Demystifying the Virtual Family Office

Identifying the keys to maximizing the effectiveness of a Virtual Family Office

Throughout the years, many families and fiduciaries have asked, “What is a Virtual Family Office (VFO)?”

My goal in this article is to demystify these structures and share a growing trend within the ultra-high net worth marketplace. A VFO consists of a team of professionals who, rather than operate in silos, collaborate together to create a seamless and holistic wealth management experience, facilitated through well-defined governance, structure, and process. To illustrate this point, let’s start off by sharing a short story.

It is every advisors ideal day: the phone rings with one of your key investment banking relationships on the line sharing with you the details of his client’s imminent liquidity event. Listening to the investment banker describe the situation, you realize that the client, Mr. Smith we’ll call him, might need more than just investment guidance. In fact, the more you learn about the situation, the more it becomes crystal clear that one of the most valuable things you can do for Mr. Smith is educate him on the process of building out a high quality team of advisors. A team that has his best interests at heart. The tangible and intangible benefits to the client can be game-changing, and the economics can appear very attractive if done properly.

In this hypothetical scenario, Mr. Smith is about to sell his family owned business, into which he poured 30 years of blood, sweat, and tears. Mr. Smith has a local advisor who has already done some basic insurance and estate planning but the current advisor is now overwhelmed regarding the complexity of a hybrid asset/stock based sale. Mr. Smith has never hired a dedicated outside CPA nor has he ever engaged in sophisticated estate planning. To make matter worse, he doesn’t have a team of dedicated professionals to properly advise him on best practices.

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_{Oppenheimer & Co. Inc. does not provide legal or tax advice, but will work with your other advisors to assure your needs are addressed. The opinions of the author expressed herein are subject to change without notice and do not necessarily reflect those of the Firm. Additional information is available upon request. Investors should review potential investments with their financial advisor for the appropriateness of that investment with their investment objectives, risk tolerances and financial circumstances.}