You only need to become ultra wealthy once if you have proper defensive strategies.

[02:26]

"One of our clients bought a motel. Two weeks after purchasing it, there was a carbon monoxide leak and two teenage girls were found unconscious and they had to be life-flighted to a hospital. Luckily, my client is an attorney. They had read every word of their insurance policy."

[04:14]

"Many times they will not tell you pricing unless they know your net worth. Whether you have four LLCs or 42 LLCs, they want to know if you're worth 400 million dollars so they can charge you 40 times more than what they might charge you someone worth four million dollars."

[01:30]

"Trust and estate planning to protect the assets you've built is really important part of building up your defense to make sure you don't lose your wealth, and you only need to become ultra wealthy once if you have the proper defensive strategies in place."

Full transcript

And welcome to part five of how to start a family office Series. So we've talked about what is a family office, why you'd want to have a family office, how to put together your family office dashboard and values and why that's important. Also, how to start talking to your family about this issue and why it's important. It's really just not doing all their hard work, Justice, they don't put the time and formalize in their family office.

I'd like to now talk about service providers and partners. You will need to get a functional virtual or single family office in place first of all. A lot of times when this topic comes up, people ask: how many full-time team members do I need? Well, it's a virtual family office. Everybody might work remotely or virtually. I just need a part-time CIO or CFO.

You might want to hire one full-time professional or two or three full-time professionals virtually. If you're a full-fledged single family office, most people are hiring four to six full-time professionals, if not much, much more. Sometimes, the number of people working for your family office is really hard to describe because, because many of your employees might be inside of a holding company. If you're building a platform business and the manufacturing space and you have 400 employees there and the only direct Investments you're doing are in a manufacturing companies, then a lot of your employees that are in your quote-unquote family office are really within their Manufacturing Company, like your CFO or controller there, or chief investment officer, Etc.

When it comes to critical service providers you'll want to connect with, though, trust and estate planning to protect the assets you've built is really important part of building up your defense to make sure you don't lose your wealth, and you only need to become ultra wealthy once if you have the proper defensive strategies in place, also having a insurance agent that is excellent and really looking out for you and adding strategic value. With each of these service providers, you should find someone who you really love to work with, not just: okay, yeah, I've got an insurance group. Oh, yeah, we've got insurance through Farmers Insurance or State Farm or whoever it is. That's great if you love the agent there and he's adding value and really looking at what coverage you really need.

We recently found a family office quality insurance group and we've been switching over all of our policies to them. We got to know them last year and this year and the depth of expertise they're adding to help with making sure different liabilities are covered based on the unique aspects of the property is really critical. One of our clients bought a motel. Two weeks after purchasing it, there was a carbon monoxide leak and two teenage girls were found unconscious and they had to be life-flighted to a hospital.

Luckily, my client is an attorney. They had read every word of their insurance policy, knew that that type of thing would not be covered, and so they had a air pollution writer on that asset and it did not come with the insurance policy. They had to manually request that and add it. Because of that, everything was covered.

If they had not asked for that, it would not have been. How many properties do you own and do you have a special writer on the insurance policy for any property that has a pool or hot tub or trampoline or a zip line or even a swing in the backyard. These are the types of things you have to worry about in addition to an umbrella policy, a key man policy, your normal auto loans, but maybe there's unusual situations like a nanny or an up here driving your cars. So you really need an expert in this area helping you play defense.

If you need a connection to an insurance professional who is a family office quality expert or trust in the state planning professional who's on short or offshore, we can help you with those connections. Many people come to us looking for accounting book Kimmy, bookkeeping, a CPA for their family office, and what's different is someone who's going to tell you how much you owe in taxes versus actually help you do proactive tax planning. So make sure you keep those things different in your mind. Many family offices use expensive reporting Solutions and software solutions for tracking their assets.

This can be a good idea, but just be aware that many of these software companies don't list their prices on their website for a reason. Um, they will first try to figure out how complex your situation is, which is fair, but also how much money you're worth, and then, based on those two factors, they'll give you pricing. Many times, they will not tell you pricing unless they know your net worth, whether you have four llc's or 42 llc's. They want to know if you're worth 400 million dollars so they can charge you 40 times more than what they might charge you someone worth four million dollars, which fair enough.

Maybe complexity comes with that net worth, but I think that that part of the industry needs more maturity. There's many different options, though, in that area of reporting on assets, which is sometimes referred to as aggregated reporting. In addition to that, you'll want an attorney who can help you strategically negotiate deals so that the terms become better for you and they don't just simply document what you need done. Come up with an employee agreement.

They also lit, they actually listen to what you're trying to put in place so that Equity only invests over time and, even if it's hard vested, you can buy it back at a certain valuation which is fair to you and the company, and it's lost if the person commits a bad boy act or, as you're buying shares in the company, make sure that your Equity state is protected and you have anti-dilution rights or drag-along rights and that you're really working with somebody who adds a ton of strategic value. On the legal side, every month we are closing on two to six legal contracts and agreements just within my own balance sheet and our business. So if you are watching this series on how to create a family office, likely you're in the same boat, if not 10 times more complex, and you really need a good team just to keep on top of all of the llc's that need to be updated constantly and how those filings kept updated so you don't lose some protective corporate Shield or protection liability Wise from having an LLC in place if you are stuck on finding a certain type of service provider, if you found it super frustrating taking months and months to put your family office together, just reach out and let us know.

You can shoot me a question by texting me at 305, three, three, one, one, five, five, or you can send me an email, Richard, at investorclub.com, and again, we help set up family offices for free. It allows us to get to know you and once we know your direct investment Strike Zone, we're happy to keep in touch for opportunities that we can Source from our investor club or build trust and help you create your family office so that we can work together within our Medical Practice side of things or our real estate division focused on short-term rental properties. So hope you found this video helpful. On service providers and putting together your service provider team.

The strength of any organization is the team and you do not want to try to hire every service provider and have them work only for you and be very expensive, and they wouldn't be learning and cross-pollinating between their different clients, and the best of the best in every industry is typically serving many different clients, um, so you'll want to go for the best resource you can find, not the cheapest or the one that would work for you full-time and nobody else, um. One last comment on this is that, while you're building out your team. If you have not upgraded your wealth advisor as you built your wealth, that can be a really costly mistake. Many times you're paying retail wealth management fees and you should not be.

Many times you're not dealing with a wealth manager who is used to working with the ultra wealthy and families worth 50 million, 100 million or 20 million dollars each. We have identified a couple, just two, Wealth Advisors out of a thousand person that we work with currently and the final areas on Direct Investments advisory: the same brains managing your public market exposure probably aren't experts in real estate. They're probably not designing a real estate strategy sourcing operating businesses for you to buy for your core operating business, and because of that, many ultra wealthy families become very lopsided. They have some ad hoc Angel Investments and operating business Investments here there with almost no guidance or oversight or Rhyme or Reason to it and without a really focused approach.

And then their wealth management side is very sophisticated, but that's just their, their defensive game. You'll want to make sure that you work with somebody, doesn't have to be us, but this is the area we specialize in: in designing the direct investment game that makes the most sense for you. We're going to go into this within future videos. I don't want to jump ahead too much on that, but make sure that you're happy with your accounting firm, tax planning, trust and estate planning, now that that's actually updated, your insurance provider, your wealth advisor, as well as whoever's helping you plan and strategize and Source your direct Investments.

Hope you found this video helpful and hope to see you at one of our Live Events soon, and I'll catch you on the next video in the series.