Accounting
The family office: CAS for the wealthy
The purpose of a family office is to organize and centralize the management of a family’s personal and business financial affairs, and to maintain the financial house in as good an order as that of a well-run public company.
The origin of the family office concept came from extremely wealthy families, with net worth in today’s money of more than $250 million. The family office was often a separate entity, with employees ranging from a CEO or CFO and a chief investment officer, to a staff of bookkeepers and personal assistants that could do everything from monthly financial statements through booking travel and personal care appointments.
In a traditional family office, no service or calling is beyond the scope of the office’s services. Employees may be called upon to pick up a car from the auto dealership or bail out a troubled family member facing a precarious situation.
Many of these wealthy families have made their money from success in business. The family office staff is separate from the business financial staff and will not be involved in the operations or even the accounting for the business.
They will, however, be extremely familiar with the business as it relates to the family. The family office will stay on top of business matters as they directly relate to family wealth, with issues such as loan guarantees, cash management, timely reporting to shareholders and the family office, dealing with tax planning or other benefit planning as it relates to family members, obtaining current valuations of the company and ensuring that the value of the business is enhanced by smart family and succession planning. The family office may also assist with acquisitions and sales of various business entities via the lens of the family estate plan, capital resources, investment objectives and the best use of talent and resources.
Answering the eternal questions
Clients, no matter how wealthy, always want to know the answer to this question: “How am I doing”? The right family office set up can answer that question from a financial and a personal perspective. What’s surprising to me, however, is that many entrepreneurs cannot really tell you the IRR or CAGR of their closely held business interests. To me, this is an important benchmark that a family office should provide.
The family lawyer or accountant may be suitable to sit in the chair of the executive of the family office. Clearly it is a role for an educated, well-versed financial executive, and not a salesperson. This person should be knowledgeable in many areas, including accounting and recordkeeping systems, law, finance, markets, taxes and risk management.
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In addition to their own personal experience and knowledge, this person should be able to build a team of subject matter experts in any area to support the family’s needs. For example, some family offices own property, businesses, alternative investments or investment accounts overseas. The traditional family office may or may not actually manage the financial assets. It is worth noting that asset oversight is different from asset management. Oversight typically involves coordination and working with investment advisors and money managers, and not actually selecting individual investments. The family office may perform due diligence on investment managers and consultants, but not oversee the actual day-to-day management of the assets. The family office plays a vital role in the independent calculations and evaluation of performance — for each portfolio individually and for the entire portfolio collectively.
Family offices that do get involved with day-to-day asset management are typically those whose fortunes were built by managing investments and those that are so large (typically north of $1 billion) that they have built or acquired their own investment management staff.
The common tasks that a family office may oversee include:
- Comprehensive oversight of family assets.
- Contemporaneous recordkeeping of all financial assets.
- Daily management of property and other real asset holdings.
- Preparation of financial reports showing cash flow, income, gains, losses and statement of assets and liabilities.
- Coordination of the advice and services received from all the clients other professionals.
- Being responsible for implementation and ongoing management for each matter under oversight.
- Offering personal concierge services to the family members for personal or business matters.
- Family and entity governance and carrying out the wishes of the family matriarch or patriarch.
- Oversight of philanthropic activities, foundations or gift trust accounts.
Each family has its own set of unique issues, and each family wants to delegate some or all these matters. But in the traditional family office, where the entity is owned and controlled by the family, there are typically no conflicts of interests or other profit-making activities. The entity’s sole purpose is service to the family.
All in the families
The type of family office services that could be provided by a CPA firm is known as the multifamily office. The MFO is a professional services firm that delivers family office services for more than one family. The origin of the multifamily office comes from traditional family offices where the family decided to use their team to help others for a fee. But beyond a traditional family office that decides to serve others, many for-profit private enterprises have flourished in the multifamily office model, including progressive law and CPA firms.
The multifamily office frequently serves families less wealthy than the single family office, but performs many of the same critical functions with respect to the financial side of family life. For the CPA firm with clients whose net worth exceeds $50 million or so, this model offers the opportunity to deliver a very personal and important service for the right CPA firm. The right firm is likely to be already deeply involved in many families’ financial matters and often has a strong personal relationship with the founding or senior members of the family who may have created the wealth.
Of course, the accounting firms that serve these types of clients are frequently larger firms with old-school partners who want nothing to do with matters beyond accounting and tax. This is another matter that falls into the practice management category. But fortunately, as aging partners retire, the younger generation sees the benefit of delivering elevated levels of service to the firm’s better clients.
A multifamily office is intended to be a for-profit entity. And as such, before you as an individual or CPA firm decide to offer these services, you must carefully document your services, compensation methods and the required licenses, if any. You would also want to be sure that your E&O insurance policy provides adequate protection.
Smaller firms also service clients whose net worth exceeds $50 million, yet most seem “too busy” to elevate their services to the level of family office for their best clients. This is a lost opportunity to serve one of the firm’s best clients at the highest level, and deepen the relationship like no other service. If you still do not want in, at least help your client find a firm that is already set up to serve in this capacity.
Getting paid — and licensed
Many CPA firms are still tied to the hours and rates economy and will track their time and simply send bills each month based on the time spent. While this can work, it is not the most common method of compensation. More common than hourly would be flat fees for a list of covered services.
Some firms will also add fees for assets under management or oversight and help to interview and select the actual asset manager. If your firm also intends to offer asset management, consider segregating your fees for AUM versus traditional family office services. If the asset management division becomes significant, a separate entity may also make sense.
Be careful with the asset management part. You do not want to detract from the significant role of the basic family office and drag the relationship down to the less personal and significant commoditized services of asset management.
Whether your family office fees are based on hours or flat-fee billing, the issue of licensing will still apply. CPAs can avoid registration as an investment advisor if their investment advice or financial planning advice is merely incidental to the practice of public accounting, and not advisory in nature.
Naturally, this is a very subjective standard and many CPAs that I talk to do not register. For many firms, however, they could be dancing on the edge of a highly regulated industry and should seek professional counsel as to whether registration as an investment advisor would make sense.
Do not let the name “registered investment advisor” fool you: The registered investment advisor license and registration is the same license that covers all financial planners. You may be deemed by regulators to be practicing investment advice and financial planning to the extent that you get involved in matters such as shaping goals and objectives and providing advice that is more than incidental to the practice of accounting for the family wealth.
Registration as an investment advisor will also subject you to the same rules about compensation, marketing and audit as other financial services firms registered as RIAs, requiring a compliance professional or consultant. To the extent that you can move client money, have logins to financial accounts or have check-signing authority, your registration level will need to be upgraded to that of a custodian.
Some multifamily offices do oversee or manage assets for their family office clients. Offering these services is easier if you are already a larger investment advisory firm with experienced asset managers on staff. This often is not the profile of the typical CPA financial planning shop, and these are not the types of clients where you should be cutting your teeth in the investment advisory business. A model that makes sense here is to use your intelligence to oversee other managers and critically evaluate their offerings in terms of the criteria that you are looking to fill.
Whether your CPA firm has a vibrant wealth management division or not is irrelevant when it comes to offering family office services. The family office role for a CPA firm is just like outsourced CFO work, except for a family rather than an entity. Call it CAS for the wealthy family entity. As that outsourced CFO, you will also rely on other outside subject matter experts and coordinate their efforts so that nothing falls through the cracks.
Should you choose to work with another firm that calls itself a multifamily office, be careful. In my experience, I have seen many financial advisors — from the largest well-known name firms down to small shops who want to move upmarket — simply call themselves a family office without the experience, desire or services to warrant that title.
As Mahatma Gandhi famously said, “If you don’t ask, you don’t get it.” I bring this up because young accountants (and soon-to-be accounting graduates) are increasingly telling me they must take any assignment their firm gives them.
I understand not wanting to make “waves” when you’re just starting your career. But if you don’t have a clear vision of your future self as a CPA, then you’re never going to get there. And when you continually settle, you could be on the fast-track to burn out. Tri-Merit’s
In a perfect world, your company or firm should collaborate with you to align your work with your career goals. This is huge for recruiting and retaining top talent like you. Unfortunately, it doesn’t always work out that way. That means you need to take charge of controlling your career and for being your own advocate. That means getting clear about your passions.
Identifying your passions
I’ve had a lifelong love affair with entertainment, gaming and numbers. As a child I always claimed the role of banker when playing Monopoly. Growing up, I loved playing video games with my siblings too, whether it was Mario Kart battles or teaming up in co-op adventures. Outside, we spent hours playing football and basketball where competition and strategy were just as exciting. That drive for competition and the thrill of winning — whether in video games or sports — fueled my love for gaming.
Watching characters evolve and worlds unfold has always inspired me. It’s part of what drives my passion for connecting finance to these industries. In many ways, a financial statement is a big puzzle to solve.
I started my career at the Big Four firm where I had interned in college. I was thrilled to have a job at such a prestigious firm even though I knew my first stop — auditing for a large retail chain in Florida — was not where I wanted to spend my career. To lay the groundwork for a transfer to a more interesting area, I made sure I was always one of our group’s strongest performers and used my spare time to scour the firm’s website to identify the partners and managers in charge of the media and entertainment practice. I stayed up on current events in the entertainment industry and even took CPE courses to learn more about accounting issues and nuances of the media and entertainment business.
Once the retail audit in Florida was done, I reached out to my resource director and asked if she knew of any job openings in the media and entertainment practice. The firm had NBC as a client in Los Angeles and New York. It had just opened up a smaller audit for the Puerto Rico division that was headed up in Florida. I liked my chances. But the retail group needed someone year-round in my role. Since I was one of the strongest performers, they didn’t want me to go. So, I kept working hard but never stopped pushing for a transfer and was finally offered an audit assignment for NBC New York. Right before I accepted the transfer, an older colleague I was close with told me that if I really wanted a career as an entertainment industry accountant, then I would have to be in Los Angeles where all the action was. Plus, I didn’t want to go back to the cold weather after my time in Florida.
Instead of moving to New York, I kept looking for opportunities on the West Coast. Eventually, a recruiter told me about Siegried, a nationwide leadership and financial advisory firm with a growing presence in the Los Angeles entertainment market. I flew out for a weekend interview. I was hired soon thereafter as a 23-year-old senior accountant and moved to LA.
I quickly got exposure to entertainment industry leaders such as Caesars and Fox. The Fox assignment was especially rewarding as we had to create 16 new financial statements from scratch for different parts of the company that never had their own financial statements before.
From Siegfried, I moved on to Netflix and ITV America before starting my own firm,
5 keys to charting your ideal career path
1. Clarify your goals: Understand why you’re passionate about an industry and how it aligns with your skills and career aspirations. Even if you don’t know what your true passion in life is, that’s OK. What types of things do you find yourself doing when nobody is forcing you to do it? What energizes you? For example, if you like shopping, you could look into career opportunities in retail. If you love cooking and hosting dinner parties, you could consider the restaurant or hospitality industry. Try to get part-time jobs or internships in those industries, so you’ll get a feel for which parts of the industry you like and which parts you don’t like before making a full-time commitment there.
2. Do your research: Learn about your current (or prospective) firm’s involvement in your desired industry. The web and AI have made it incredibly easy to do research on targeted companies and industries. But you must also get out and talk to people in those industries and ask them what their experiences have been like. Also talk to the managers and their direct reports at your firm who are working in your targeted industry. They’re tasked with helping to develop talent and so they’ll appreciate knowing what you’re really interested in and think you might be good at. Lean into face-to-face interaction, even if that makes you uncomfortable at first.
3. Show your value: Highlight your performance and explain how your interests could benefit the firm, such as bringing fresh perspectives or expanding the client base. There’s always a need for fresh ideas and approaches in our profession. Accounting firms are prone to SALY (Same as Last Year) thinking. But you’re young. You can bring in a fresh take such as: “Hey, I understand how you guys do this. But I learned this: x, y and z. Do you think this would be interesting to you?” They might not agree, but it shows you have an interest in their business and that you’re taking the initiative to learn. That will help you stand out.
4. Have a thoughtful conversation: Schedule a meeting with the managers and resource directors at your firm to discuss your career development, share your interests and propose actionable steps, like taking on relevant projects or clients. They usually have control over your schedule and how your time is allocated at the firm. Make them your allies.
5. Be patient but persistent: The influencers you’re trying to reach are busy people and may not have the same sense of urgency as you do. This is one of the hardest lessons for young professionals to learn. Just because you sent someone a text or email doesn’t mean they’re going to drop everything to read it. You must keep reminding them who you are and what you’re seeking. You may need to follow up every week or two (put it in your calendar or reminder tool) to keep the heat on. Don’t worry about being too pushy —- they’ll let you know if you’re over-stepping. More often than not, they’ll appreciate the courteous, professional reminders.
No one knows you better than yourself and it’s on you — not your employer — to chart your most fulfilling career path. Be your own advocate. My journey from retail auditing to entertainment industry accounting wasn’t just luck — it was the result of careful planning, persistent networking and a clear vision of where I wanted to go. You can too.
Cutting IRS staffing in half over the next 10 months would mean less help and longer waits for many U.S. taxpayers and increase the risk that wealthy tax cheats escape paying what they owe.
It also would leave the Internal Revenue Service with its smallest workforce since at least the 1960s, according to
The Trump administration plans to cut the number of IRS employees in half by the end of the year, Bloomberg Tax reported Tuesday. But gutting the workforce so dramatically and so quickly could mean slower refunds and processing of returns for many Americans, taking the agency back to the difficulties it experienced before an infusion of tens of billions in new funding under the 2022 tax-and-climate law known as the Inflation Reduction Act, according to tax professionals.
“This strikes me as foolhardy, unless your intention is to bankrupt the US government by essentially making tax-paying optional,” said Kimberly Clausing, a tax law professor at the University of California at Los Angeles and a former Treasury Department official under President Joe Biden. “I think the approach they’re following so far seems to be taking a wrecking ball to the system without concern for the consequences.”
The planned job cuts in an IRS workforce that in January was roughly 100,000 would come across the agency. They would include attrition, layoffs, and two already-announced efforts: the firing of probationary employees, and Trump adviser Elon Musk’s “deferred resignation” plan, under which some employees have resigned in exchange for getting paid through this September.
About 12,000 employees have already left the agency under those two efforts.
“The IRS needs more people, not less,” said Lee Meyercord, a partner at Holland & Knight. Job cuts like these “will reverse the dramatic improvement in recent years in taxpayer service, collection, and enforcement.”
Tax cheats “will sleep better at night,” Clausing said, anticipating that audits of wealthy people would be more drawn-out, less efficient, and less probing when they happen at all.
Structure changes, uncertainty
Not everyone has the same view of the workforce changes.
Halving staff numbers “will force the IRS to rethink how it’s structured and how it operates,” said David Kautter, federal specialty tax leader at RSM US LLP and a former Treasury Department tax official during President Donald Trump’s first term. The administration still wants to collect taxes, but the huge cuts are an expression of the idea that the IRS “needs to change” and “do something different,” he said.
But large staffing cuts would mean longer waits for taxpayers to resolve disputes with the IRS, said Nikole Flax, a principal at PricewaterhouseCoopers and a former commissioner of the IRS’s Large Business & International division.
There would be “less opportunities for tax certainty” if dispute-resolution programs like appeals, fast-track settlement and advance pricing agreements become less accessible to taxpayers, she said.
Longer waits on dispute resolution would also cost companies money, in the form of continuing legal fees and interest that keeps accruing on their tax bills.
‘Distrust of the government’
Which areas will feel the greatest impact will depend on exactly where the job cuts ultimately are made, said Monte Jackel, principal at Jackel Tax Law and a former IRS official. Whether they’re from employees generally or focused on IRS divisions such as LB&I and the Office of Chief Counsel; whether they’re primarily in Washington or outside Washington.
“I don’t know how they’re going to prioritize it,” Jackel said.
The consequences of the job cuts could be long-lasting, said Janet Holtzblatt, senior fellow at the Urban-Brookings Tax Policy Center.
Next year’s filing season was already looking “shaky” anyway, she said, because IRS funding via the Inflation Reduction Act is supposed to dry up by the end of this year, and layoffs will only deepen the problems with IRS performance.
“In combination, it adds to the distrust of the government and it creates further vulnerabilities in the IRS’s ability to administer the tax code,” Holtzblatt said.
The threat of major job cuts has already decimated morale among IRS employees, said David Carrone, an IRS revenue agent and a chapter president for the National Treasury Employees Union in Arkansas and Louisiana.
“Your whole routine is gone. You’re waiting for that tap on your shoulder,” Carrone said. Employees continue to do their work, he said, but “the reality of the situation is everybody’s head is spinning.”
Kautter said the job cuts will spur the agency to adopt technology rapidly to carry out its work.
But improved IRS technology isn’t a substitute for the people needed to conduct complex audits of wealthy people’s complicated returns that are needed to force them to pay up, Carrone said.
“The computer can’t catch those.”
Aprio, a Top 25 Firm based in Atlanta, has acquired JMS Advisory Group, a firm that specializes in unclaimed property compliance and escheat process development, also based in Atlanta
Financial terms of the deal were not disclosed. Aprio ranked No. 24 on Accounting Today’s just released
JMS was founded in 2006 and helps clients mitigate risk and capitalize on opportunities through managed unclaimed property compliance. The team includes attorneys, CPAs, CFEs and others.
JMS has a wide range of clients, including enterprise companies, financial institutions, credit unions, insurance companies, hospitality and health care organizations.
“As Aprio continues its rapid growth, we are committed to expanding our services to meet the evolving needs of our clients,” said Aprio CEO Richard Kopelman in a statement Tuesday. “The addition of JMS gives us the opportunity to continue strengthening our position as a future-focused advisory firm. JMS’s focus on escheat management and asset recovery not only enhances our current capabilities but also allows us to deliver even more impactful solutions to help businesses navigate complex compliance challenges.”
JMS president and CEO James Santivanez is joining Aprio as a partner and provides guidance to clients on unclaimed property and state and local tax issues.
“We created JMS to make an impact nationally in the unclaimed property consulting industry, and I’m proud of our nearly 20-year history of helping clients mitigate risk and capitalize on opportunities resulting from accurate and properly managed unclaimed property compliance,” Santivanez said in a statement. “Joining with Aprio takes us to the next level, allowing us to build upon our success while providing even greater value to our clients. This is an exciting next step in our journey.”
JMS founder and director Sherridan Santivanez is also joining Aprio as a partner. He specializes in representing clients before state enforcement authorities and managing complex audits and voluntary disclosures for some of the world’s largest companies. She provides strategic guidance on audit preparation and navigates interactions with state and third-party auditors.
Aprio received a
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