Rhona E. Vogel launched Vogel Consulting in 1993 after working as a CPA and tax partner for Arthur Andersen, long before Enron became a household name. Today, her Brookfield, Wisc.-based firm has a clientele of more than 50 high-net-worth families and $3.5 billion in assets under advisement. Her 48 employees include accountants, financial planners and attorneys. They manage the wealth of client families with an average net worth of approximately $50 million.

"While working at Arthur Andersen, numerous families with closely held businesses or recent liquidity events approached me with the same complaint," Vogel recalls. "They were harassed by salespeople from different advisory disciplines and desperate for a one-stop shop to meet their complex financial needs." With clients begging for family office services, Vogel approached Andersen with her idea, but the company rejected it.

Sixty percent to 70% of her clients are first-generation wealth creators. Her services include tax planning and preparation, business consulting, investment management, estate and financial planning, philanthropic planning and concierge services.

Taxation Plus Integration 

In the firm's early days, Vogel's team was composed of three CPAs. That influence has not waned. "We do an enormous amount of tax planning," Vogel says. "Unlike most multifamily offices, we also handle the tax preparation ourselves. Integrating the tax work with investment and estate planning yields a much better net investment return for our clients. A good money manager might add 200 to 300 basis points to a client's investment return. By comparison, integrating tax, investments and estate plans in their totality can add 2,000 or more basis points annually to a client's return." For example, by examining a family's holdings and plans, Vogel might find defective trusts that can be taken advantage of for tax purposes.

Vogel charges clients on a retainer basis and as a percentage of assets under advisement; the majority of her clients pay hourly fees.

In today's volatile market with plenty of downside exposure, Vogel's team is heavily hedging clients portfolios. "While no two asset allocations are the same, it is not unusual for 20% to 40% of a portfolio to be in hedged products and cash right now," she says. "We look for hedges that generate alpha as well as low volatility. Perhaps 5% of a generic portfolio would be in bonds and up to 20% in private equity. The balance would be in equities–long positions only—with a big chunk of those equities in international and emerging markets."

She continues, "We're a bit like endowments in our asset allocation. We have very long-term plans for our portfolios—up to 100 years. The investment income needs of our clients are minor. The money is invested for their children and grandchildren."

Specialized Services 

It is not unusual for Vogel's team to spend 30% to 40% of its billed time with some families on tax planning and restructuring assets—moving from individual ownership to a variety of family partnerships. With other families, they spend much of their time advising on the purchase or sale of private companies.

One family needed assistance in the purchase, insurance and transportation of a large collection of musical instruments shipped internationally to be played by top solo artists in the world. "Our financial advisors must be very flexible," Vogel says.

The firm also spends much time educating their client families about financial and governance issues. "We actually have our own training room," Vogel explains. She maintains a disciplined family meeting process with a minimum of quarterly meetings for the heads of families.

Vogel loves the creativity and complexity of running a multifamily office. "Getting your arms around the myriad details of a wealthy family's situation is enormously complex as well as rewarding. When I see a family's balance sheet grow, I know that I've made a meaningful contribution." 

Jim Grote contributes regularly to Financial Planning.