Cloud Accounting Podcast

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Summary

How do the ultra-ultra-ultra-ULTRA-wealthy manage all that money? Some utilize what is known as a family office. We sat down with Angelo Robles, Founder and CEO of Family Office Association, at Sage Intacct Advantage 2019, to talk about what exactly a family office is, what it takes to run one, and how virtual family offices are ushering in the highest-quality outsourcing, and best technologies to streamline family-office management. Angelo also shares some 'Sage' advice for those new to the accounting industry on how to break into this highly 'niche-y' field!

Show Notes

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Show Notes

  • 03:38 – Angelo defines 'family office' 
  • 04:19 – Definitely not small potatoes!  'Single' family offices are usually owned by those with wealth ranging from tens to hundreds of millions of dollars
  • 06:21 – The ultra-high-net-worth crowd use a family office as a way to manage wealth, and mitigate financial risks
  • 07:16 – An effective virtual family office utilizes outsourcing and the newest and most efficient technologies to seamlessly manage the family or individual's funds
  • 08:51 – How do you measure success of a family office?  Clarify, communicate,  compare, and get two or three sets of eyeballs to check the work
  • 12:26 – How exactly does one enter into the family-office arena as a career choice? Is it even possible? 
  • 13:52 – Breaking into the family office segment means getting to know the target (ultra-wealthy) audience, gaining some experience, and proving your worth
  • 14:38 – At some point, the old dogs are going to have to learn some new tricks
  • 15:36 – You really can't outsource creativity and leadership in the family office
  • 16:50 – Apart from technology and automation, you need the soft skills - collaboration, globalization, and listening 
  • 17:22 – Angelo discusses some of the challenges of working for a family office
  • 18:31 – Angelo talks about what inspired him to enter into the family office arena
  • 20:29 – Check out Angelo’s book, β€œEffective Family Office: Best Practices and Beyond,” on Amazon!  He’s also got a podcast! You can find Effective Family Office Podcast on iTunes, for Apple users, or Stitcher, for the Android crowd! 
Connect with Angelo
Episode Art Photo Credit: 
  • April Blankenship
    • https://twitter.com/aprilblnknshp
    • https://twitter.com/aprilblnknshp/status/1187023281687130112/photo/2
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Transcript
 
This episode of The Cloud Accounting Podcast is sponsored by Teampay. Wouldn't it be great if you had a way to automatically enforce spend policies and gain full transparency into requests for funds all the way to reconciliation? Or what if you could do that while empowering your employees to buy what they need, when they need it? Teampay gives total control and real-time visibility into spending. Teampay's distributed spend management platform automates the purchasing workflow and gives you proactive controls and real-time visibility over a company spend. 
 
Teampay also empowers your employees with a user-friendly purchasing experience. When employees make a request, Teampay automatically enforces policies, issues intelligent payments, and automatically sends the transaction data to your accounting system pre-coded. To learn more about how Teampay modernizes how you manage spending, head over to CloudAccountingPodcast.promo/teampay. That is Cloud Accounting Podcast dot promo forward slash T-E-A-M-P-A-Y.

Angelo Robles: I hire one or two people dedicated to me 24/7, and now I know my interest is in their heart.
 
Blake Oliver: Welcome [00:01:00] to The Cloud Accounting Podcast. I'm Blake Oliver.
 
David Leary: I'm David Leary.
 
Angelo Robles: And I'm Angelo Robles of Family Office Association.
 
Blake Oliver: Awesome! Thanks for joining us here live at Intacct Advantage 2019 in Las Vegas. We are here in front of a giant digital billboard - Welcome to Sage Intacct Advantage - Never-Ending Imagination. It's fun to be here. Thank you so much for joining us. We're really eager to be talking to you about-
 
David Leary: About family offices. I [00:01:30] found you- I went through the 250 sessions, I think, that were happening at this event, and I looked at .. I was like, "That sounds interesting. We should have him on the podcast!" The connection happened, so now you're here, and we wanna learn about family offices.
 
Blake Oliver: So you know, my background in public accounting was in outsourced accounting, Angelo. I was on the same floor as the business-management team. I understand there are some parallels between family office and, say, business management. Could [00:02:00] you give us and our listeners an overview of what exactly family office means in the accounting world?
 
Angelo Robles: Sure. It's great to be here, guys. Great to be at the MGM in Vegas. I think the first time, among my 50 times to Vegas, I'm ever wearing a suit.
 
David Leary: It looks very nice for those of you who can't see it. 
 
Blake Oliver: Yeah, and the suit must be a part of the family office thing, right? You've gotta dress to impress?
 
Angelo Robles: The audience is missing my double-breasted suit. I always wear my best suits when I can't be seen visually. They could imagine in their mind. 
 
Blake Oliver: Well, we'll get a picture, and we'll [00:02:30] stick that up on social media along with the podcast.
 
Angelo Robles: It'll be proof I'm not kidding about my suit. 
 
Blake Oliver: It'll be proof that we're here, too, right?
 
Angelo Robles: Behind the giant digital billboard.
 
Blake Oliver: Exactly. Exactly. So, what brought you away from your family to Las Vegas to talk about family office?
 
Angelo Robles: Coming to Las Vegas is not the hardest thing for me to do, so Sage Intacct had a pretty easy job over there;  but there certainly is a tie-in to the great work that Sage Intacct does around the world with accounting and their amazing software and how family [00:03:00] offices would benefit from the utilization of greater technologies. A lot of them are still a little dated. They're doing things a little bit ... We would look at it as that's like 10-20 years ago. You've gotta leverage technology. I've been talking about that and what I do for a long time.
 
Blake Oliver: I realize we totally skipped past that first question, which is-
 
David Leary: Yeah. What is a family office?
 
Blake Oliver: Yeah, what is it?
 
Angelo Robles: Well, at least we started talking about my suit and about how it could be impactful, too. That's probably a better first question. But I suppose [00:03:30] you're right, to add some context, in terms of what I'm saying ... I'm the founder and chairman of an organization in Greenwich, Connecticut, called Family Office Association.
 
In simple terms, that means what is a family office? I define it- We're very narrow. We're an inch wide and a mile deep. To me, it's a single family office. A single family office is an entity created by one family of great, great wealth to internally and exclusively manage their money and, often, their other affairs. If [00:04:00] you're a billionaire, even lesser, but if you're a billionaire, almost every billionaire will have their own single family office.
 
David Leary: A lot of podcasters have family offices, I imagine?
 
Angelo Robles: You guys are on the way. You just gotta get the right advertisers! 
 
Blake Oliver: What's the minimum? How much do David and I need to make from The Cloud Accounting Podcast to hire somebody to run our family office?
 
Angelo Robles: Well, since you bring that up, in my conversation at the Sage Intacct conference today, I spoke about the rise of the [inaudible], the ultra-ultra-affluent theoretically [00:04:30] being able to create their own what we call virtual single family office. I'm gonna make the argument ... Historically, it would be probably a couple of hundred million to have a "traditional" single family office. But with the utilization of technology and greater outsourcing, I am gonna state that it's possible to have a single family office at only, and I'm doing air quotes, everyone, only a couple of tens of millions of dollars.
 
Blake Oliver: Oh, David, it's within reach!
 
Angelo Robles: You're there. 
 
David Leary: When you say virtual family office, I'm thinking like you being the accountant or bookkeeper, [00:05:00] you'd have your own virtual family office, but you would take Blake and I as a client, and me in as a client. You'd have multiple clients?
 
Angelo Robles: No. So, again, I'm gonna ... I probably need to define the single family office. It's one family; keyword there is 'family.' One family or individual of great wealth. Let's define that as someone hits it big in the jackpot today at the MGM. Okay, it's not $100 or $200 million, it's $30 or $40 million, God forbid. They now have enough resources where, like, "Wow, I'm rich, but I care about my legacy. [00:05:30] I care about taxation. I care about investing. Everyone ignored me before; now everyone's coming after me, and they're gonna be in it for themselves."
 
So, how about this? I create my own company. I hire one or two people dedicated to me 24/7. They're all mine. That's all they could do. Now, I know, in theory, my interest is in their heart because they're totally dedicated to me. It's my company. I created it, and I could trust [00:06:00] that they're gonna be dedicated to me because I'm paying them to be, and they don't need other clients. If they have other clients, that's gonna, in theory, water down their focus to me. I want them 24/7, and I'm willing to pay for that.
 
Blake Oliver: Got it. Single family office - ultra-high-net-worth individuals, or families who have a dedicated accounting/finance team for them?
 
Angelo Robles: Yes, but in theory, what a smaller virtual single family office, where ... The keyword 'virtual' means it's gonna be a lot of outsourcing [00:06:30] and the utilization of technology for communication, for project management, for accounting. It gets better all the time. It's never been easier.
 
Sage Intacct is an amazing company for families that have multiple LLCs, multiple entities, multiple trusts. Doing it one by one's a lot of work, so having a company like Sage Intacct, it streamlines the capability to get the information how you want to get it. If you get it in a more timely manner and with less errors than the [00:07:00] traditional method of doing it, you can make more timely investment and tax decisions, as well. So, it's a risk mitigation tool, as well. The key things in a virtual family office are outsourcing and technology, so certainly, technologies are gonna be a big part of it.
 
Blake Oliver: What sort of outsourcing are you talking about? Like, maybe a virtual family office, I only hire one CFO for my family, and then he asked delegates everything [crosstalk] 
 
Angelo Robles: Yes, correct ... Let's talk a little bit about that. A more traditional family office - half-a-billion [00:07:30] dollars and up - and let's just say you have 15 people that work there. You have a CEO, you have a CFO, you have an analyst, you have a CIO on investments, et cetera, et cetera, et cetera.
 
That also means you've gotta manage people. People maybe get bored, they leave; you have to replace them. When you have employees, I hate to say this, but sometimes things go wrong. You get workplace issues, you get sexual harassment, you get ... Well, they need to go on vacations. They need disability insurance. They're [00:08:00] human. They have ups and downs.
 
David Leary: Well, it's like a real business at that point. 
 
Angelo Robles: It's a real ... Maybe, if you're the family, or the CEO, you don't want or necessarily need that. So, how about you form your entity, you streamline operations, you hire one or two people that are very good at communication and maybe broader knowledge. Then, it's like, "Okay, we have this legal issue. Then, let's source the best legal person for the job. We don't need to have them 24/7 and pay them half-a-million dollars [00:08:30] a year. We're gonna use them for this trust and estates work. We're gonna use this attorney for companies we're looking to buy that need to handle the transaction." That applies not just to legal; that could apply to investing, accounting, and many other things, where the job of that virtual family office is to outsource by best in breed.
 
Now, that does beg the question - how do you measure the results and success? Well, one, you've gotta clarify the goals of that individual or family, because sometimes, [00:09:00] with wealthy individuals, a shock to all of you, they change their mind a lot. So, you need to understand what are your goals that you want us, and me, as a single family office, to focus on? By the way, I'm probably gonna ask you that every two weeks, and we're gonna clarify where we are in these goals, right now, so you understand it.
 
To help understand whether the outsourcing is doing a good job, you want to clarify the goals among all the parties involved and what's expected. You want to have great communication; not good, but great. [00:09:30] You want to measure. How do you benchmark? How do you do best practices of what the other best-of-the-best virtual single family offices are doing? Then, how do you stress test? 
 
I spoke a little bit about that in my session, where you have other experts that look at the work that someone else has done. They're not gonna replace them, but you want a second set of eyes, or a third set of eyes because this money is so important, and it's important for the person running the single family office.
 
You could do [00:10:00] things without having a whole bunch of employees. Some single family offices have 100 to 200 employees. For them, that may be applicable, but if you're looking at a- not hundreds of millions, or you don't wanna manage in big, dispersed group of people ... I can make the argument, if you're a smaller family unit, and you're traveling around the world, have one anchor entity and a couple of employees, but then have different outsourced partners even beyond the U.S., around the world, that help in certain specific [00:10:30] legal, tax, and investment issues.
 
You don't have to hire them. You're outsourcing them. How do you manage that? Use technology like Trello, for project management. Use a Slack, and Asana for communication. Use even social media; use a private network on Facebook, or LinkedIn. Then you have, again, the accounting software that we briefly discussed. Technology and AI is making all of this easier.
 
Now, a problem is ... I mean, I'm 53. I'll give that as an example. Now, I happen to have a Gen-Z-er at home. He's [00:11:00] 16. So, the average Gen-Z-er goes on their phone, by the way, 116 times a day. Technologies, to me, are not quite as native. I have to think about it. I gotta work a little harder, but I know it's important. So, what you may want to do is incorporate people, where technology is just more natural and native to them. They're a little bit more used to the quasi-outsourced world, and how they collaborate, and how they communicate is different than people in my age bracket. Now, I'm not quite saying go out there and hire a 21-year-old ... 

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Blake Oliver: Well, speaking of that ... 
 
Angelo Robles: But ... 
 
Blake Oliver: Speaking of hiring a 21-year-old, [00:12:30] many of our listeners are students, or new in their careers as CPAs, or accountants, and bookkeepers. If they are excited by family office as a career, how do you even get into that, because it's very niche, right? Very small.
 
Angelo Robles: It's very niche-y. Until the rise of the virtual single family office, which will change things ... I mean, how many people are worth half-a-billion dollars or more? It maybe 8,000 or 10,000 around the world, so it's hard for someone younger to get into a position to even be an intern at a "single [00:13:00] family office," and they're dispersed. They could be anywhere.
 
Obviously, there's gonna be more of them in New York, and San Francisco, and London, Moscow, Hong Kong, et cetera. It's gonna be where the wealth is a little bit concentrated. There's not a great career path at the moment, because single family offices are a relatively limited number. They're fragmented. You know one, you know one - they're like snowflakes, they're all different. There's tremendous interest of getting involved in a single family office, even though it has both positives, but [00:13:30] it has negatives. For a younger person, I would say ... Finding out single family offices is almost impossible. It's so hard, but if you- 
 
Blake Oliver: Right, because a lot of wealthy families don't want that family office to be public.
 
Angelo Robles: You got it. They wanna be private.
 
Blake Oliver: Yeah, so it's got some obscure name on the LLC, and there's no sign on the door, right? 
 
Angelo Robles: Here's a couple of things that I may recommend to someone younger. One of them may be interning, getting the experience, and proving your worth. The other that we hinted [00:14:00] at in a pre-conversation is a lot of the families that created wealth are getting older. They're in their 60s, or 70s. They're transitioning to the millennials that are upwards of, what, 37, at the year that we're talking now? They might have went to school with some of the family members of wealthy families ... If they're a Gen-Z-er, they're in high school or college. What's gonna be their peer network? They have to look a little creatively around it and see where that could align.
 
The other thing that we spoke about is the older generation, that they don't relate to the millennials, and [00:14:30] they don't understand how they communicate, and how they make decisions; they're not gonna have a job. So, there will be a transition of jobs to a younger generation of people.
 
Maybe the last thing I'll bring up is, if we're talking virtual family office, and technology, technology, technology, the younger generation's gonna be more fluid in various technological advancements and how to ... I would even consider, and I mentioned this to some SFOs that are a little more dated, bring in a tech whiz that's young and dynamic, and have him work [00:15:00] with, one, adding an intern, or two, but changing a little bit of the culture and changing the technological tools that your family office is using. Now, the only challenge with that is some older people, it maybe a little bit hard to learn a new trick, but they could. They're gonna have to see and have the desire to do so, but that could be a value to everyone.
 
David Leary: It sounds like, if I'm an accountant, and my history has always been accounting, and tax, and bookkeeping ... I get all that. I really have to develop a whole set of new skill sets of management, and communication to [00:15:30] really run a family office, especially one of these virtual family offices, because I'm kind of an orchestrator, at that point. I'm not really just running numbers.
 
Angelo Robles: You are correct. The skill set basically involves how do I become a leader? But becoming a leader is going to be something you should be learning in your own family initiatives with their own friendships and relationships, and how do you become a good listener? How do you come up with ... There's a couple of things a family office can't outsource. What is that gonna be? It's gonna be the creative part - own the idea; leadership - how [00:16:00] do you inspire and motivate others, and how do you communicate and execute upon the service to the family?
 
So, you are correct. You're almost implying that maybe accountants are gonna be intellectual and smart, and they're gonna understand numbers, but maybe they're not always gonna be great on the softer skills - the emotional intelligence part. I don't think that's necessarily true, by the way, but let's even assume that stereotype. In that case, then you are correct. Learning about how do I become a better listener? How do I be a leader? How do I communicate? [00:16:30]
 
I'm going to say that's gonna benefit them in life, not just in this specific job situation. They should be starting to do that anyway. Could I make the argument that accounting, legal, and many professions with the greater advancements in AI and technology is gonna make the more mundane aspects of those jobs gonna be replaced by technology and AI?
 
Then we come down to what Davos spoke about the year prior at the meeting. What are the 10 most needed skills to move forward over the next 10 years in a job? It's being collaborative. [00:17:00] It's globalization. It's being a good listener. It's working in different teams from people that you may not be as used to. How do you collaborate and lead each other to come to the best conclusion or the best answer to the questions that you're bringing up? Those are the skills that are going to be needed and I think that could be learned.
 
David Leary: Are there any downsides to family offices? Do families fight?
 
Blake Oliver: What are the biggest challenges? 
 
Angelo Robles: If I was someone looking to work inside a family office, potentially, the biggest challenge is, okay, great, I'm hired for this position. The family [00:17:30] principal, let's use that word, is 73 years old. They're probably not gonna live forever. So, I'm giving up a career where I have a diversity of clientele, working in a traditional accounting firm. I'm getting all the advantages now of never needing to rain-make. I'm just working for one family ... A couple of the downsides are do I get bored after two or three years, if they're too small and not doing enough interesting things? By getting bored, do I also not sharpen my skills as much because I don't have enough different things [00:18:00] coming at me? That's one big issue.
 
The other that I hinted at is suppose that more elder principal ... If they don't have a younger family that is involved and interested, what happens if they die or get disabled, and I'm two years in? My skills might have slightly diminished if I'm not seeing as many diverse clientele anymore. I'm not rain-making as much; I'm not networking; I'm not meeting as many people. Now, I feel like, "Oops, I gotta start over all again." Those are two big challenges.
 
Blake Oliver: How did you get into the family [00:18:30] office business?
 
Angelo Robles: No one wanted to hire me. That's 90-percent true. I was at UBS and also ... The real driver, I've been in financial services, and I've been an investor; mainly, a startup investor for a fair number of years. But the main way is I approached the Hedge Fund Association and supposedly, I live in the headquarters of the world for hedge funds, in Greenwich, Connecticut.
 
I'm like, "Hey, Hedge Fund Association, you have no chapter here. Let me start a chapter for you." They were kind enough [00:19:00] to take a risk. I enjoyed organizing, writing, thought leadership, programming, introducing speakers, picking out speakers/topics. I liked the process of running, effectively, a membership organization and events.
 
I'm like, "Who needs to only make their money in financial services, given that I have some relationships with families and single family offices? Hey, let me create my own kind of a family office organization dedicated to single family offices that is a deep thinker, a writer, a thought leader ..."  I like [00:19:30] the intellectual part, but also host a variety of programs. Here I am now, about 11 or 12 years later, so I guess it's working.
 
Blake Oliver: How many members do you have, and where do they hail from? Are they all over the world? Country? 
 
Angelo Robles: Yes, they are all over the world. I would say ... Well, to be exact, what our number is about 93 percent, I think are U.S.-centric; mainly gonna be where some of the wealth is a little bit focused on. Greenwich, New York, Boston, Miami, Palm Beach, Orange County, L.A., San [00:20:00] Francisco, Silicon Valley. So, it tends to be a little coastal, but I have members in Iowa, and Wyoming. I have members in the Caribbean. I have members on, I think, practically all continents. We're looking to become even more global, from our perspective, in what we do. We have over 200 direct families and single family offices who are committed members.
 
David Leary: So, if anybody wants to learn more about the family office, or learn about the Family Office Association, how do they get a hold of you or stay in touch?
 
Angelo Robles: Sure. Our [00:20:30] website is simply our company name - FamilyOfficeAssociation.com. My email is Angelo@FamilyOfficeAssociation.com. I wrote a book. I have others coming out next year. They could look me up on Amazon, by my name, and I do have a podcast, myself. It's on iTunes, for Apple users, and Stitcher, for, I guess, Android users. I think iHeart, as well, if I remember correctly. You could likely look it up from my name. It's Angelo. Last name is Robles (R-O-B-L-E-S), but it does [00:21:00] have a name. For now, we call it Effective Family Office.
 
David Leary: Okay. We'll put that in the show notes, so everybody can link to it, and find it very easily, and subscribe.
 
Blake Oliver: And I've got a new show to listen to. I'm looking forward to that.
 
Angelo Robles: You may have too many podcasts on your rotation now.
 
Blake Oliver: Well, I'll knock one of the other ones out. I won't say which one- 
 
David Leary: You just stop listening to The Cloud Accounting Podcast, then you can make room-  
 
Blake Oliver: Exactly. Then our numbers will go down.
 
David Leary: Yeah, that's true ... 
 
Blake Oliver: Well, Angelo, thank you so much for joining us and giving us your time today, and safe travels back to Connecticut.
 
Angelo Robles: The pleasure was all mine. Thank you, guys. Loved it-
 
David Leary: Thank you. 
 
Angelo Robles: Thanks. Bye-bye. [00:21:30]

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The Cloud Accounting Podcast is the #1 accounting and bookkeeping podcast in the world! Join Blake Oliver and David Leary at the intersection of accounting and technology for a weekly news roundup, plus interviews with industry leaders.