more this year? What's going on?" This way, we can help the client understand that.

You and I are familiar with the family office. Some of the readers may not know what a family office does, mean or is.

The best way I can explain it is a single-family office is when one single-family that's ultra-wealthy has its own edit. I'll use me, I work for one family and one family only. I'm their CFO. I'm running home purchases and anything that they do runs through my office and me and all the staff. We only work for that one family. A lot of billionaires, that's what they have, single-family offices. A multifamily office is when you as the billionaire, or the almost billionaire, lets a few of your friends in, "You can't afford to have your own single-family office, but you're my friend. I'm going to let in 3, 4 or 5 other families, which helps me mitigate some of my costs for the single-family office. It allows for the other families to get those services from the team."

It gives them a little bit of growth and learning because you're not working for one family. We are neither of those because we work for a lot of different families, but we're a multifamily office that is working with many different families and we're not formed by a one-parent family. We've led in a few friends. We come from the accounting firm world. We have a client. They're all of our clients and they'd come in. What a family office does is everything financial that you would need, paying your bills, making sure your taxes are done. The single-family officers, you have a tax accountant that's working for you. You have tax preparers, you may not use an accounting firm. Some people will still use the outside accounting firm because you've got technical expertise.

A lot of them have tax staff in-house and they do everything internally. It is having all of your financial aspects as if you were a business, having your finance department fully housed under you. That's the core of what a typical family office does. The higher-level service that doesn't get talked about at parties is the hard part, which is project management. There are always projects. There's always something that a family needs. I'm buying a house, we're building a house, we're buying a house and tearing it down and building a house. All these different real estate scenarios, “I want to buy a plane. I need to hire a nanny. I want to fire my chef."

All the HR-related functions that go around having multiple homes. I need to know what I am spending in this home versus that home. We’ve got a client once, mainly because it was a husband and wife and the husband wanted to show the wife that she was spending too much money on clothes. The wife wanted us hired because she was saying, "You spend more than me." Guess what? She was right and we won. It was great. It's interesting when it's about solving the problem that the family has. What's the reason they're in the room? That's what a family office is supposed to do is solve those problems for the family so they can go on and do what they want to focus on in life.

[bctt tweet="People that seek help from family office servicing companies are an eclectic group of clients." username=""]

If for a person reading goes, "How much money do you need to have to make a standalone family office, economically viable?”

There's no magic number. Don't hold me to this, but when you go into the industry and you talk about it. It seems when you start approaching $1 billion, $750 million, then you've got the assets and you've got income that's coming in that you can afford to do it. It doesn't mean that, "I'm worth $500 million. I can't do it." The costs of having a single-family office can be quite large. We've seen single-family offices, they have their investment team. They have their tax team. They had their accounting and bill pay team and finance team. It could cost $2 million, $3 million, $4 million in payroll for all those different people.

When you look at it that way, you want to make sure you're not someone, "I make $10 million a year." You probably shouldn't have a single-family office and have a $4 million payroll because you're not going to be able to eat. It's balancing, but the industry looks at $750 million starting to approach and being able to do it. It also depends on liquidity. I'm worth $750 million, but it's all in my business and I only make $250 million a year. I can't even afford an outsourced family office model. It depends on a lot of different factors. I go with $750 million.

For you guys, you function in what for me is somewhat a unique term, a virtual family office setting. Let's compare and contrast that in the family office. 

Let's use a single-family office model. A single-family office would have Evan all to themselves. They would have a CFO, maybe even a president that's in charge of running the family office. They might have an investment team and the president or the COO of the family office has all those people in their office runs down the hall. "We need this for a family meeting yet maybe info." That's the single-family office. The virtual family office, we do all that coordination as well, but the investment advisor is knock down the hall from me. It's a matter of managing all the different professionals and all the different locations and making sure that the family is getting whatever it is that they need. I'm not going to say it's easier because it's harder in that you're dealing with multiple different people in multiple different locations. It's a little bit easier because we're all professionals that are hopefully agreeing to play nice in the sandbox.

Whereas if it's a single-family office, everybody's a professional. There's usually one boss where they may be a family member. It may be the president of the family office and everybody drops what they're doing to please that you and one person may end up having an issue. "I didn't get this from the family member because I was working on this for the other family member." In multifamily offices, it could be an issue too. I'm working for the main family that needs something done. I'm not going to work for family number two that may be more urgent because I have to please the first family that I'm working with.

I think about competency. If you're a family office, you have the talents that you have. If you have a virtual family office, they may have a cross border. Who the heck knows, maybe I want to buy an Island somewhere else and you go, "We may not have that expertise in-house?"

That's one of the reasons we've seen single-family offices like tax as an example. Still, using an outside tax firm is how much expertise can someone have inside of a single-family office? They're only as good as what they've seen. It doesn't mean they cannot go to seminars, webinars. It doesn't mean they can't go to other professionals that they know. They can. If you're inside of a firm and there are more people to go to get that resource, it seems to be a trend that we see more and more. They are outsourcing some things like that. The virtual family office, you're not relying on me to be your investment person.

I can't be your investment person. It's not what I do professionally, but I'm able to work with many different investment professionals. Find the right one that makes sense for the client or if the client is working with someone, then, "They've never seen this issue. We have other resources that we can go to ask questions on tax issues, legal issues that come up.” We're able to work with any and many different professionals. It comes and keeps coming back to the root to get the client what they need and that's ultimately what our main goal is. Whatever the clients are looking for, whatever their pain point is, our job is to make it go away and resolve the problem.

As you talk about project management and skillsets, you guys can bring to bear several options or solutions allowing that person to make the absolute best decision with the data at hand.

When we started the practice and we were talking about doing bill pay at a public accounting firm, they're working on hedge funds and doing sophisticated planning. We're talking about the best way to pay a phone bill. You're looking at that and that doesn't sound sexy. You're paying a bill. What's the big deal? The truth is it all starts with bill pay. If I see all the money that's coming in because I'm getting your bank statements, I'm doing your bank recs, I'm paying all of your bills and I see all the money going out, what's the bottom line? I get to see how much you're saving. I get to see how much you're spending. I can help your budget to save more. That allows that money to go to the investments, to different purchases that you may, "I want to buy a car. I want to buy an Aston Martin."

[caption id="attachment_4841" align="aligncenter" width="600"]BLP Evan | Family Office Servicing Companies Family Office Servicing Companies: A family office servicing company helps the family deal with all their providers, and ensures they get the services they need.[/caption]


Based on this, we're going to put money away from your savings. In a few months, it's a technical term. We call it bucketing. What we do is we create buckets for clients and we help them plan, "You bought this home and you've now got this debt. We're going to bucket." When you get your paycheck, we're going to take that paycheck. This covers your regular expenses. This is going to go into investments, but we're going to take this piece and we're going to put it into your home debt repayment bucket. That bucket is still with the investment advisor. It's being invested, but those funds are going to be able to be used so that at some point, you've got enough to pay down the debt. It starts with that is if you don't know what's coming in and going out, you can't do any of that future planning.

About the horror stories we've heard, they make a lot of money and they have houses all over the place or they had no idea about their cashflow and they wake up broke one day. For you guys, about the accountability on cashflow and alleviate, for the sake of argument, it starts with bill pay. What's the first question that you typically get when somebody is thinking about using you for bill pay? What do they ask?

The first thing that they should ask is what your internal controls are? How can I be sure you won't steal from me? That is not the first question I get asked. Honestly, a lot of times, I don't get asked it. We volunteer it because we grew up in an accounting firm. We have that internal control mindset and we built those controls so that no one individual can push anything out. What do they typically ask? Usually it's, “How are you going to pay the bill? I'm seeding control. That's the fear is I'm giving you control. How can I be sure the phone bill gets paid?” It's talking about the process. How are we going to get the bill? I want the bills to come to my home. Inefficient because of this. Here's what happens. The bill comes to your home, then you send it to me once a week. A week has gone by, we process it. Maybe it takes a week because we're getting it on a Monday. We put it in, we pay your bills Thursday. You may end up having late fees and then we're calling in and dealing with that. It's about building the right process for the client so that they feel that they still have the control.

The good thing about technology, we couldn't do this back in 2002, 2003 when we started our practice at Rothstein Kass. Now, we can. The clients can log into the app, approve all the bills and have them go out. They don't have to give over signing authority to Rick or me. They have full control. Not every client wants that because they don't want to have to go in and do it. Some clients want the control, but then they don't go in and push things out and then things are late. It's about the process. Every client is different and you have to work out how it is going to work for that client.

I'm that client that signed up. I've now been using the bill pay service from you guys for 4, 5, 6 months. What are the typical responses that you hear from that client once they've signed up and they have you do bill pay? What do they typically say to you, guys?

The biggest thing that we get is, “I've gotten my time back,” which is great. That's ultimately what we're trying to do is give you your time back. Let us do the administrative part. That's something we get a lot from clients, but it isn't about the bill pay. Most clients, they're not worried about, "My bills are on auto-pay." They come out and get paid. It's about budgeting. What they're asking is, "Over the few months that you've been paying the bills, what am I spending? What do I look like? What am I saving?" That's where the budgeting comes in. We do get people that have a lot of bills. Those people appreciate getting their time back. I'd say the most common response to us paying the bills is, "That's great. I'm not worried about the bills. What's going on with my budgeting? What's going on with my spending? How do I look?" We're able to help them back to planning. That's the reason we do it.

Shifting gears a bit, about the skillset and getting your time back. We only get so much time issued. If I'm a business owner and my client helped business owners. They've sold their business and they come to talk to you. What would that conversation be like? Here's what we can do for you as a post-sale business owner.

The interesting thing about when you're selling your business and you've sold it is what's your next move? What's your next life? Are you staying on in the business? I'm still running the business but now I've taken some equity out. All of a sudden, I've got a lot of liquid cash. What am I doing with that? I'm going to give it to my cousin. He's an investment advisor and I'm going to give it to him and he's going to manage it. I don't know if I would recommend that. I'm sure your cousin is good, but that's where you want to help them understand. You came into some money. What do you want to do with it? The phrase shirtsleeves-to-shirtsleeves in three generations always seem to ring true unless a family does good planning.

What you don't want is the owner who is sold to say, "This money is going to last me my lifetime and my kids, their lifetime, and stop there." What we want to work with them on is this planning, this money that you earned depending on how much it is. This money, we want to see how we can make it last for generations, multi-generations and help them set it up for long-term planning. That's not easy. Not everybody can do that. That's why we're working with different advisors because some people have that experience and they've done that. The first thing we want to understand from the client is what their goal is, depending on the amount. Some clients have come in and said, "My kids aren't getting any of that. I'll give it all to charity when I'm gone or I'm going to spend it down." "Okay, great."

Here's the plan for that individual person, "I want to be able to pay for my great-grandkids to go to college." The money has to last longer. Here's how we're going to do that. It's the power of compounding. It is immense when you're trying to do that planning. Leave the money in the account because when you're leaving the money in, you're earning interest on for 20, 30, 40, 50, 100 years. All of a sudden, that dollar that you put in is worth a million. It's important that they understand that, but if you don't understand the client's goals and what they're trying to accomplish, you're going to get it wrong. Then, you're going to get fired. That's the first one we look from them is what are you trying to get at?

For the business owner that's contemplating a sale and has not completed sale, do you guys interface with them much before a sale?

[bctt tweet="Family office servicing companies want to help you get your time back." username=""]

We do. We've had clients that have sold their business or they're thinking about selling their business. We've run scenarios with them. Here's what it looks like from a tax perspective. Here's what you would get out after the fact. We work with the investment advisor. If they sold at this multiple and they got this amount of dollars, what would you do with it? How much money does it generate? Where are they living? Are they living in Florida? "You're going to get more. Are you in New York City? Thirteen percent, what are you going to do?" We always advise our clients don't move for tax purposes. That doesn't make sense. Live your lifestyle and if you move to Florida, great, move to Florida, but don't move to save money on tax. A lot of people try to do that. A lot of people try to fake it and that's not good because you're going to get caught.

Puerto Rico comes to mind. I think about the de-risking that you do. I'm a business owner. I'm thinking about selling, presale. I own real estate. I own the company. I have a few other things. I think about scenario planning and looking at gaps and he goes, "It's okay not to do A, B, C or D, but it's not okay not to know."

What we've done with clients, we've helped them do buy and sell in their agreement. What happens if partner A passes away? Partner B, you're partners with partner A's wife. How is that working out for you? You've got issues that you have to deal with. We've helped them think of that planning, keyman insurance that comes in. To enable you to hire the next person that's going to help maybe keep the business afloat. There are lots of those issues in succession planning that they're not thinking about, "I want to pass the company down to my children, but I have two children. One is involved in the business and the other one isn't." They're not going to get the running of the business per se. Should they be penalized economically because they wanted to be a lawyer instead of being in the foodservice business? They shouldn't or they should. It depends on what the client is thinking. Those are conversations that we will have with them to help throw concepts at them, so they understand, "I have to think about this.” They’ve sold the business before. They don't know. They're not thinking about it.

The number of experiences and scenarios that you guys have seen through the years, no telling. As you go through and you get cross-pollinated from good minds and outside experts, have you considered a scenario similar to yours, “We did it this way and this was the outcome?” Many business owners and folks don't know what they don't know. It doesn't mean they're not smart people. They just don't know.

That's the thing, it's not a knock on you. It's not a negative not to know. Not every business owner is an international tax expert. I would venture to guess most of them are not, unless you're a business owner in an international tax firm. A lot of times, you're talking to them and they're like, "I don't understand that. I feel dumb.” Why would you feel that way? I don't know the first thing about the construction business. It's not what I do, but if I were talking to an owner of a construction business about what to do for his personal life, he's saying, "I don’t understand that. I don't know. I feel bad." I don't feel bad if I don't know the right way to put the bricks together so that they don't fall apart.

It's an interesting dynamic is a lot of times, people are afraid of the finance because they don't understand it. That's okay. You have to be with trusted advisors and it's okay to seek multiple opinions from people on your team. Where I've seen clients get into trouble is Google. I love Google. They google, "Here's the tax law, great." It's like, "Not quite." What you googled was for Georgia, we're talking about New York. Crazy thing, states have different laws. That's where they run into trouble, I love that they want to educate themselves, but it's okay to ask your professional and say, "I don't know, I've never had to deal with this before."

In your timeframe of working with clients and so on, there's the potential client that doesn't come in when you first talk to them and they do whatever it is they do. They come in later and they go, "I wish I had known." Given your experience of all these years and all of the cases and all of the wisdom, if you are going to offer some advice to either somebody that sold their business and is trying to figure out one, these guys are in New York. The New Yorker guys, what advice, given your experience, would you offer to that individual to bridge the gap?

The most important thing that I would say is if it's after the sale, it's too late. It's not too late to get the rent, but you want to start building your team. If you don't have a team yet, you want to build your team pre-sale. After the sale is over and you build your team, you'd hate for me to come in and say, "Did you think about doing this?" "Nobody told me." You didn't build your team. You built your team after the fact. I would stress that if you're thinking about selling your business, bring in the team that you trust. Bring them in, talk to them. Scenario plan. Talk about the structures. Talk about bringing your tax advisor. Talk about tax planning. What are the ramifications? Those are the things that you have to do it before. An idea on how to save money on taxes, for example, or an idea on how to better structure it, so your children keep the ownership that you want them to keep or have guidelines that they have to hit. It's too late if it's after the fact.

It's a common thing that people do is they hire their advisory team after the fact. They hire part of their advisory team before, but they bring in their accountant after the fact or they bring in their lawyer. Usually, they'll bring in their lawyer because they’ve got to negotiate the deal and they're going to pay for it. Maybe they won't bring in their estate planning lawyer. They didn't think about that. "I sold the business. Here, update my estate plan." “I could have done this, that and the other. We could have passed some of that to your children tax-free. I wish you would've told me before.” I can't tell you how many times I've had that discussion with people where it's like, "Okay." Do it beforehand.

It's not a small piece of money. We had a string of changes in the tax law. Let's say that there's the business owner that sold and they said, "I always wanted to buy a house, wherever that is. By the way, I've always wanted to have a restaurant, which seems to be normal. I want to have a farm and you see that. It's time for me to have an airplane," which typically is the kiss of death near as I can tell. Let's talk about a potential airplane purchase. What are your thoughts when somebody said that?

The first thing is I want to make sure they understand. Are you going to use it? Are you thinking about, "I'm going to buy a whole plane. Am I buying fractional ownership?" What's the thinking? Before you get to that it's, "What's the reason you're thinking about doing this?" "I've got $500 million and I can." That doesn't mean they should. "I fly twice a year." "Are you going to buy the plane and then rent it out and charter it and you're going to be in the charter business?" It's about throwing scenarios at them to get them to think about what's the reason they're doing it. If it's as a status or I feel like I should have one, I'm not going to say always because there are no absolutes. It sounds like that's probably not the best decision to be making. It's helping them make that decision.

[caption id="attachment_4842" align="aligncenter" width="600"]BLP Evan | Family Office Servicing Companies Family Office Servicing Companies: Family office servicing companies do bucketing, which is helping clients set aside money and plan their budgets.[/caption]


There are tax ramifications that have to think about. You want to make sure that the tax partner is involved in the conversation. What's deductible versus not deductible? Are you using it for a new business venture? No, it's all personal. None of it's deductible. It's after-tax dollars. That means the money's coming out of your investment account. That means you're not putting it away. What does that mean? Sometimes it's worth it because the client needs it and it makes sense. Other times, the client can afford it and they don't need it, but they can afford it and they're going to do it because they want to. Do we try to help counsel them as to understand what the reason you're doing it is? You want it. What's the best way to structure it if you are going to proceed?

It's funny, you think about all the circumstances. I met a business owner and I sold my business a short time ago. You go, "How is it going? Go onboard?" I don't know what to do with myself. What do you want to do? I want to buy another business. You go, "Really? Interesting. What kind of business?" "The same thing I sold." "Okay.” “I don't need the money.” “What are you doing?" For you, when you look at somebody that says, "I've got money and I've got more than I need and I want to take in. I enjoy working and I want to buy another business." What might a conversation with that person look like?

It starts with what's the reason. That's the first one. What's the reason we're having this dialogue? What I've learned is when I say to a client, "Why do you want to do that? Why?" It comes off negative. I've gotten a few times smack. I've learned. That's the reason I changed it. I say, "What is the reason that you're thinking about this? I want to understand." You're exactly right. It's the why. Why are you doing this? When they say, "I'm bored." "You want to go back into that business. Do you want to be an investor? Do you want to be an owner-operator? Which bucket do you want to be in?" If you want it to go back to work, that's why it's important to have the conversation and build the team pre-sale. I would hope that if I was on the team and I was talking to the client pre-sale, “What's the reason you're going to sell the business?” “I can cash out.” “What are you going to do day one after the business is sold?” “I have no idea.” “We probably should figure that out before you sell the business.” It always happens. They don't think about that.

Phase three, they don't think about it. 

It's like, "What am I going to do?" I've seen clients that have come in and they've said, "I'm going to be a car wash giant and I'm going to go into franchising. I'm going to buy a bunch of franchises and do that." "We can help you do that. We know franchise brokers that can help you make those purchases and things like that. We can help vet it and make sure that it makes sense. That it's going to turn a profit or at the least not lose money.” Sometimes you're doing it again, "I want to have that restaurant." Restaurants historically is a low-margin business that the stories are everywhere. How many people have lost their shirts over restaurants? "I want to be in the restaurant business and I can afford it. I'm going to spend this money and take the risk."

There are plenty of people though that have made a lot of money in the restaurant business. It's about who are you going in the business with? If you have the right teammate who's had success and we've had clients that have done the restaurant business. They've done it with people that have already had success in that area. Therefore, we did not lose our shirts. They've been profitable and they've gotten their money back. It's always about the ‘how.’ There's what you want to do, what does the client wants to do and then how you do it. That's what we focus on with them is how we can accomplish what you want to accomplish?

Here's the math, the markers. There are some of the clients that said, "I like to collect, fill in the blank, cars, art, whatever."

Art's a big one. Cars are also a big one, a little harder to store.

At some point, how do you keep all the batteries charged up? I've seen that dance before with multiple Chargers and go like, "I don't remember how to start that one." It's an interesting thing. For some of the things that would strike my mind, you guys are not local in a different range of Colorado. There may be somebody that pushes back and go, "I don't know that I can have a relationship with somebody that's on the East Coast." What would you say to that person?

I would say that I'd be happy to introduce them to the client that we have in Nashville. I'd be happy to introduce them to several of our LA clients. I have a client in London and I don't handle the UK stuff. We have someone over there that's handling all the Europe stuff, but everything that's over here in the US that's what I'm handling. The truth is if you're worried about meetings, it's great. I can get on a plane and fly to wherever you are. If you're worried about how many times you’re going to come to the office and sit down with the bookkeeper and talk about bill pay, we've got phones. If you want to see me, we've got Zoom, we've got FaceTime. There are all options where we can do this dialogue. We don't have to be in the same state. We don't even have to be in the same country.

I understand there are clients that I want someone local. We can help find someone local. We've done this with a few clients where they have a person that may be working out of their home. It’s their local contact and then that person is reporting to us. That's how maybe we would solve something like that. The truth is we've had a couple of clients here and there that didn't hire us because I don't want to hire someone that's in New York when I'm in Colorado or I'm in Seattle. How am I going to work with somebody that's the time difference? We would put our California person on it. She's in the same time zone. We are a national firm with people all over the place. We're in New York. Our office is in New York, our employees are in New York. We're New York-centric, but we can work with anybody anywhere they are.

[bctt tweet="If you're planning on selling your business, make sure to bring in a team you trust." username=""]

The typical response from folks who go, “Why do you back up? Why do you go ahead?” Before I forget, how can people find you on social media? 

I am not on Facebook or Instagram because I'm not cool enough to be on either. I am on Twitter. Sometimes I will be ranting about my favorite football team up here, the New York Jets, who drive you crazy. Other times, it’s things that, "I want to let you know, here was an interesting article that was in Forbes and people should read it." Reach out to me on Twitter, @EvanJehle.

You're also on LinkedIn, Evan Jehle.

Those are the two key ones that I'm communicating on.

What's your website?

It's www.FFOLLC.com.

What I want to make sure is, one, they know how to reach you. Two, I'm that business owner, "I sold my businesses. I want to reach out to Evan and have a discussion." Walk me through the process between where you start visiting with somebody and then when you decide to engage. What are the steps for you guys?

The first thing is usually a phone call with the client to understand what the reason we’re chatting is. There's usually a pain point that gets them on the phone. Sometimes you get shoppers, "I'm checking out the merchandise, trying to see what the sale is. Maybe I see something I like." We get those on occasion. Typically, when we get someone who's coming in and they're a buyer, they're ready to make a switch. It's like, "What happened? What's the pain point?" We try to understand that. We can tell them, "We're right for you because we can solve the pain point and here's how we would do that. Does that resonate with you?" Sometimes we're not the right fit. Let's say the problem they have is, "I don't like my asset allocation and I want to move advisors." "I can recommend some people and we work with some great advisors. I can help you vet people. We can get involved, but is that all you need?" "Yes." "We're happy to help,” but that wouldn't be an ideal client because you're not paying us.

We're not the investment advisor. It's about understanding the pain point. How can we solve it? Once we figure that out, it would go to the next question always, how much does it cost? Understandable. We have a range of fees depending on how many services you want. I want the full gamut of services. While that's going to be in the higher range as opposed to I want some light bill pay, some bookkeeping, and some budgeting help. That might be in the lower to mid-range depending on the volume of transactions. We understand that. We'll put together a proposal. We'll send it to the prospect. They'll say, "Yay or nay." A lot of times they'll say, "I'm meeting with 2 or 3 other people.” Hopefully, they come back. We've wowed them differently than the other people, knock on wood.

Usually that happens, every now and then we don't get the gig. The reason that people end up coming back to us is we have a track record in the industry. We've been around a long time. The one thing that people don't ask enough is when we're able to start by saying, "What's the question I should have asked but didn't?" I always go back to, "You didn't ask me what's your internal controls to prevent anybody in your firm from stealing from me." When you're giving up control and you're giving access to your bank account, that should be your 1st, 2nd and 3rd question.

We've seen the horror stories.

[caption id="attachment_4843" align="aligncenter" width="600"]BLP Evan | Family Office Servicing Companies Family Office Servicing Companies: Being profitable and getting your money back on your investment is always about the how.[/caption]


It's all over the place. Uma Thurman had the Prime. You hear about it with celebrities a lot because they're flashier names, but it's not just celebrities. There are plenty of family offices that have come in. The newest craze is these hackers that hack your email. They sit there for months and figure out, "I know exactly how I'm going to word this email." They blow in an email from a fake email address, but it looks like the client. "Yes, sure. Let me wire that money," and then gone. You should be asking me what my protocol is because the bank does a callback. If I'm the signer on the account, the bank's doing the callback with me and I'm approving it because I got the email, not an FFO. You want to know what our process is internally so that we make sure you are the one making the request.

Some clients honestly get annoyed by it because I'll text them or I'll call them and I'll be like, "This request looks weird. I want to make sure it's you." It's like, "Yes, it's me." "Would you rather have me send it out and then it wasn't you?" I'd rather be that guy. That's the key question that you've got to ask those things. It's not that, "I didn't think about that." You don't know to ask it. It's not what you do. A lot of advisors in my position, they may not have a good answer. I've heard people say, "We're comfortable with that advisor because the answer was the only person that can steal is me and I wouldn't do that." "Okay." I'm sure that's the case. I trust you implicitly but that's the answer? That's the person to be most afraid of is the one that has unfettered power.

I was thinking about the quality of a decision for a high net worth person and also trying to protect them. It's not bill pay. It's trying to avoid some potholes, taking care of the family, de-risking, trying to look and say, "Do you have umbrella policies? Simply, is it big enough?" Have you done anything to protect from lawsuits? What are you doing? If you're doing a new venture, are you titling in that properly so they can't come to get the rest of your money? What I was heading toward is what do you notice from the folks that are starting to use a company like yours on the depth or quality of their decisions? When they've been working with you guys for some time, what do you see?

What we see when we're onboarding a client is it depends on if they've worked with somebody like us versus if they haven't. If we're taking on a family and this is their first family office experience where they haven't, a lot of times we find things that are missed. Early on in my career, we took on a new client and one of the first things we do is we look at the P&C insurance. We're not insurance brokers, we're not selling P&C insurance. I am an accountant by training. I'm a CPA. I look at a balance sheet that has all of its assets. I looked down the balance sheet and I say, "Home number one, where's the insurance policy for that? Check. Home number two, check. Home number three, I don't see, I must not have that. Let me call the insurance broker. What home number three?" It's because when you're paying for a home in cash, you don't have the bank sitting there saying "Send me your insurance information." Here was a client that had a third home that they were renovating and doing construction on and they did not have insurance. That's crazy. The thing would have burned to the ground, they would have lost everything.

What if somebody fell off the roof?

Many things could have happened. That's what a family office does versus if I were your CPA. If I'm your CPA, I'm doing a tax return and maybe I'm putting together a financial statement. The family office, I have to make sure that the insurance broker knows you bought this piece of artwork. I have to make sure if the tax team understands you bought this piece of artwork and we didn't pay sales tax because it came from overseas. We have to pay use tax. It's coordinating with all these various financial issues that pop up all day, every day. That's the key when we're onboarding a client. We're finding a lot of these things that get missed. It’s not the client's fault. They don't know. They didn't have anybody looking for these things.

It could be that their advisors, it's not their fault either because you may have siloed advisors that don't know.

As an investment advisor, do you ask your client, “Send me your P&C insurance so I can check it against your balance sheet to make sure your home is properly insured?” The answer's no. They don't do that. It's not their job. If we're getting somebody that had a family office previously or a business manager, which is what the entertainers are using, then we tend to get general ledgers. We get back up, we get copies of bills. It's a little bit easier on the transition. They had somebody that whether they did a good job or not is another story but at least somebody was doing something along those lines and we have something to go by. It depends on whether they had someone or not. After they've been working with us for a while, what you're seeing is us producing information to the client and then the client's ability to make decisions with confidence because they know somebody's looked, somebody's giving me this information, they have vetted it and it's correct. Somehow, I can make a decision.

The difference between data and intelligence is data is data. 

It is what you do with it.

In thinking about this, the one thing that you said more than once, Evan, is what didn't I ask you that I should have asked you?

The one thing that people should ask again that maybe is, "What is the philosophy of client service that we have at FFO? How are we looking to serve our clients?" Not in terms of, "This is the software that we're using,” but what's the culture? What you affirm about that makes us have great employees that are great team members that therefore become great client service people. That's something that a lot of people don't ask. We work hard on the culture of our firm. When people don't fit the culture, when we're hiring people, we ask questions differently because we're looking for people to fit that. Our culture is a competitive innovation. That's what it's about.

What that means is not a competition, "I have to be better than Rick." That has nothing to do with Rick. I have to be better and more innovative tomorrow than I am today. What am I doing in terms of my learning and development so that I'm a better client service person next week than I was this week? It's always about learning and dealing with the clients in a way where I've made mistakes. I've talked to clients and pissed them off and they've said, "You're out of your mind. I wouldn't have said it that way." I'm like, "Yeah, you're right." It's learning from those experiences and not being afraid to make a mistake. If you're afraid to make a mistake, it's like in football, you're playing prevent defense. I'm playing not to lose. What always happens is you'll lose. It's about not being afraid to make that mistake and go and innovate.

It's not just about learning. It's about how can I things better differently than I've been doing it? We try to resonate that throughout the whole firm. That's what we do with our development plans for our employees and our team members is we're working with them to create a culture where, "I want to try to do this for a client." "You're going to do it. I'm going to help you. We're going to get great client service." The reason I'm saying this is when you have team members that are part of your team that is looking to be better in themselves. You tend to get much better client service people because they're sitting here saying, "I want to achieve. I want to get things done. I want to be better for the client." The results for the client tend to be better. That's something that a lot of people don't ask and you did not ask it. It is something that I do think is important and it is something that we're proud of here at FFO. I don't know if I'm being corny, but that's the reason that we're passionate about it.

It's the reason we're having this discussion because what I'm interested in bringing to bear is understanding what specialists do, understand how that fits in with the client requirement. Like I tell clients many times, "It's okay not to do. It's not okay not to know." You’ve got to know and if you're not a lifelong learner, then you're going to get run over at some point. You’ve got to sharpen the saw all the time. In closing for the folks that are reading out there, is if you didn't know that this is available, it’s good that now you know. If you didn't know who to reach out to get informed, now you know as well, talk to Evan. As the world gets more complex. The one thing you can't buy more of is time, as far as I know. You take a look at this. Is it worth the money you're spending? Would you rather have the time? If you think the quality of your decisions will go up by the quality of the data that you can start saying. If you can't figure out your numbers, you're apt to make a wrong decision. I appreciate you taking the time. You in particular, and I met Rick out in San Jose before. I appreciate you sharing your wisdom.

Thank you for having me on. For everyone that's reading, thank you and I hope it's helpful. If anyone has any questions or wants to understand the family office industry or what's going on, reach out to me. I’m happy to help.

I sure appreciate it. Evan, thank you for your time.

Thank you.

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About Evan Jehle

BLP Evan | Family Office Servicing CompaniesEvan Jehle, Partner at Flynn Family Office ("FFO"), is an industry expert providing business management, tax and accounting services to ultra-high-net-worth clients, including celebrities, athletes, asset managers and executives.

Evan specializes in wealth preservation and growth strategies, such as education planning, investment portfolio aggregation, retirement expense forecasting and small business consulting—all executed with a focus on advantageous tax planning.

Throughout his career, Evan has worked with a variety of entertainment clientele to oversee tax issues specific to the industry, manage royalties, value intellectual property, launch namesake companies and plan for common liquidity issues faced by celebrities and athletes.

Evan is a Certified Public Accountant (CPA) in New York and holds a Personal Financial Specialist (PFS) Certification from the American Institute of Certified Public Accountants (AICPA). Combining his depth of experience with the PFS accreditation, Evan is uniquely positioned to serve as a trusted advisor providing objective recommendations in all areas of personal financial planning, including income tax, estate, retirement, investment and risk management.

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