The Expert Podcast

There was a really good article this week in the Wall Street Journal about property management and estate management for high-net worth individuals. But as you know, managing a family office is about more than just your domestic staff. A family office has to do with other types of financial arrangements, more than just the groundskeeper and the maid and the chefs and all the physical labor that goes into managing an estate or multiple estates. A lot of it has to do with things like HR, security, risk management, legal. There's a lot of things that go into a staff of employees that handle your family office that are beyond just a domestic staff of individuals.

So, how do you do that? You want to make sure that the three key positions in your family office are very highly skilled and qualified. First of all, you have to have some type of HR or personnel observation to make sure all the activities are properly managed. You have to make sure all the documentation is done properly. The way that payroll is handled is done properly. Remember, you have one less layer of protection between yourself personally and your assets and employees with a family office.

With a corporate office that is one of your revenue producing companies, you have more distance because that company is not in your house. Those people are employed. They have a general manager. It's offsite. The company isn't related to you personally. Where a family office, a domestic staff is one step closer to you. They're in your house. They're on your property. So there may be more risk potential for peril in that family office. So you want to make sure the person who's observing the activities, making sure that if somebody's driving to run errands, there's the right kind of insurance on their personal vehicle or on your commercial auto policy. You also want to make sure that the jobs they do and the work they do is done properly.

So the second position is financial. You want to make sure that the handling of your personal finances, whether it's philanthropic, whether it's investment, sometimes it's even your internal family budgets. If you have children or grandchildren, they get allowances or they get dispersements. Those are handled properly. You want to make sure the accounts are monitored and managed so there's not embezzlement. You also want to make sure that you're looking at the family office itself as a profit center. It doesn't have to just be expenses going out and it gets funded from your for-profit companies. You can create an income producing revenue stream from your family office. So, it's at least self-supporting and possibly even profitable.

And this is done by the strategic creation of what the operations are. Maybe the activities of some of the staff could also have additional revenue producing streams. In this day and age of artificial intelligence, there's ways to use AI to make the processes more efficient and maybe generate revenue. If you only want to use that revenue for philanthropic means that's fine. You can do that. Make it a nonprofit if you like.

In the meantime, remember that actualhum.com offers you live one-on-one private video consultation with an expert in this exact subject. We want to listen to your story. We want to hear your questions. We want to give you expert advisement of your options and tell you what we know about your particular situation.

The third area is a combination of legal and risk management. You might think, well, legal has to do with the personnel. Well, yes and no. Legal will certainly interact with HR and personnel, but legal and risk management has to do with things like are there inherent risk to your property from third parties, vendors, maybe customers that come to your property? It may be things like the activities of the company itself in the marketplace create risk that you could get sued or cause injury or cause damage.

The risk management side also includes things like privacy. Making sure that your personal information isn't included even accidentally in any filing. Sometimes corporate filings will have an address on it that is your home address. Sometimes blueprints of your house will accidentally be revealed. So you want to have a good risk management aligned with legal and one of the biggest areas right now for risk management is cyber. All of these people working in your home, working on your property are probably using some internet access through your house. It might be Wi-Fi. It might be your network. And you want to make sure that that internet access is protected so it doesn't leak into personal information. Even if that domestic staff is not a bad actor. If their activity allows a hacker from the outside to get in, that could be devastating.

So there's a lot of things that go into it. The most important thing is you want your family office to make your life more fulfilling, more rewarding, allow you to do the things that your wealth allows you to do. Whether it's travel, whether it's luxury activities locally, maybe even things like your dining experiences or your acquisition of material goods. Strategy can help you do that without having to worry that each one of those activities is creating liability or creating a loss.

You also want to make sure that your purchases are done efficiently. Basically, you're not getting ripped off by vendors just because you're wealthy. Because your high net worth, you're not overpaying for some of those things. And you might not want to personally get involved with negotiations of how much your yacht charter costs because it makes you feel like you're being cheap. Have a person in your organization do that. You don't have to be the one that does it. That person could pay for themselves by negotiating the large-scale purchases you have, whether it's automobiles, whether it's jet leasing, yacht chartering, remodeling your home. If you negotiate those things, you know, a full-time staff that handles that vendor manager could pay for itself and then some. That could be a profit center.

So for more information about consulting on domestic staff and/or family offices you can click the link below. We have a quarterly journal that comes out that gives you information. We have access to professionals in various fields that can be a sounding board for your professionals in staff that can help create the strategy, coordinate their efforts, not do their job for them because you have excellent people, but give them a second opinion on things or to fill in some blanks on specific knowledge in certain areas.

Thank you for watching another episode of Actual Human Advisory on Describe TV. Remember, we have live one-on-one consultation appointments available at actualhum.com where you can book a one-on-one undivided attention live call with a licensed investigator, a licensed insurance broker, a licensed mortgage broker, real estate broker. I'm also a certified real estate title examiner, a certified civil court mediator, along with having developed and started over 15 businesses, several of which were sold for millions of dollars. So, if you do have questions in any of those categories, you can arrange a one-on-one live video consultation. Use the link below and we'll see you on the next episode.