Episode 68: Tom McCullough on Family Estate Planning and the Five Pillars of Wealth

It's a very interesting comment you make about elite MFOs.

It's confusing for people what an MFO is because when I started out, 23 years ago, people would ask me what I do, and I would say I'm involved in a family office, and they would wonder if that was birth control and family counseling.

So people didn't really know what it was many times.

Now, it seems like everybody is a family office.

There's just all sorts of people who are claiming to be a family office.

So there's no exact definition of it.

So it's a little bit tricky.

But I think there's essentially five elements that a typical what I'll call full-service family office offers, and they would fit into the category of, broadly speaking, planning, which would be everything from family goal setting to capital sufficiency analysis to estate and tax planning, all of it with outside advisors as well, philanthropic planning, risk management, etc., That's the first one, planning.

The second would be investment management asset allocation, and that's maybe the most known and understood one.

Sometimes it's the one people come for and don't even realize the other components are available.

The third would be something to do with, I'll call it family governance, and that is really just helping families decide how they're going to make decisions, especially if there is shared control of assets.

And that would include everything from educating future generations and planning for succession and transition.

The third area would be family well-being, and that's really the relationships among the people and having healthy individuals in the family.

That's that human capital that is often talked about.

And then the fifth area would be wealth administration, which is probably 100 items under that category.

But it's all the things that make sure the trains run on time from consolidated reporting to bring forward lists to one-off tasks that the

family office will manage for people.

As a wealth management function, as a fiduciary wealth management function is very important.

And I think you've covered the key areas of the multi-family office.

Of course, some are more traditional and more closed architecture.

Others are more open architecture.

Others lean into alternatives and others don't and so on.

And others focused on managing, protecting the wealth versus expanding the wealth.