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What are some of the keys to the most successful family office?
Family offices have this mystique; some people think only the multi-billionaire families need one. Yet, the key reasons families create family office are shared by many families:namely asset protection and confidentiality. Learn about the different types of offices and what might best suit your family’s needs. Do you want my own consigliere, like Frank from the Godfather? If you’ve seen one family office, you have seen one family office. You can make a big impact! Learn some of the ways.
As always, it is good to have an expert on your side.
Nathan Merrill:
Welcome to the Expert Network Team podcast.
Karl Frank:
I want to learn a little bit more about the size of family that this works for. You mentioned different scales and different business models too. A virtual family office sounds interesting. A multi-family office sounds scalable. A single-family office sounds really expensive. What does this actually look like for different families at different levels of wealth?
In my mind I have a stereotype — I think of The Godfather… the consigliere. I think his name was Frank? But tell me: what does a family office look like? Where are you at for different families at different levels of wealth?
Taylor Smith:
This is probably the most asked question you’ll see in any article or interview about family offices, and it’s where people who have been in the industry a long time can have starkly different opinions.
I recently participated in a webinar where one gentleman said you can’t call it a family office unless there’s $500 million under management. I kind of laughed, because I don’t agree with that. If you have $500 million under management, you are a family office that can do all the things a family office potentially can do — and you have the resources to explore those things.
But that’s like saying you can’t call it a business unless it makes $10 million a year. There are degrees. It’s arbitrary.
Within our practice group we see a very wide scale of what a family office can look like. We have some clients a little over $50 million in net worth where we’ve put together a family office. Then it becomes an exploration within the family: how many advisors and services do they need?
It’s not so much the structuring costs — those are fairly consistent across a $50 million family versus larger. You’ll see variance when you go international and start looking at different jurisdictions, but the bare bones of what a family office structure looks like is pretty consistent.
Where things change is in the continuing costs of maintaining a team. Like any business, if you’re a traditional single or multi-family office, you’re an employer.
A virtual family office is on the lower end of operating costs. But as a family grows and continues to make investments, they may reach a point where last year they didn’t need a particular role — and this year they absolutely do. So organically they can move from a virtual family office to “we need a larger team, all hands on deck.”
Virtual family office doesn’t mean you don’t have employees. And VFOs are often the ones that employ family members. For example: you might have a child who worked at Goldman Sachs and you want to bring them into the family enterprise to help manage the family wealth — compensated, employed, benefits, all of that. It can create roles for both professionals outside the family and people within the family.
In a perfect world, I like planning to contemplate some level of participation across generations. That sets families up to be more successful. Some families may not want that, and that’s okay — a family office should be built to spec.
There’s a corny phrase: “If you’ve seen one family office, you’ve seen one family office.” And it has real credence.
At the heart of the family enterprise, we have to build a story and a “why.” We need clarity across the family and the team — even non-family employees — about what’s important and what is not important, what the family wants involved with and what they absolutely don’t.
Over time, it’s become more common for families to say, “We want to support private businesses in our community that do X,” or “We’re interested in fintech or AI,” and use family funds to participate in that sector. A family office works within guidelines of what matters to the family.
On a larger scale, family offices can have enormous influence. Well-organized family enterprises working strategically — they can have significant economic impact beyond simply passing money from parent to child.
That’s what makes this so fun for us. The possibilities open up. It becomes: What do you like? What do you want to do? Because things become more possible.
It’s incredible to see impact at scale — not just “we made a great investment,” but “we built a foundation,” or “we built projects that create massive community impact.” Even having a small role in helping clients create the tools and structures to do that is exciting.
Karl Frank:
Yeah, I can sense your excitement. That really is exciting to think about.
What are some keys to success? You mentioned getting the next generation involved — and having a mission/vision/purpose, a “this is what our family stands for” conversation.
It also makes me think of a friend of mine — Colorado guy — Courtney Pullen, who helped some of our wealthiest families with family dynamics. Like a therapist, honestly — family systems and money systems.
What other keys do you see for families thinking about this? Or families who already started something — maybe a one-person family office where a bookkeeper stayed on after the business was sold. What can they start working on?
Nathan Merrill:
I’ll add: we’ve done podcasts with one of my favorite outside consultants — a group called More Than Money with Sean Barbarous and Rowy Defendorf and their team. They help families address the issues outside the balance sheet: talking about legacy, communication, how family members view money, goals, aspirations — creating systems and relationships so the family office can succeed.
It helps create a relationship independent of the balance sheet. Those skills have to be practiced over time.
Taylor Smith:
Yes. Running the business only goes so far without communication.
Families often have very different communication patterns, relationship dynamics, and money dynamics — and they avoid dealing with it because it’s uncomfortable and takes work and compromise. But if families only focus on the balance sheet, it’s a disservice.
They need to work on the softer skills and preparation. Every person is different — different talents, different interests. The plan won’t work if we pretend everyone is the same.
Some beneficiaries won’t care about wealth management — they’re not interested. But they might be passionate about philanthropy, process development, marketing, research, fine art investing — there’s a role for many different types of people if the family is willing to widen their view of what the “family business” can be.
Karl Frank:
Do we start out — say we sell a business for $50 million — and we call Goodspeed & Merrill and say, “This is our situation.” Then you come back and say, “We think a virtual family office is the solution,” and you start finding experts to plug in?
Nathan Merrill:
It depends. Often after a business sale, the acquiring company doesn’t need the prior financial team — so a CFO or COO may become redundant. Sometimes that person becomes the leader of the family office.
The idea is to take the burden off family members. You hire a key person to quarterback it. Taylor — anything you want to add?
Taylor Smith:
I agree. Often when we’re on a tight rhythm with family office clients, I’m not always talking directly with the family members. Sometimes they participate — and we enjoy each other’s company — but often we’re working with key employees who are quarterbacking.
We’re collaborative — circling the wagons of service providers at different seats of the family office. Some families want to be on every call; others don’t. Over time, the rhythm adjusts.
In the beginning there’s a lot to talk about. Our firm would architect the structure and lay it out. Once it’s in place, we move into a general counsel / outside general counsel role. That’s where you need someone with authority within the structure to be at the helm — that could be the patriarch, a child, a family member — but someone has to lead.
Nathan Merrill:
And one advantage of our firm is we have multiple disciplines under one roof — family office, wealth transfer, business strategy, tax equity — plus employment, litigation, business transactions. Family offices can go wide and deep.
But if any attorney tells you they can master everything, run the other direction. In this environment, being a jack-of-all-trades is a liability.
Our role evolves into structuring, education, maintenance, and connecting clients with the right advisors — even outside our firm where needed — managing that network over the lifetime of the family’s development.
Taylor Smith:
Exactly. It’s knowing enough to identify issues and say, “Let’s pause — we may need more questions or another advisor.” Then making the connection. I like giving clients options: three trusted people we’ve worked with before.
Once processes and relationships are built, everybody benefits — less friction for the client, more momentum.
And honestly, I don’t think there’s any better area of legal practice than mine. We learn something new all the time — our clients are brilliant, our advisors are brilliant. It stays exciting and non-adversarial.
Karl Frank:
Yeah, I can sense that. You’re a team within a team. It’s very different than litigation.
Okay, I’ve got a question. What’s your vision for the future of this industry? Technology, AI — what does that do for what you do? How do you respond? What does the future look like?
Taylor Smith:
I think it’s the best. People are scared of it, and the people who are scared will predict their own future because they’re not taking action.
We’re at a precipice. The environment is changing. You don’t have to know everything, but you need enough understanding to have a say in how it’s used.
Don’t say, “This will take my job.” Assume it will — and then look at your job and decide how you’ll leverage AI to make it faster, more efficient, less mistake-prone.
That can improve fee structures, make clients happier, and still benefit firms because work gets done better and faster.
You need to take ownership and make it work for you — before someone else decides how it works for you. I’m not afraid of it. The only way to succeed is to partner with it and use it with some control and direction.
Nathan Merrill:
Taylor says: embrace it, partner with it.
I’m reading this really obscure book right now — Think and Grow Rich by Napoleon Hill. (That was sarcastic.)
It was written in 1937 during the Depression, and the world was changing with new technology like radio. The question was: how do you use this new technology?
AI isn’t a totally new type of question. A thinking person asks: how do I use it to create value?
I agree with Taylor. You have to understand where you bring unique value, and it’s an 80/20 problem: 80% of production comes from 20% of effort. Where are you wasting time? Where can AI help?
And AI doesn’t have empathy, emotion, or intuition. Those things matter in family dynamics. AI can help design and execute — but you still need a human consigliere to guide the family.
A well-structured family office isn’t one captain steering the ship. It’s the family steering together. That keeps things healthier and avoids resentment, distrust, and an HBO special.
Karl Frank:
I like it. Closing thoughts?
Nathan Merrill:
Taylor, you’re a rockstar. I’m glad we featured you today. Your heart is in it and your energy will cascade for your family clients.
Karl Frank:
And she’s great to work with too. I tell clients: you’ll get to work with Taylor and you’ll probably never want to talk to me again.
Nathan Merrill:
Not true — they love a Nathan Merrill appearance every once in a while.
Karl Frank:
We do. We appreciate you, man. Taylor — thank you so much for teaching us today.
Taylor Smith:
Thank you. It was fun.
Karl Frank:
And to all of our audience members: create a beautiful day. Thank you.
Thank you for joining us today. We hope you enjoyed the discussion and the information we shared, and find it useful.
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Investment advisor services may be provided through ANI Wealth Management. Securities may be provided through Genios Wealth Management.