The DiNuzzo "Middle-Market Family Office" Breakthrough

Creating Strategic Tax, Risk, Cash-Flow, and Lifestyle Options for Successful Privately-Held Business Owners and Affluent Families

P. J. DiNuzzo

• Publisher: Morgan James Publishing
• Year: 2022
• Print ISBN: 9781631958335
• eBook ISBN: 9781631958359
• Topic: Business
• Subtopic: Business General
• Index: Business

More personal and business wealth exists in the world today than ever before, as privately held business owners creatively grow their companies. Unfortunately, the private wealth industry has not kept up and options for successful middle-market business owners are limited. Only the world's wealthiest families have access to the expertise needed to truly achieve their business, personal, financial, and philanthropic needs. In The DiNuzzo Middle-Market Family Office Breakthrough, private wealth advisor P.J. DiNuzzo reveals the first and only structure through which he and a well-coordinated team of experts help middle-market business owners get the same level of service once only reserved for the ultra-wealthy.

PART 1:

How Single Family Offices Have Served Ultra-Wealthy Business Owners for Decades

Chapter 1

How Ultra-Wealthy Business Owners Use Single Family Offices

When many business owners think about achieving extraordinary success, the first things that come to mind are all the positive effects that level of success brings. From building a better life to making life better for the next generation to making a positive impact through philanthropy, they know that wealth opens the door for incredible possibilities.

Once these business owners finally achieve high levels of success and wealth, however, they are often surprised by the many challenges that arise. Wealth, for instance, can attract requests for money from family, friends, and strangers. It certainly attracts salespeople and scammers. And it can also attract people looking to steal from or even physically harm family members.

Effectively navigating so many opportunities and challenges on top of running such a successful business would be impossible. To start, many of these issues are challenging for the average professionals to identify and address. Many accountants, attorneys, and other professionals don’t even know what questions to ask to help successful middle-market business owner clients navigate more sophisticated issues. Thus, you can’t reasonably expect a business owner to be able to anticipate and address the multitude of opportunities and concerns that come up across various areas of specialty on top of running their business.

That’s why the ultra-wealthy establish Single Family Offices to optimize the family’s business, family, philanthropy, and future.

Why Only the Ultra-Wealthy Can Establish Single Family Offices

When business owners hit certain levels of wealth, the time and attention needed to truly optimize their life and protect them and their family members becomes equivalent to operating a full-time business. Their legal needs pile up. Their accounting becomes so nuanced that simple strategies can cost or save millions of dollars in tax obligations. Demands on the family’s time become overwhelming, especially when such a significant business continues to grow. The list goes on.

At some point—often somewhere between $250 million and $500 million of net worth—it becomes cost-effective to hire a team of specialists to serve the family on a full-time basis. The family would employ a core team of specialists whose sole responsibility is to get to know the family’s needs and goals and help them achieve them. It would generally include a variety of professionals, as well as administrative support. And when something comes up that needs an outside specialist, the Private Wealth Advisor would handle finding, negotiating, and working with the right specialists to achieve the best possible result for the family.

If that sounds costly, it’s because it usually is. The professionals who have the level of sophistication needed to identify and address issues for the ultra-wealthy command high salaries and benefits. It can easily cost millions of dollars a year to operate a family office that can adequately serve an ultra-wealthy family on a full-time basis. That’s why it generally requires a family to achieve somewhere between $250 million and $500 million in net worth before the additional value created by a family office makes financial sense.

How Single Family Offices Benefit the Ultra-Wealthy

Some of the most recognizable benefits of Single Family Offices include optimizing the family’s financial and legal worlds, such as reducing risk, improving cash flow, increasing investment returns, and addressing legal issues.

Those are far from the only benefits of a Single Family Office, however. A Single Family Office handles every detail of the family’s life. Simply put, if the family wants or needs something, the Single Family Office acts as a catalyst to get it. Here is a list of just some of the other ways Single Family Offices help the ultra-wealthy:

• Providing investment management expertise aligned with the long-term goals and concerns of the family
• Evaluating all legally valid ways to mitigate taxes on a corporate and personal level
• Providing extensive administrative support from ensuring all financial statements are up to date and accurate to paying and tracking all expenses
• Coordinating concierge medical care
• Coordinating security for family members at home and while traveling including protecting them from Internet criminals
• Structuring and managing the family’s wealth as well as working with later generations to build a family dynasty
• Working to achieve business growth through the adroit use of tax mitigation strategies including helping to transfer wealth tax-efficiently between the generations
• Addressing significant personal matters such as adoptions and the children’s education
• Planning vacations, parties, and other events
• Helping the family buy cars, planes, yachts, and islands
• Helping the family buy homes and making sure they and their contents are protected
• Finding and managing in-home cleaning, cooking, and support staff
• Acting as a barrier between family members and the outside world
• Managing family dynamics
• Finding support for family members in crisis
• Keeping private issues private and managing PR issues that arise

From a day-to-day perspective, this level of support brings great peace of mind to the family members. It enables the family to concentrate on the activities and areas they want to, knowing that these other matters are being well taken care of.

As families build wealth, they become more and more targeted by frivolous and unfounded lawsuits, people wanting to latch onto them, and scams. Having a family office in place provides the expertise that can put in place the appropriate barriers for protecting the family. Commonly, Single Family Offices help screen and filter people who are trying to gain access to the family or their funds to make sure family members are working with the best professionals, as opposed to all the people who are trying to take advantage of or exploit them.

The Single Family Office as a Profitable Operation

For some ultra-wealthy families, Single Family Offices are not just a justifiable expense, they are cash flow positive. The financial gains realized by the family more than make up for the cost of operating the family office. Those benefits come in many forms, including

• Superior investment performance
• All forms of tax savings
• Risk reduction
• Expense management

These financial benefits can add up to many millions of dollars for the family. However, with such high fixed costs involved in paying a full team of specialists and support staff, it can take a lot to achieve cash flow positivity. That’s why the numbers on a Single Family Office only tend to make sense for families when they cross somewhere between $250 million and $500 million.

In short, ultra-wealthy families are using the family office model to both manage and achieve growth in their business and personal lives. The family sets goals and priorities, and their Single Family Office helps them achieve them. The benefits I mentioned are just some of the ways the wealthiest families have used Single Family Offices to optimize their lives. But all those benefits don’t matter much for families who can’t justify the cost. The Single Family Office system won’t work for most successful families. And that’s why I created the first Middle-Market Family Office^TM, which I called the DiNuzzo Middle-Market Family Office^TM: to change the model in such a way that it creates the same results for a family with significantly less wealth: families with a net worth of between $10 million and $100+ million, who generate more than $10 million in annual revenue, or who make $1 million per year, or who are rapidly approaching those numbers.

Keys to Chapter

• Single Family Offices are expensive and thus are only established by the ultra-wealthy.
• There are significant benefits the ultra-wealthy have because of their Single Family Office.
• Ultra-wealthy families worth somewhere above $250 million of net worth have benefited by setting up Single Family Offices for decades.
• Single Family Offices can benefit every area of their clients’ lives by managing family wealth, reducing risk, increasing and managing cash flow, improving family business operations, coordinating concierge medical care, coordinating security at home and abroad, addressing significant personal matters, or helping the family buy cars, planes, yachts, homes, islands, and more.
• Single Family Offices can function as profitable operations where benefits realized from centralization and economies of scale, superior investment performance, tax savings, risk reduction, and expense management exceed the operating costs of the Single Family Office.
• Because of the high operating costs, only the ultra-wealthy have enough income, net worth, and potential benefits to justify the expense of setting up a Single Family Office.
• Middle-market successful business owners and wealthy families with a net worth of between $10 million and $100+ million, who generate more than $10 million in annual revenue, or who make $1 million per year can achieve many of the same benefits of a Single Family Office through the first Middle-Market Family Office^TM, my DiNuzzo Middle-Market Family Office^TM.

Chapter 2

The Forgotten Demographic: Middle-Market Business Owners

You’ve followed your vision, worked hard, managed a ton of risk, and created a significant business. You’ve built substantial wealth inside and possibly outside your company. You’ve grown your family. You give to the community. You’re worth $10 million or more. You make around $1 million or more in annual income, or your business generates annual revenues in excess of $10 million. Or you’re fast approaching one or more of these benchmarks.

You’re incredibly successful by anyone’s definition.

To achieve a net worth of at least $10 million and/or generate $10 million or more in annual revenue for your business, you will need to have built a significant business, earned a high income, saved and invested diligently, or a combination of the three. No matter what combination you used to build your wealth, if you’ve achieved $10 million or more in net worth, you face many of the same issues as those who achieve $250 million or more, just on a smaller scale. For example

• You face multiple tax issues that could cost or make you hundreds of thousands of dollars or more.
• You have surplus wealth and want to make sure you make smart decisions as to how to invest this money.
• You have significant assets to secure and risks to manage.
• You are consistently faced with tough decisions to manage and maximize cash flow in both your business and personal life.
• You likely have a target on your back for scammers or other people wanting your time and money.
• You have family, financial, and philanthropic goals.

You likely face some if not all of those issues, just not at the scale of the ultra-wealthy. That means you can strongly benefit from the same level of expertise provided by Single Family Offices, just not at the scale (and expense) of a Single Family Office. So a Single Family Office won’t work for you.

That challenge is what influenced me to create the DMMFO in the first place. I saw an entire group of hardworking people who had spent decades building a business and taking care of their families, but who were stuck in a giant void in the marketplace because the system designed to provide the level of support those people need was prohibitively expensive. They were almost stuck in “no man’s land” with nobody serving them to the level they needed to be served. I have spent decades recreating the impact a Single Family Office can have on successful business owners and their companies without the fixed expenses of a Single Family Office to serve a very specific but forgotten demographic—middle-market businesses and their owners.

The Anatomy of the Forgotten Demographic

At this point, you might wonder whether you fall into the forgotten demographic that has the same needs as the ultra-wealthy but at a smaller scale. After working with hundreds of business owners, their companies, and their families, my advanced planning strategy team and I have identified three relevant factors you can use to answer that question: net worth, income, and entrepreneurship.

The reason these factors are relevant is because each of them tells me something about taxes, cash flow, risk, health, philanthropy, and potential family issues at the level where a specialist or cohesive team of specialists is needed to achieve significant benefit, find solutions to material problems, or both.

When it comes to net worth, if you’ve reached somewhere around $10 million, or more, you begin running into issues and opportunities where consulting an expert can make a big difference. For example

• You have meaningfully more financial and legal options available that can prove instrumental in helping you protect and grow your wealth.
• You start running into major estate planning issues that can cost you millions of dollars if not properly addressed.
• You can create significant additional cash flow to improve your day-to-day life in ways that matter to you.
• You’re more likely to have a target on your back from people who want your time and money.

When it comes to income, if you’ve reached somewhere around $1 million, or more, you also begin running into issues and opportunities where consulting an expert can make a big difference. For example

• You have surplus wealth where you can take advantage of investment possibilities less affluent individuals are frozen out of.
• You get to the point where traditional investment models and retirement plans might not be enough to help you achieve your retirement goals.
• You are, many times, able to benefit from more sophisticated wealth planning resulting in a significant decrease in taxes.

When it comes to entrepreneurship, if you own a business, you also face unique issues and opportunities where consulting an expert can make a big difference. For example

• You have greater control over the taxes you pay and how you pay them.
• You make busin...

Table of contents

• Cover
• Title
• Copyright
• Contents
• Acknowledgments
• Foreword
• Introduction: The Challenges with the Status Quo and the Lackluster Existing and Traditional Solutions
• Part 1: How Single Family Offices Have Served Ultra-Wealthy Business Owners for Decades
• Part 2: The Big Breakthrough for Privately Held Business Owners: The DiNuzzo Middle-Market Family Office™
• Part 3: How the DiNuzzo Middle-Market Family OfficeTM Helps Successful Middle-Market Business Owners
• Part 4: Biohacking: Taking Mental and Physical Wellness to an Even Higher Level for Those Who Want It
• Part 5: Experiencing the DiNuzzo Middle-Market Family Office Way
• Conclusion and Invitation
• Important Disclosure Information
• About the Author