P. J. DiNuzzo, CPA, PFS, MBA, MSTx is the founder, president and lead consultant at DiNuzzo Middle-Market Family Office and DiNuzzo Private Wealth Inc., an investment advisor and registered with the United States Securities and Exchange Commission since 1989, located in Beaver, Pa. and Pittsburgh. P. J. is also the author of the breakthrough book: The DiNuzzo “Middle-Market Family Office” Breakthrough.

Prince: What is a middle-market family office?
DiNuzzo: In short, a middle-market family office is a proprietary way of serving certain successful closely held business owners and affluent families. I identified, coined and trademarked the name and approach that creates strategic tax, risk, cash-flow and lifestyle options for a large underserved group of successful privately held business owners and affluent families within a fiduciary type structure. 

Essentially my Middle-Market Family Office provides a single-family office level of service and expertise in a way that makes financial sense for the clients, family office consultants and the extensive and diverse group of experts I bring in to serve my clients.

I lead and coordinate three teams—think… “teams within teams”—of best-of-the-best professionals in three categories to work seamlessly together and with trusted advisors who are already serving the client. There is a core team of concierge service, tax, financial wellness, life planning, investment planning and “wealth management professionals” to provide guidance, advice and support to my clients on a daily basis. 

The second team is a cohesive group of best-of-the-best experts in areas needed regularly to advance the clients’ tax, risk management, cash-flow and lifestyle goals and needs. I also have an extended network of best-of-the-best “subject matter experts” available at a moment’s notice to consult and support even the most unique or specialized needs of the client, which don’t often arise in the regular course of their lives—the third type of team.

The ideal candidate for my DiNuzzo Middle-Market Family Office generally:
• makes $1 million or more per year in income, or
• has a net worth of $10 million to $100+ million, or
• owns a business that generates $10 million or more in annual revenue, or
• is rapidly approaching one of those three benchmarks.

The most acute objective guidance needs for my DiNuzzo Middle-Market Family Office are successful closely held business owners and affluent families with between $10 million and $50 million in net worth. These people usually have the same needs and wants as the ultra-wealthy but not the same velocity. My DiNuzzo Middle-Market Family Office allows me to help them significantly benefit from many of the same services, solutions, and high level of care as the ultra-wealthy achieve using single-family offices without the extraordinary expense of engaging a full-time staff coupled with a dedicated team of specialists. I’m able to provide equivalent high-quality expertise and level of care and service to people worth south of $100 million.

Until my DiNuzzo Middle-Market Family Office, the truly specialized experts, professionals and consultants have not wanted to or been able to come downstream from serving the ultra wealthy to provide the same highly customized, consultative level of expert service needed to help them achieve their goals. I established the DiNuzzo Middle-Market Family Office because successful middle-market business owners and affluent families have been dangerously underserved.

Prince: You said that the middle market is underserved. Just what do you mean by that?
DiNuzzo: Before my DiNuzzo Middle-Market Family Office, these successful middle-market business owners and affluent families were being served primarily by brokers and advisors who were woefully unqualified and underprepared, often to the point of malpractice, than the level of skill and experience needed to help the clients achieve their goals. Most of the best-of-the-best subject matter experts focused on serving ultra-wealthy families worth $1 billion or more. Some came slightly downstream to serve families worth $250+ million. Very few had the need or desire to come more downstream than that because it would require them to invest more hours for less than they could make by continuing serving the ultra-wealthy.

Moreover, these brokers and advisors were often focused primarily on selling one particular product or service. Because of this, they focus on selling their products or services they can sell to the client and do not take a consultative approach. With my DiNuzzo Middle-Market Family Office, I take a fully consultative approach to discover all of my clients’ interests and then provide them with viable options and solutions to achieve them. 

My process repeatedly follows the same pattern of (1) discovery, (2) specialist coordination, (3) presenting the client with options, along with the benefits and limitations of each and (4) leaving them to do what they do best: make final decisions. Unlike many typical brokers or advisors serving these middle-market business owners or advisors, I have a panoply of strategies and tools available to me and never push a client toward any single option. Many of my discovery meetings result in zero income for me or my firm but still produce value-added options for the client.

Additionally, none of the brokers and advisors serving this market have three well-coordinated teams of experts available to even attempt to provide the comprehensive level of services required or necessary to cater to the clients’ full spectrum of needs. With my DiNuzzo Middle-Market Family Office, I coordinate with every expert needed to discover, research, present options, along with the advantages and disadvantages of each, and deliver the results my clients demand using the options my clients decide to pursue. I make sure every relevant expert on my team fully understands what each other is doing so my clients don’t end up with any dangerous legal, tax, risk, or cash-flow gaps, which are created with one advisor doesn’t know what the others are doing.

I treat my clients just like the single-family offices treat the ultra-wealthy families they serve, operating a truly client-centered approach to get to know my clients and their business, personal, family and other goals and concerns before I ever present a single possibility or recommendation.

Prince: What is the future of the middle-market family office?
DiNuzzo: The future is bright for talented consultants who are willing to put in the work to build a middle-market family office and offering the right way. Anyone looking to use “family office” as a marketing tool to sell products or services to successful middle-market business owners and affluent families will struggle mightily, produce slipshod service, and may even cross over the line into malpractice.

In my opinion, best practices dictate the need to develop three well-coordinated teams of experts to serve this market’s regular and specialized needs, act as the coordinator to pull in the right team members at the right times, and ensure every relevant professional understands what’s happening so your clients don’tend up with unnecessary gaps or missed opportunities because one professional didn’t know what another professional was doing. 

Finally, everyone on your teams needs to be just as objectively dedicated to the client experience as you are and comfortable using a fee structure that is different from what they’re used to, knowing that it will work out well for them in the long term.

If you can do each of these things, the future is truly bright and exciting. However, the future is also challenging because this a completely new and different model unlike anything currently in place in subtle and nuanced but material ways. Unfortunately, many brokers and advisors are targeting this market from a marketing perspective without the approach, expertise, experience or structure to provide a true middle-market family office experience to their clients. Many of them are working with professionals who don’t have the knowledge, expertise and tools to provide the solutions necessary to optimize client goals and best address their concerns. They are woefully underprepared, often to the point of malpractice. The future in this space is all about the bar being raised…not lowered.

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