Personal Finance

My friend has $20 million in assets and has no clue how to get organized - what steps should he take?

Kristin Hitchcock

Published: October 9, 2024 4:17 am

24/7 Wall St. Key Takeaways:

• Once you have a certain amount of net worth, you often need a third-party manager to help keep track of everything. There are several options available, depending on your needs and exact net worth. 
• A back-office setup is best for those on the lower end of high-net-worth, such as around $20M. Hiring a family manager isn’t often recommended until you have a net worth closer to $100M.

Managing significant wealth can often feel like you’re juggling too many balls in the air – bank accounts, properties, bookkeeping, taxes, and various legal and logistical tasks. It’s easy to become stressed!

This is the exact scenario I came across in a recent Reddit post where a SoCal-based user was seeking advice on organizing their financial life. With around $20 million in assets spread across several financial instruments and properties, organizing it all was becoming complicated. 

I thought this post raised an interesting question: For someone in a complicated financial situation, how can they best get their financial affairs organized? Should they turn to a fractional back-office service, hire a dedicated manager, or explore a multi-family office?

Let’s take a look at my opinion on the situation. Remember, this is just a representation of my thoughts, not financial advice. 

The Glue to Hold Everything Together

This user already has several key pieces of the puzzle, such as:

• Family attorney and estate attorney for legal matters
• Accountant to handle taxes and finances
• Property managers oversee their real estate (which is what we recommend when investing in a rental property)

They clearly have no lack of professionals helping them, but coordination is absent. Without someone or a system to stitch all of these roles together, things can quickly become disorganized and overwhelming. 

Here’s a breakdown of potential solutions you could consider:

1. Fractional Family Office or Back-Office Support

My top recommendation for someone in this position is a fractional family office (or back-office service). This specialized team takes over some administration duties, such as bill paying, bookkeeping, bank coordination, and similar services. 

The benefit of a fractional service is that it’s more affordable than setting up a dedicated family office (which typically requires $100M+ in assets to be cost-effective). This service provides some high-level expertise without full-time costs. 

This option allows you to bring organization without requiring a full-time hire, and these services are becoming increasingly popular among high-income individuals. 

2. Hiring a Dedicated Family Office Manager

Some replies mention hiring a dedicated family office manager. These individuals oversee and coordinate all the professionals involved, which is exactly what this poster seeks. Family office managers act as a point person for organizing daily financial tasks, like scheduling meetings with professionals. 

This option is a more hands-on and tailored solution than using an external service provider. If you want a single person in control of your finances, this option is a solid choice. 

However, this option is very expensive. It often requires a higher net worth than $22 million.

3. Multi-Family Office Participation

A multi-family office services multiple clients and typically offers the same services as a traditional family office. They do everything from wealth management to day-to-day administration, including bill pay and financial reporting. 

These typically cater to ultra-high-net-worth clients, but some do work with those who have a net worth of around $22 million. 

These offices have several benefits, like comprehensive services and the ability to scale easily. 

However, for someone with around $20M in assets, an MFO may be overkill unless they find one that offers flexibility and à la carte services. You’ll need one that works with a net worth of around $20M, as most work with much more money than that. 

4. Hiring a Virtual Chief of Staff

Hiring a virtual chief of staff is another option that’s becoming more popular among high-net-worth individuals. This person works remotely and can handle everything from organizing logistics to personal matters. 

A VCoS is essentially a back-office manager but operates virtually and is often cheaper. They help coordinate all the professionals and keep everything running smoothly. 

Some VCoS professionals can also handle lifestyle management tasks, like managing personal schedules. However, this often comes with an extra cost.