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The Power Of An Accounting Firm’s Family Office Practice

Joshua J. Bodenstadt is a partner with Duffy Kruspodin. He focuses on providing both business and tax consulting services to a broad range of clients with a primary focus on high-net-worth individuals, small closely held businesses, S corporations, and partnerships.

Russ Alan Prince: Please describe Duffy Kruspodin. 

Joshua Bodenstadt: At Duffy Kruspodin, we're known for establishing trusted relationships with our successful families and business owners by providing proactive guidance around all financial issues. While we’re a traditional accounting firm at our core, we have recognized the need to focus on a planning approach for our clients and not just tax compliance. 

By bringing together the expertise from our tax, audit, trusts and estates, valuation, and wealth management departments we can provide a more holistic approach to solving the complex needs of our clients. Recently we established a Family Office Practice.

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Prince: What was your reasoning for establishing a family office practice?

Bodenstadt: While we have a state-of-the-art wealth management practice bringing more value to our clients, we recognized that our wealthiest clients required something more expansive and in-depth. As we researched the benefits that high-performing single-family offices were providing to families over $500 million, we realized we could bring much of that value to our most successful clients through a Family Office Practice.

In our Family Office Practice, we provide some of the expertise in-house. At the same time, we act as a coordinator of external experts. For each family office client, we create and oversee a cohesive team of experts. This elite team guided by the accountants at the firm provides customized solutions to optimize the financial and personal lives of our high-net-worth families and business owners.

Many of our most successful clients are dealing with significant issues around tax planning, estate, and asset protection planning, as well as secession and exit planning. Their financial lives have gotten so complex that they have needs for administrative, lifestyle, and family governance services that traditional accounting and wealth management practices often don’t provide. These can range from things as simple as bill pay and cash flow management to concierge medicine to dealing with interpersonal conflicts within the family as they prepare for the transition of the business to the next generation. We also help our clients with one-off requirements such as buying an airplane or a private island. In all these situations, there are very specific tax and asset protection issues that need to be addressed.  

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To pull all this together, we recognized the need to have a specific Family Office Practice dedicated to addressing the complicated needs and concerns of very successful families and business owners. 

Prince: How does the Family Office Practice work?

Bodenstadt: Our role is to find ways to add value to our clients. Through our discovery process, we identify all of the key goals, relationships, and issues our clients are dealing with and assess whether the current solutions are delivering significant results. Also, we want to make sure our clients are not missing any meaningful opportunities.

Where there are gaps and opportunities, we begin to help them prioritize what’s most important to them now and going forwards. When we get agreement about what they want to do, we implement. 

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For example, on the lifestyle side, many of our most successful clients have become increasingly interested in concierge medicine so that they can have 24/7 access to top medical professionals, especially while traveling out of the country. A large percentage of these individuals and families are also very interested in longevity planning. We work with top concierge medical practices throughout the world to identify the level of healthcare that is ideal for their needs.

With family governance, what we find is that many of our high-net-worth family clients have solid tax and estate plans in place that deal with the mechanics of transferring assets in the most effective way. However, we find these plans to be ineffectual as few of them foster family cohesiveness which is a big concern of our very successful entrepreneurial clients. Studies have shown that most wealth transfers fail to make it past the 2nd generation and the lack of family harmony and preparedness to receive the wealth often causes more serious problems for the family.

Another area that comes up for our clients is special one-off projects. As I mentioned earlier the purchase of an airplane or private island and could include others like cross-border adoption or overseeing the construction of a 60,000-square-foot mansion. While none of these needs are unique, often the most talented experts that provide these services and products are only available to those “in the know” and our role is to know how and when to bring them in.

At the end of the day, our Family Office Practice is all about bringing more value to our wealthiest clients and providing the coordination that is needed for flawless implementation so they can best achieve their goals and deal with their concerns.    

RUSS ALAN PRINCE is the Executive Director of Private Wealth magazine (pw-mag.com) and Chief Content Officer for High-Net-Worth Genius (hnwgenius.com). He consults with family offices, the wealthy, fast-tracking entrepreneurs, and select professionals.

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