The FOX Financial Executive Council was first established in 2004 and it offers family office financial executives (CFOs, controllers, tax managers, etc.) an opportunity to share best practices on operational, compliance, and technical issues.

On January 30-31, 15 of our members joined us in Orlando, Florida, for a meeting focused on management issues. This included a discussion of the services family offices generally outsource and the services they provide in-house.  The common trend among our attendees was that their family offices depended on a mix of in-house and outsourced services for most functions:

Partnership Accounting

Attendees varied in their approach with some outsourcing the function and others handling in-house. Some attendees outsourced the function to accounting firms.  Among those keeping the function within the family office, one uses QuickBooks, while another reported using Investran -- a program which also provides performance reporting.

Internal Audit and Compliance

Attendees reported using both in-house and purchased resources. One office outsourced quarterly audits to a Big Four accounting firm. Another completes a quarterly internal audit with external oversight.  The external provider then writes a final report that is provided directly to the family.

Bill Pay

All attendees reported providing bill pay services using either in-house software or an online bill paying program.  Several reported using Quick Books. One office uses Bill.com online.  The program synchs with Quick Books and charges fee per check or ACH transfer.  The executive has authority to approve transactions up to certain agreed upon level without owner approval.

Family Education and Meetings

Most attendees reported using a combination of outsourcing and in-house programs. One office established an in-house education program for their third-generation clients utilizing the FOX Guide to Guide to Family Education. Another hired a commercial trust company.  One family office created internships for next generation family members between the ages of 16 and 18. The children spend a week in the office going through financials, and paying on site visits to the family foundation and the organizations the foundation supports.

Payroll and Human Resources

Several attendees reported using professional employer organizations (PEO) such as Paychex, ADP, and Administaff.  Some expressed concern that the fees for these services are a percent of payroll.  If one or two employees are highly paid, the PEO can be expensive. One office, however, was able to negotiate a reduction in fees and recommended that others try this as well.  Another office noted the benefits of the HR advice their PEO provided when faced with the termination of an employee. Some offices keep the payroll function in-house but reported that keeping up to date on employment taxes and regulations was a challenge.

Closing Words

Thanks to everyone who attended the Financial Executive Council meeting. As usual, it was a terrific opportunity to exchange insights and best practices. This is an example of the level of sharing at these meetings. Some meetings are more strategic in nature. Others are more tactical.

We’d love to hear how your office handles service procurement.  Do you have any advice or suggestions for our family office community? If so, provide a comment below.