For persons who have built successful careers and are managing a significant level of personal assets as a result, making the transition to a personal financial manager can often be compared to hiring a chief financial officer. In fact, obtaining the services of a personal CFO, as we have mentioned previously, can free up significant time and “emotional attention” for the successful professional, permitting a greater focus on strategic concerns for both the business and family it supports.
What a CFO Does—and How That Can Benefit Your Personal Finances
As a flourishing executive or entrepreneur, you are probably already familiar with the principal functions of the chief financial officer for a company. This individual is responsible for the efficient function of the firm’s finances, including:
- Reporting and control: Ensuring accuracy in financial statements, overseeing accounting teams, managing tax compliance, and maintaining appropriate internal controls and oversight;
- Strategic planning and forecasting: Analyzing data to forecast future performance, advising on investment opportunities, and driving long-term financial strategy;
- Treasury function and risk management: Managing liquidity, debt financing, and mitigating financial risks to protect company assets;
- Investor relations: Communicating financial performance to stakeholders, board members, and investors.
For a moment, consider how these duties might relate to the efficient functioning of your personal finances:
- overseeing your investment portfolio and other personal assets;
- ensuring that the family’s personal “treasury function” proceeds efficiently (bills are paid, income is distributed, various accounts are funded as necessary);
- assistance with managing your real estate and other less liquid holdings;
- optimizing your and your family’s personal tax strategy;
- employing appropriate wealth preservation strategies;
- coordination with other professionals (attorneys, CPAs, insurers);
- management of your and your family’s personal risk profiles, including life, property, and health insurance (replacement and protection of current income and assets).
And beyond these, think about the benefit of having an informed, professional, and dedicated advisor on less directly financial matters such as estate and succession planning, both for your business and your personal assets; financial education for children and grandchildren; and even oversight of trusts and other vehicles you may be employing to facilitate your charitable and philanthropic interests.
How might the services of a “personal CFO” improve your ability to spend more time in strategic planning for your and your family’s personal interests? Could having a dedicated professional managing the day-to-day processes involved permit you to allocate more or better attention to non-financial matters, freeing up your ability to do more of the things you are passionate about, like time with family, working on important charitable or philanthropic causes, or even pursuing hobbies and other personal interests?
Finding the Right Professional for Your Needs
As you consider the advantages of having a personal CFO, it is important to remember that in order to properly serve your and your family’s needs, professionalism, experience, expertise and, above all, fiduciary responsibility are vital qualities. Your personal CFO should be able to provide holistic planning services driven by a strategic overview of your resources and a thorough understanding of your goals and your core values. You should be able to depend on their commitment to your best interests and also an ability to communicate recommendations and guidance in a way that you, your family, and other stakeholders can understand.
Just as the CFO of a business serves the CEO by taking responsibility for the efficient financial functions and allowing the CEO to formulate and lead strategically, the personal CFO can aid the effective functioning of the multi-generational family enterprise. At Optima Asset Management, we assist families with significant wealth by freeing them up to spend more time understanding and enjoying what they have accumulated and also helping to prepare those who will be the family’s future leaders to be good stewards. To learn how we can assist you, please get in touch with us.
