Family Office Consulting
I serve as an independent consultant to private investors, family offices, privately held businesses, and family foundations.
My engagements often begin when a client needs help planning a transition such as simplifying their overall wealth management process, managing a liquidity event, or forming a family office or family foundation.
Please note that I am not an investment advisor and I do not provide investment advice.
Project Timeline
I start by conducting a comprehensive baseline analysis of your current wealth management solution and/or family office structure. Next, I develop criteria based upon your specific requirements for services and expertise. Finally, I help you evaluate options and implement your plans.
Phase 1. Conduct a bottom-up review of your current situation including your specific needs, personal, family, and philanthropic goals, and unique circumstances.
Phase 2. Develop a summary of the strengths and weaknesses of your current situation and recommend options for moving forward.
Phase 3. Implement your plan including prioritizing objectives, developing a timeline, and executing the plan based upon our mutual agreement on next steps.
Family Office Framework
To help people visualize the overall process of managing wealth, I’ve developed a proprietary analytical framework that integrates governance, planning, investing, and operations into a holistic system.
I utilize this framework to help people develop a solution that is flexible, cost-effective, and sustainable.
Types of Family Offices
A family office is designed to oversee the personal financial matters for a group of related family members by working with a combination of in-house professionals and third-party providers.
Each family office is designed for the level of wealth, types of assets, complexity, and objectives of the family it serves. While the specific design and activities of family offices vary widely, by-and-large there are three basic types: services family office, investments family office, or comprehensive family office.
Services Family Office
The services family office typically employs staff to provide some level of bookkeeping, administrative services, personal property management, project management, and concierge services. Investment management activities are outsourced and managed through contracts with external providers.
Investments Family Office
The investments family office keeps functions strategic to the family’s investment objectives in-house and outsources nonstrategic functions. In addition to overseeing investment functions, investment family offices may employ analysts or retain external providers to aid in asset allocation, manager selection, and direct investment due diligence. Certain investment management functions may be brought in-house particularly where it leverages a family’s expertise, for example in real estate, technology, or other industry experience.
Comprehensive Family Office
The comprehensive family office is designed to provide services for families who desire the maximum degree of control, security, and privacy. All functions including administrative, tax, legal, risk management, and investment management are provided primarily by in-house employees. Specialized investment management activities such as hedge fund, venture capital, private equity, or emerging market investments may be sourced externally depending on each family’s objectives, budget, and their ability to recruit and retain such talent.
Types of Investment Advisors
The approach you take for managing wealth is one of the most important factors influencing your long-term results. Many families use a combination on in-house investment talent and external investment advisory services ranging from artificial intelligence-powered robo advisors to institutional consultants.
Since it can be challenging to understand how various investment advisory solutions compare, please see the framework below to get a better understanding of the types of advisors and advisory firms.
Investment Advisor Business Models
Whether you’re looking to choose an advisor for yourself, or acting on behalf of someone else as a fiduciary, a trustee, a member of an investment committee, or a family office executive, it’s crucial that you understand the various business models of investment advisors. That process begins with understanding how investment advisors actually do their job for their clients.
Advisors start by creating what’s known as an investment policy statement, or IPS, which provides guidelines for overseeing each client’s portfolio. As part of the IPS, the advisor develops an asset allocation, which is a big-picture plan for the asset classes that the client’s money will be invested in. When advisors talk about asset classes, they mean overarching investment categories—things like cash, bonds, stocks, real assets, and also alternative investments such as hedge funds, private equity, and derivatives.
Once the client approves the IPS, the advisor shifts to what’s known as portfolio construction, which involves putting the client’s money into a mix of investment products. This is where you’ll want a clear understanding of the advisor's financial incentives since they may impact the investment recommendation that your advisor makes.
Essentially there are three different business models based on how an advisor makes money. With an Advice Business Model, the advisor only makes money from charging a fee for advice and uses external investment products in which they have no financial interest. The Product Business Model is where the advisor makes money from recommending the firm’s own proprietary investment products, but does not charge any fee for advice. The Hybrid Business Model is where the advisor makes money from charging for advice and also earns fees for external and proprietary products.
Advice Business Model
The investment advisor charges a fee for investment advice, but does not use any of its own products, or share in any of the investment fees for the funds that it recommends.
Product Business Model
The investment advisor does not charge a fee for advice, but instead earns money from investment fees on its own products or from the products it recommends.
Hybrid Business Model
The investment advisor charges a fee for advice, and may also use its own products or external funds it recommends.
About Stephen Martiros
Stephen Martiros is a wealth management and family office expert with more than 30 years of industry experience and has been named one of the World’s Top Family Enterprise Advisors by Family Capital. Since 2010, he has served as an independent strategic advisor to a wide range of family offices from start-ups to some of the largest and most complex. Stephen brings a holistic understanding of risks, taxes, cash flows, fees, estate planning, and family goals to wealth management and family office design.
Previously he served as the Managing Partner of CCC Alliance, where he helped build America's largest private network of single-family offices. He is the founder of Summitas, an award-winning cloud-based vault and portal for family offices.
Stephen recently launched Kindros as a public benefit corporation that provides colleges students and young adults with unbiased financial knowledge through its online Financial Building Blocks® system.
He received his BS and MBA from Babson College. He is co-founder and Chair of the Bertarelli Institute for Family Entrepreneurship and is the recipient of the Babson Snyder Award for Distinguished Service and the Babson Cruikshank Award for representing the highest ideals of service and loyalty to the college.