Vince Annable is the founder and president of VFO Advisory Group. He established the firm to deliver results to high-net-worth families and individuals who wanted and deserved more than financial advisors usually focused on selling services and products. He is the author of The Household Endowment Model: Wealth Planning for Affluent Families.
Russ Prince: Can you please describe VFO Advisory Group?
Vince Annable: Single-family offices are proving to be the most effective way for families and individuals to optimize their financial and many parts of their non-financial lives. That’s why the number of single-family offices is increasing so quickly. However, most high-net-worth families and individuals don’t have the financial resources required for a single-family office. That’s where VFO Advisory Group comes in.
VFO Advisory Group is for high-net-worth families and individuals that want many of the advantages of a single-family office but cannot afford to set up and maintain one. VFO stands for a “virtual-family office.” We provide the total range of expertise high-net-worth families and individuals are looking for from tax mitigation and business transitions to all manner of wealth planning, retirement services and portfolio management to maximize returns with low volatility. Between the in-house experts and an extensive team of specialists that are part of the VFO Advisory Group team, we can deliver many of the same solutions that single-family offices provide to their super-rich families.
Simply put, the VFO Advisory Group is an extensive, well-coordinated team of professionals providing solutions or input to all of our high-net-worth clients seeking total wealth planning to meet their needs and objectives as well as address their major concerns.
Prince: Can you provide some client examples of the expertise of the VFO Advisory Group?
Annable: Most of our clients are high-net-worth business owners, physicians and dentists looking for a total wealth management approach to solving their short and long-term issues. For just about all of them, a key concern is tax mitigation and wealth planning.
A business owner, for example, approached us in September 2020 concerned that he had a $900,000 tax bill for 2020. He was interested in finding out if there was anything he could do to legitimately lower what he owed. After multiple tax-planning sessions with the client as well as extensive meetings with a range of leading tax professionals, we came up with a set of bright-line solutions.
After reviewing these solutions with the client and his other advisor, we got the go-ahead to implement them. The result was that the client’s tax bill dropped to approximately $130,000. These strategies we put in place provided multiple new entities converting tax dollars into future income and retirement dollars along with additional resources providing asset protection and additional reserves available for use to the business when needed.
Helping high-net-worth clients significantly lower their tax bills is a big part of what we do. Additionally, we regularly help clients maximize their wealth by providing them with a range of wealth planning expertise such as estate to asset profession planning. We do a lot of work with business owners desiring to pass their companies to heirs or sell at the best price possible—of course always looking for ways to keep taxes as low as possible.
Another client we were introduced to at the end of 2020 was a business partnership with two owners. They had plans of selling their business to a private equity group but were concerned with the tax bill they would realize. We were able to structure the sale with significant deferral and elimination of first-year taxes and deferral of remaining taxes over multiple years.
Because of the specialists that are part of our VFO Advisory Group team, we can move very quickly getting the results our clients are looking for. Both examples were the results of our ability to plan for these events during the 4th quarter of the year, which is a really short window. We prefer to start tax planning as early as possible, as that sometimes gives us more options but, when necessary, we sprint.
Prince: What do you see as the future of the wealth management industry?
Annable: The business is going to change a lot over the next five years. For clients needing simpler straightforward services, advisors with limited expertise or AI solutions will suffice. These advisors will be more functionaries than what we think of as advisors today.
For advisors that want to do well financially, they will have to be delivering significant value to high-net-worth clients. The financial advisory model and even the wealth management model are not going to cut it. High-net-worth clients are smart and they’re becoming more astute consumers of financial services and products. Basically, they want substantial value cost-effectively.
A family office is what high-net-worth business owners, physicians and dentists want. A family office provides them the greatest value cost-effectively. A family office model delivers solutions, not financial services and products. So, there’s no question that the more capable advisors are going to be providing more sophisticated solutions via the VFO model.
Russ Alan Prince is the executive director of Private Wealth magazine and one of the leading authorities in the private wealth industry. He consults with family offices, the wealthy, fast-tracking entrepreneurs and select professionals. Connect with him on LinkedIn.com.