Remember when you felt confident in your ability to balance managing the growth of your business with your personal finances? When you had it all under control? Seems like a long time ago, doesn’t it?
The hard truth is that as business owners, entrepreneurs, and corporate executives become more successful, their personal finances often take a back seat, even though their wealth management needs have increased in complexity.
Inevitably, there comes a time for every successful businessperson when you can’t manage it all yourself. It’s too much, too complex, and your time and talents are better used elsewhere, such as continuing to run and build your business. That’s when it’s time to lean on a “personal CFO.”
Now, every businessperson understands the role of a CFO in the traditional business context. That senior executive responsible for managing the financial activities and stability of an organization. However, when it comes to managing all the different facets of an individual’s or family’s wealth, that role can become even more multifaceted and nuanced. Everything from investment management to estate planning to risk management to family governance and education. And that just scratches the surface.
Think of a personal CFO as a “financial quarterback” who can bring together and manage your – and potentially multiple generations of your family’s – entire financial picture. A personal CFO is responsible for building and leading your team of advisors and ensuring they all work in close coordination, with your best interests in mind. In essence, a personal CFO is a “one-stop-shop” to ensure everything stays on track and no balls are dropped when it comes to your wealth management needs.
Sounds good, right? But how does one find a personal CFO who can handle that load? In reality, a personal CFO is not necessarily an individual, but rather is a firm that takes a holistic, team-based approach to meeting the complex needs of highly successful individuals and families.
As a boutique, multi-family office founded by successful entrepreneurs, Cresset is one such firm. We have developed a robust ecosystem of financial professionals to meet the myriad needs of successful families. The depth of that ecosystem provides diversity of thought and perspectives, yet we remain nimble and rooted in innovation. At Cresset, we know the right questions to ask and provide clarity and simplicity in what can be very complex situations.
So what specifically can a personal CFO do for you and your family? Below is a short list of what to expect:
- Evaluate all of your financial accounts and documentation. A personal CFO should be able to compile and distill your entire balance sheet, including all investments, bank accounts, and liabilities into one unified report that is easily accessible and understandable. That singular view should provide clarity and transparency, in real-time, for your current and projected financial outlook.
- Build a team of third-party advisors and provide oversight of that team. As stated earlier, a personal CFO is responsible for leading your team of advisors, ensuring they are always coordinated and acting on your best interests. A personal CFO should be able to recommend and build that team from a deep and experienced bench of industry professionals, including wealth advisors, CPAs, insurance brokers, estate planning attorneys, certified exit planners, and more.
- Proactive outreach with recommendations for you and your family. You don’t have time to be forever examining every investment trend, insurance offering, and tax law change that surfaces. That’s the job of a personal CFO, to stay on top of any and all opportunities and threats that you and your family should be aware of, and to come to you with real-time recommendations.
Finally, don’t confuse a personal CFO with your business CFO. A corporate CFO may not have the experience and specific skills that your family needs. Plus, if and when you sell your business, you may no longer have access to the business’ CFO. You don’t want to find yourself in that situation. Shift that burden to a personal CFO and free yourself to focus on what you do best.