A Monograph White Paper –

The Case for a Virtual Family Office

The case study presented within is only current as of the date delivered, and it is provided for illustrative and informational purposes only. It is not intended to nor should be construed as a guarantee or assurance of future financial outcomes. Each client’s individual circumstances are unique, and outcomes will vary. Past performance is not indicative of future results; projections have inherent limitations and may not come to fruition. The statements contained herein do not constitute nor should be construed as personal financial, tax, or legal advice, nor a solicitation of any type. Each client's situation is unique and thus requires individualized financial, tax, and legal advice from a qualified financial professional, CPA, and attorney, respectively.  The client situation discussed within reflects that of a current client; such client did not receive any cash or non-cash compensation  in relation to this case study. The firm’s disclosures are available here or upon request.

Summary

Monograph empowers affluent families to build a more efficient and effective Family Office through technology-forward delivery.

Whether a family’s balance sheet is in the initial stages of growth, or mature and complex, the Monograph Virtual Family Office can transform a family’s experience with intergenerational wealth.

By reducing complexities, including the requirement for in-house staff, and incorporating more external service providers, we work to free up time, reduce costs, and optimize the expertise of the team.

A virtual family office structure is biased toward simplicity and cost efficiency, with the flexibility to embrace complexity when suitable.

The Client Profile

Many families work for decades to establish and operate a successful family business that builds a legacy of multi-generational wealth.

Upon realizing this material success, they must then embrace a new and more complex reality in which having affluence introduces new financial risks and complexities.

Wealthy families often assume they require a dedicated family office to guide them through matters of investments, tax, philanthropy, and law. While a fully staffed family office does offer the benefits of institutional exclusivity and household customization, a more effective and cost-efficient solution can be implemented using a combination of in-house and outsourced experts.

 

The Challenge

A traditional single-family office is organized like a business, with an internal team of wealth management, investment, legal, accounting, and related professionals.

However, this is not an off-the-shelf purchase. Assembling an optimal family office is a complicated process requiring extensive due diligence, governance development, significant financial investment, and a long-term commitment from leading practitioners in competitive disciplines. Once established, responsibilities of oversight and management of the family office often fall on one or more family members. While the family may eventually delegate some of these human resource tasks, significant supervision may still be required.

Family offices can be expensive and often do not realize economies of scale. 

Total annual expenses can range between one and two percent of total assets, a price tag of between $1.5 million and $3 million for a family with $150 million in active assets. Total staffing requirements also vary widely, from a few to over 50 at the largest. 1

  1. “Counting the costs of running a family office.” Family Office Group, Citi Private Bank. https://www.privatebank.citibank.com/insights/the-costs-of-running-a-family-office

While the traditional family office structure ensures exclusivity, it also introduces unanticipated risks:

  • The family becomes reliant on the services of their hand-selected team which may limit exposure to cutting edge solutions across multiple disciplines including legal, banking, insurance, accounting, tax, and philanthropy.

  • A single, in-house family office also introduces succession risk should the entire team or a key member depart. These risks also apply to maintaining coordinated, continuous family oversight from generation to generation.

  • Depending on the investment priorities and compensation incentives, a family office may unintentionally introduce illiquidity or conflicts of interest.

  • Monograph estimates a family office operating expense to be at least two times more than hiring a comparable team of external specialists due to added human capital, business integration, reporting, and infrastructure expenses. 2

  • An in-house-only service team can lack the independent checks and balances that exist with multiple fiduciary service providers.

  • Centralizing cash management inside the family office can increase fraud risk.

  • An in-house team can lack advanced protections against cyber threats and fraud risk.

2. Based on an assumed family balance sheet of $500MM and a virtual family office staff of two-full time professionals with 13 external service providers costing an estimated $1.5 million annually, compared to a fully staffed, active single-family office of 13 full-time professionals costing an estimated $8.0 million annually. Potential family office scenarios were constructed using industry data and sample pricing from client families.

A Strong Solution

The Monograph Virtual Family Office (VFO) provides wealth management services to a family without the need for a physical office.

Instead, the VFO team is typically composed of independent professionals who collaborate remotely to provide the family with the services they need.

Monograph has integrated advances in financial tech that make the VFO both attractive and efficient.

Our platform offers a robust, flexible, and cost-competitive solution that can manage the entirety of a family’s investment and wealth management needs or be integrated with an existing family office team.

Whether a family’s balance sheet is in the initial stages of growth, or mature and complex, the Monograph Virtual Family Office can transform a family’s experience with intergenerational wealth.

Monograph VFO’s can be tailored to each client situation and offers:

  • Holistic views and decision making: Monograph aggregates key financial information and inventories of existing service relationships for integrated balance sheet planning and coordinated service delivery.

  • Control, transparency, and integrity: While Monograph orchestrates the activities of the VFO, the advice of all service providers is independent. Each element of the virtual family office is only compensated for services rendered. They also maintain a healthy check and balance to provide safety controls for the family.  

  • Flexible and suitable access: Monograph organizes and leads the team of advisors serving the family, targeting relevant expertise, value, and ability. Providers are client-to-service providers as opposed to employer-to-employee, enhancing adaptability and choice.

  • Efficient Use of Time: The shift of human capital management to providers enables the family to focus on desired outcomes and household intentions.

  • Cost efficiency: We survey the market for the highly competitive deliveries across all functions. These include investments, lending, legal services, accounting, property, and casualty insurance as well as lifestyle amenities such as travel and leisure.

  • Continuity of expertise: Because we coordinate and source exceptional partners nationally across the spectrum of wealth products and services, our clients do not face the succession and competitive risks inherent in a single-family office.