What is a Virtual Family Office?
A virtual family office (VFO) is a modern alternative to the traditional single-family office, offering comprehensive management of financial and personal affairs for affluent families. Unlike single-family offices that require significant wealth—often hundreds of millions of dollars—VFOs provide similar high-level services without the hefty overhead, making them accessible to families with $5 million to $20 million in investable assets.
Who Benefits from a Virtual Family Office?
VFOs are designed for the “merely affluent,” families who want sophisticated wealth management but don’t have the extreme wealth needed for a traditional family office. These families benefit from tailored solutions that align with their specific needs, preferences, and goals, similar to those enjoyed by the super-rich.
How Virtual Family Offices Work with Clients
At the center of a virtual family office is the client family itself, supported directly by a coordinator, often a wealth manager, who facilitates the efforts of various specialists to meet the client’s needs. The coordinator typically provides high-end investment management and then draws on a network of outside experts for advanced planning services, such as:
- Asset protection
- Tax compliance
- Estate planning
- Concierge medicine
- Family security
The Role of the Coordinator
The coordinator is essential in ensuring that all services are delivered efficiently and effectively. They work closely with the client family to understand their unique situation and preferences through a process like the Total Client Profile. This process involves gathering detailed information about the family’s values, goals, relationships, financials, advisors, processes, and interests to tailor services precisely to their needs.
Important: Of course, each family’s specific needs will depend on its particular situation. Coordinators often use the Total Client Profile to understand their client families on an extremely deep level.
Specialists in a Virtual Family Office
The specialists involved in a VFO fill in the gaps by providing expertise the coordinator may not have. These professionals are selected based on:
- Specific Expertise: Authorities in their fields, such as estate planning or concierge medicine.
- Integrity: High ethical standards are a must.
- Professionalism: Commitment to excellence and continuous learning.
- Personal Chemistry: Strong rapport among specialists and with the coordinator.
Specialists might work directly with the client family or behind the scenes, depending on the situation. This flexibility ensures that families receive the best possible advice and services without unnecessary complexity.
The Total Client Profile Process
The Total Client Profile process is a comprehensive approach to understanding a client family’s complete profile. It organizes information into seven key areas:
- Values: Guiding principles and ethical considerations.
- Goals: Aspirations for loved ones and professional obligations.
- Relationships: Important family and professional connections.
- Financials: Asset structure and liabilities.
- Advisors: Current tax, legal, financial management, and banking relationships.
- Process: Preferred communication methods and meeting participants.
- Interests: Hobbies and philanthropic interests.
Using this model, the coordinator gains a deep understanding of the family, enabling them to effectively leverage specialists’ expertise and deliver targeted, impactful solutions.
Is a Virtual Family Office Right for You?
VFOs offer a synergistic approach and extensive expertise similar to single-family offices but are accessible to a broader range of affluent families. When implemented correctly, a VFO provides coordinated solutions that align with a family’s specific needs and goals, delivering a wide array of impactful services without the prohibitive costs of a traditional family office.