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Introduction to What the Super Rich Know about Wealth Management, and How it Can Help You

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Vince Annable: [00:00:25] Welcome to Secrets of the Super Rich. Now what in the world might we be talking about on a podcast, a video podcast at that in regards to secrets of the super rich? Well, what we want to talk about is finding out what the super rich are doing to protect their wealth and to grow their wealth. And today what we’re going to do is we’re going to have a very special guest on the show. His name is Russ Allen Prince. I refer to him as the godfather of family offices. He is a highly sought-after consultant to super rich, to family offices. He’s also engaged in wealth creation planning for wealthy families. He’s authored 60 plus or co-authored 60 plus books on family offices, on wealth creation, on all different types of literature, on how the very wealthy, ultra wealthy, super rich manage their wealth because there are some secrets. And hopefully today what we’re going to do is we’re going to be able to reveal some of those secrets to you. The listening audience who are aspiring to be super rich or you may already be super rich and fall into that category. So with that, what I’d like to do is I would like to introduce Russ Allen Prince. By the way, Russ, I just happened to have your most recent book here, and if anybody wants to get a hold of any of these books at the end of the podcast, all we have to do is reach out and there’ll be some instructions when we get to the end. So with that, Russ, welcome to Secrets of the Super Rich. I’m hoping that what we can do right now is just talk about. The secrets of the super rich, what is it that you see in planning that is so very important to the super rich? And how can we tie that into some of what we are doing now with the creation of multi and virtual family offices?

 

Russ Alan Prince: [00:02:50] Vince, first of all, it’s a pleasure to be here and we talk about secrets of the super rich. You know, it’s less about fewer people know the answer, but they’re not exactly hidden. So when you talk about the planning, for example, many of the super-rich families and super super-rich redefine that as having a net worth of $500 million US dollars or more. Many of these families are taking steps to very strategically mitigate taxes, all doing it extremely legally or within the tax code. So, for example, there are ways that the super rich manage their portfolios or structure their portfolios so that they never have to pay taxes on the gains of those portfolios. So as their investments do better and better, their increase in wealth is never taxed. And that was just one example of how the very wealthy, the super rich, are enhancing their fortunes and making sure that they’re growing in a way that can benefit themselves and future generations, another big concern of theirs as they think forward. So what we see here is that the very wealthy are really expert at integrating sophisticated planning with investments with lifestyle so that they’re going to get the biggest advantages possible based on the current rules and regulations and laws that exist. That’s what this is all about for them. Now to go to your next point, the way they do this, many times the super rich create something called a single family office. A single family office is…let’s take a step back. A family office definition is a coordinator of the top experts serving the family producing superior results. A single family office does that for one family. And their best practices on how to do this, well, aside from sharing it among themselves over the last decade or so, we’re finding that a lot of sophisticated families who are not super rich can now take advantage of that same expertise, that same insight, those same opportunities that were previously limited only to the wealthiest families in the world.

 

Russ Alan Prince: [00:05:27] So, Vince, when you talk about things like multifamily office or the fact that you help people create virtual family offices in your case, I mean, we talk about this, what we’re doing is bringing the expertise that is is limited only to these wealthiest families to a much bigger audience. You’re taking the planning; you’re taking the investment opportunities. You’re taking additional expertise and services and now applying it to a much broader universe. And that’s what is now happening now when we say broad a universe. You still have to have I’ll say, for example, 10 million or more in net worth, but some of this to really kick in. But what’s happening is that you can now do that with people who do not have hundreds and hundreds of millions of dollars, you can help people who have, you know, when you’re managing money and you’re getting them great results, you can now help them make sure they now have to pay taxes on those great results. You can help business owners put away hundreds of thousands of dollars into specialized retirement plans and legally mitigating their income during that time. There are things you can now do that before were not possible, and that’s what’s happening. We’re taking the lessons from the super-rich, from their single family offices and applying it across this much broader spectrum of individuals and families.

 

Vince Annable: [00:06:57] So how how does the VFO differentiate from the traditional go to the wire house and ask them to manage their money?

 

Russ Alan Prince: [00:07:10] VFO virtual family office. The idea of a virtual family office when done well is taking the advantage of of the single family offices and you’re building it around a family. So it’s not a off-the-shelf anything. It’s a very bespoke opportunity to help this family deliver exceptional, to get exceptional results for what they want. That’s what it’s all about. So it’s not about going to someplace and I can manage your money. There’s a lot of places you can go, and if that’s all a person wants is somebody to manage their money and that’s it, then there’s a lot of opportunities. If they want to have this synergistically combined with sophisticated tax planning, help ensure that the family is taken care of in all sorts of ways, then the virtual family office tends to be a better solution. And what we’re seeing more and more is that successful individuals, wealthier individuals, more affluent families are moving toward this virtual family office model because of the enormous benefits they can accrue, which is not characteristic of that money manager who’s only managing money. Remember, when you think about managing money, it’s not how the portfolio performs necessarily. It’s how much you take home at the end of the year, so to speak.

 

Russ Alan Prince: [00:08:39] You know, this is the after tax issue is a big factor here. And virtual family offices like single family offices are very attuned to the taxes of their clients. And that’s a really big factor here because there’s a lot of ways the government sets out for anybody to mitigate taxes. And we’re talking about bright line transactions strictly in the tax code. But most professionals, I mean, across the board, including tax lawyers for some in many cases are not aware and in tune with all the possibilities that exist, and a virtual family office, what makes it very much like a single family office, and when where virtual comes in is the expertise isn’t in one place. Vince, for example, is not the definitive expert on all these issues. Vince has built a professional network, a group of experts specialists that he can call upon, and that’s what a virtual family office is all about. Being able to call upon this network of experts to help address particular issues, to help address concerns of the client, to help find ways to really create these optimal results.

 

Vince Annable: [00:10:00] Yeah. Let me interject a little of the differentiation that I see as we practice this, and that is that we’ve got people with money that have their own experts. They have an estate planning attorney, they have an asset protection attorney, maybe they have a CPA or two. They have several different investment advisers. The issues that we always identify for the client is that there seems to be a lack of coordination. The tax guys don’t know what the legal guys are doing, and the investment guys have no idea what the tax planning portion of this particular client’s wealth management plan should look like. So there’s really no coordination and synchronization of the efforts, which is what we provide by establishing this virtual family office. We have put together the key experts that would work best for any one particular client’s issues. And after we bring in those experts and we have a roundtable discussion which also involves a significant discovery meeting with the potential client or client, then what we’re able to do is coordinate efforts within everybody’s expertise, which is far superior to what most people are accustomed to. They’re usually picking up the phone and they’re calling their CPA over here, and they call their estate plan again, but nobody really knows or has any coordinated effort to synchronize everything to maximize, optimize their wealth planning.

 

Russ Alan Prince: [00:11:42] Well, that goes to the whole point of the family office model, whether it’s a single family office or multifamily office or a version of that which is a virtual family office. It’s all about getting the best expertise, the best possible solutions to the client so that the client can decide at the end which direction to go. All right, at the end of this process, the family office model is about showing opportunities, making sure no opportunities are missed, making sure no mistakes are happening, and then ensuring that the client is in the best position to make the best decisions possible so that that person and that family, their financial worlds get optimized and that’s what differentiates the whole family offers from the other types of, say, provider models. It is not siloed. It is integrated. It is synergistic in many respects. And that is why the wealthy, the super rich, have gone in this direction, and why much, why so many other people are looking to do the same.

 

Vince Annable: [00:12:55] So do you have a immediate checklist that somebody might mentally go through or write down to help them determine what questions to ask and whether or not family office, virtual family office, multifamily office, a coordinated wealth management team, would make sense for them?

 

Russ Alan Prince: [00:13:17] Well, there are a lot of things you want to consider in when you think of this checklist. So the first thing is that are you getting optimal results at this point in time? Is everything working really well on your behalf? Is it all clicking? Or do you have any hesitation or concerns? If you to have hesitation or concerns, now we can start thinking, OK, this is not working perfectly. Let’s see if something better might. That’s really a simple overview type perspective. We can say we can always drill down, but let’s stay big picture for this part. Our goal is to understand, you know, what it takes to make this work, so for another key consideration are the professionals you’re dealing with, do they really understand you well? Do they know what your concerns are? They know what the issues are. Do they know what opportunities there are that you’re looking at or considering or wondering about or anything of the sort that they really have a deep understanding of your interests and what matters to you and what is keeping you up at night and all the rest. In all probability, most people find that their professionals they’re working with don’t.

 

Russ Alan Prince: [00:14:28] They know one piece of things, but they don’t know the big picture. They don’t know how it all connects. That’s another and a high performing virtual family office. They can solve those issues. They do that. This is much more about, especially as we start off into this understanding what matters to you, understanding what you’re trying to accomplish, the outcomes you’re looking for. It’s not about the products and the services. It’s about the results you want because there are a lot of ways to get there. Different products and services can be combined in different fashions to get you there. We’re focused on results, and that’s what family offices are all about– results. So those are the two big issues that come into this, and if you have any doubts. If you have any doubts, if you’re not sure if you’re optimizing all aspects of your financial world, then this is something you might very well want to consider because it can enable you to produce the type of outcomes for you personally just like the super rich are getting the outcomes that they’re looking to achieve.

 

Vince Annable: [00:15:43] Yeah, I think in summary, rest the the idea is that if you do have any doubts that you should work with somebody, they can call us, they can call somebody else that has a family office. But the importance of going through a discovery process which helps identify any stress points that they may have in their wealth planning, in their financial planning, determine what those stress points are. I mean, if you’re going to set sail and go from Newport Beach to Catalina, guess what? You want to make sure you don’t have any holes in your boat, so you’ll be ensured of getting to where you want to go. So I’m going to wrap it up, Russ. I sure appreciate you coming on today. I think this has just been a snippet of what people can come to expect from a coordinated effort on their behalf. We are happy to discuss any or all of what we talked about today with them. And if anybody out there has any requests, they are certainly able to submit those to us at our website, which is vfoag.com. There are also several of Russ’s books that are listed on the website that you can request digital copies of. We will get those digital copies off to you right away. And to wrap it up, my name is Vince Annable, VFO Advisory Group. We’re glad you were able to come in today and spend a little bit of time with Russ Allen Prince godfather of family offices, as I love to refer to him with that. We look forward to seeing you again soon. Thanks so much for coming in.

 

Announcer: {Disclosure} This program has been presented for the education of our audience only and is not intended as investment advice, nor is it intended as a solicitation of investment products or services of any kind. We encourage you to seek the advice of a licensed professional financial advisor before making any investment decisions.