Grove: What are you doing differently than the other multifamily offices and investment advisors that are trying to catch the attention of the ultra-high-net-worth markets?
Flynn: One of the firm’s distinguishing factors is its commitment to understanding the trends shaping industry best practices. With this forward-looking approach, we are prepared for the wave of generational wealth transfer that has stymied so many other providers. Our team structure enables us to use personnel in ways that are most effective for each family, allowing for differences in age, experience and working style. We’ve also proactively developed a curriculum to help families ensure that successive generations are prepared for their roles in the family and with the family’s wealth.
Another important thing we’ve done is to make an investment in the intellectual capital of the firm to enrich the staff and give our clients an edge. Meaningful training programs allow us to cultivate technical expertise and thought leadership. The research influences best practices and innovation. Within just the last year, we added some critical client service redundant capacity and also began to institutionalize our business and client intelligence. The depth of knowledge within the enterprise is intrinsically valuable and we want to be able to leverage it to the fullest extent.
Another key difference is our approach to partnering. It’s not simply a matter of outsourcing to a vetted provider—we act as advocates for our clients and seek others who share a similar philosophy. We fully explore options and pricing, working tirelessly to design the perfect solution on the most attractive terms, every time. That ultimately benefits everyone involved.
Grove: You’ve recently started partnering with single-family offices to augment their operations. How does that work?
Flynn: As an independent firm that doesn’t manage or allocate client assets, FFO is an ideal partner, especially for organizations that are looking to disaggregate and outsource their non-investment functions.
Most single-family office executives have earned the trust of the family members through years of dedicated service, sometimes across generational divides. Historically, when clients needed something that fell outside the executive’s defined areas of asset management experience, the options weren’t great—try to provide a solution alone, refer it to an outside professional or refuse the assignment entirely.
Recognizing this phenomenon, we’ve developed a platform that allows us to assemble and manage a team of qualified providers for each client relationship, working with the SFOs to ensure that all resources are aligned toward clearly defined family wealth goals.
The platform lets us deliver and oversee the highest quality solutions while keeping our pricing competitive. It’s such a compelling combination that, over the past several years, we’ve adapted and deployed it effectively on behalf of companies representing most segments of the wealth management community, including RIAs, accounting firms, agents and business managers. We help other professionals deliver a family office experience; in essence, we’re a family office for family offices.
Grove: You’ve mentioned that the FFO team has helped define best practices for the current generation of family office providers. Can you describe some of your work in this area and how it has shaped your current business initiative?
Flynn: Anyone who serves the ultra-wealthy is keenly aware that the integrity, credibility and trust cultivated over years can be undermined by a single mistake. Even a minor mishap can have major repercussions for the client. Every expert in the world agrees that best practices are the answer to reducing mistakes and improving productivity. Rather than waiting for industry consensus, we choose to define best practices by directly engaging high-net-worth clients and a range of key experts through ongoing research initiatives.
Grove: What has your research revealed?
Flynn: Regular surveys of the ultra-wealthy population and their various advisors have helped us identify emerging trends that will shape the future of the industry and quality of life for clients. Our previously mentioned in-house training programs, software models, service provider relationships, products and services, and even the formation of new divisions, have all influenced the timely insights we’ve gathered. We will continue to invest substantial intellectual and capital resources in unearthing, analyzing and understanding these issues.
Despite common portrayals, the wealthiest people in the world are generally preoccupied with many of the same issues—family, health, safety, public image—that confront most Americans. It’s the specific circumstances of their situations that are exceptional.
A number of now robust FFO services began as special projects undertaken on behalf of clients that did not know where else to start. In fact, it’s how our Billionaire Division came to fruition. Several years ago, we developed some highly specialized infrastructure and support systems for a particular billionaire client. Those processes and systems helped us bring on two additional billionaires. Since then, we’ve codified all procedures and adapted the infrastructure to meet the specific needs of a fourth family, also extremely wealthy, but not yet billionaires. It’s become a scalable solution and one that is easily adapted for growth.
Grove: Can you talk about some of your other special projects?
Flynn: In just the past two years, my team and I have helped clients on a range of one-off projects, essentially everything from adopting children and building 200-foot yachts to traveling the world without fear. It’s not about wish fulfillment, but rather helping clients evaluate each event in the context of the overarching family wealth strategy, allowing them to make informed decisions.
In the past few years, we’ve seen a dramatic increase in the number of ultra-wealthy families interested in pursuing private equity, private placements and club deals through the family office structure. Because of the quality and scope of our relationships, FFO is able to help our clients explore and evaluate potential deals, identify co-investment opportunities involving other ultra-wealthy individuals and develop metrics for measuring impact.
Grove: What are the greatest threats to the family office universe and how will you tackle them?
Flynn: The disaggregation of the traditional SFO that began with the economic downturn a few years ago has escalated in each passing year. This has created vast opportunity in the marketplace and, sadly, unfathomable disparity in the quality of service providers. The barriers of entry to the sector are low, but the obstacles to success could not be higher. Advisors that are incompetent, under-qualified or unscrupulous have the potential to threaten the credibility of our sector, so I believe we have the responsibility to maintain the highest ethical standards.
In this environment, our proven ability to skillfully, even delicately, enhance and protect family fortunes, legacies and personal brands is perhaps the most powerful competitive advantage we have.
Covering The Client’s Back
Wouldn’t it be amazing to know that someone had your back all the time, no matter what? A person to make sure you weren’t being ripped off, fleeced or taken advantage of? That’s the job of FFO partner Evan Jehle, and his services have never been in greater demand.
Officially, Jehle and his team are responsible for overseeing tax mitigation, wealth transfer, asset protection and charitable giving—collectively known as advanced planning—for the firm’s ultra-wealthy clients. Unofficially, they are known as “high-class problem solvers.” (Jehle is also a columnist for Private Wealth.)
A top priority for many clients is the investigation of new and popular tax strategies. “Nearly all of our clients, at one time or another, have been pitched an idea that will supposedly reduce their taxes,” says Jehle. “What most don’t know is that a lot these pitches bear unacceptable risks to ultra-wealthy families, and many are simply scams. Our team works with some of the leading global and domestic tax specialists to dissect and evaluate some mind-numbingly complicated stuff to help clients make wise choices.”
Clients of FFO are typically subject to millions of dollars in income, estate, inheritance and gift tax liability. They rely on the firm’s research and critical thinking to make sure their tax bills are as low as they legally can be. “It’s always about mitigation, never evasion. There are a number of smart and legitimate strategies in existence,” explains Jehle. “As the tax code evolves, every change can have far-reaching implications for wealthy families. It is our duty to fully explore every viable and proven option for our clients.”
Another fact that distinguishes FFO from other MFOs is the clear and deliberate absence of financial products. “Ultra-wealthy families increasingly view financial products as commoditized offerings,” confirms Jehle. “Instead, we provide the advisory services to help our clients find, evaluate and coordinate the services they do need from trusted and proven advisors.”
This means that he and his team put in lots of hours building a deep understanding of things like alpha generation and underwriting standards. “We try to cut through the murkiness to understand the nuances of each process,” says Jehle.
The FFO team also handlesthe validation of investment performance reporting and the oversight of carrier selection and underwriting on life insurance policies, all with a goal of making sure the clients know exactly what they’re buying and whether it’s properly structured for their needs.
“There is a sea of predators continually circling the ultra-affluent and the number is only multiplying,” declares Jehle. “We do everything within our power to ensure our clients will never mistakenly get entangled in immoral and illegal schemes. Doing my job well is about giving peace of mind to our clients and their families so they can concentrate on the goals and pursuits that matter most to them.”