Surprisingly, the vast majority of those with high net worth estates, even the most sophisticated CEOs and business titans, started off as reactive victims.
Why?
Most people don't realize the need for tax planning, succession planning, liquidity management, better investment due diligence, asset protection, or cybersecurity until there is a significant problem.
Family offices exist for one reason:
Being proactive about maximizing returns on the family's wealth.
Otherwise, you are just reacting to disasters or accepting solutions that someone sells to you.
Most families face financial issues as back-burner issues slowly get larger, then out of control. They then react to the problem under pressure.
Waiting to be sold has implicit conflicts of interest, because the salesman just wants to make money off of you - making money for you is at best secondary.
This is how most issues get dealt with, and it invites poor return on investment, and even worse, family strife and dysfunction, because the solution is sourced from a position of weakness.
Most advisors get paid on an hourly basis invites racking up "churn," or useless repetitive back and forth to increase revenues.
It's not the hourly firm's fault per se, but the incentives are all wrong.
A family office team should negotiate on the same side of the table as the wealth-creators, not against them, exploiting them.
This aligns goals and increases return on investment.
Unfortunately, most family offices get built once the vast majority of wealth is already created. And usually a slew of problems cause the family to search for solutions.
The best way is for the family office to be formed as the wealth is growing, so it is optimized along the way.
There are many benefits, not the least of which is that all of the planning and investment returns are compounded over the years.
Having asset protection and cybersecurity in place before an emergency is also crucial.
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