This news service recently spoke to an award-winning US firm that specializes in accounting, bill payment and related financial services. A major theme is the notion of helping clients set the full "balance sheet" of their lives – often hard to do but vital to accomplish.

After rises to interest rates and other changes to the financial landscape, ultra-wealthy individuals and family offices must rethink how they invest and spend. They need to look at the whole “balance sheet.”

That seems obvious, but the hard part of it is understanding what all the elements on that balance sheet are, where they are held, who has control of them, and whether assets have gotten mixed up over the years. To some extent, UHNW individuals require someone like lifestyle guru Marie Kondo to clear out the clutter, as it were, and impose order on chaos.

While that simplifies what it does to some extent, creating this kind of order is a big element to what Aquilance (formerly My Accountant), does. The firm, which handles financial administration and accounting, book-keeping, and related services, was founded in 1987 and is based near New Haven, Connecticut. It won an award from Family Wealth Report in 2023 for the “bill pay” category. 

“Assets can be difficult to manage if you don’t even know what’s there. But once you have everything, then it is great,” Patty Fitzsimmons, director of partnership accounting at Aquilance, told this publication. She spoke alongside Joe Farren, president, and partner at the firm, where he has worked since June 2008.

An important issue for business owners is that when they sell up and retire, they miss the old infrastructure of a business office to help them to manage their affairs, Fitzsimmons said. Sometimes they also lose that legacy knowledge from having someone manage things for them; that’s why a firm like Aquilance, she said, helps as all of that knowledge and experience is maintained.

“Technology is super-important in facilitating the services we provide,” Fitzsimmons continued. (The firm uses  FundCount.)

At the outset, a big task is clients is gathering clients' information on their liquid, illiquid assets (including properties, boats, planes, and other “toys”) into a coherent picture, a “personal balance sheet,” she said. Without taking such a step, assets can be forgotten by the client and by advisors.

“I think decentralization is often a major issue here. While clients usually have a primary advisor, it is not uncommon for there to be held away assets, illiquid assets, and private equity that are not “on the books” with that advisor,” Fitzsimmons said. “It then falls on the client to aggregate and understand their finances wholistically, which they rarely do.” 

“Yes, we often see that deconstructing their assumed situation and rebuilding their actual situation fixes a great deal of issues. We often see cash movements comingled from various entities in a `pay from where we have liquidity’ emergency. These, technically, should be reconciled as due to/due from transactions, but they rarely are. This alone can cause legal and tax liabilities, as well as confuse or misrepresent the financial positions of multiple parties or entities.”

Fitzsimmons brings experience that she acquired in former roles in accounting and operations at Lime Rock Partners (private equity), Edgewood Capital Advisors (real estate investments and bridge lending) and Commonfund (marketable securities and alternative investments).

As for Farren, he’s worked at the business since the financial crisis year of 2008 – a chastening experience when many lessons had to be learned. Before this, Farren worked for various architectural firms for a total of 13 years. 

A "single point of truth”
Wealthy individuals need to unify their financial lives, Farren said. As families have developed businesses and investments over the years, they can create all manner of tax and structuring complexities. Investments can be mingled in ways that lead to costly tax bills which, if managed better, would be removed, or significantly cut, he said. Such clients require a “single point of truth” of the sort that a firm can provide, he said.

As regularly noted in these pages, UHNW individuals and family offices have been pushing into alternative investments such as venture capital, private equity and direct investing. This adds to the complexity. How does Aquilance approach this?

“It has certainly added to the complexity of their lives, but we tailored this business exactly to serve those clients,” Fitzsimmons replied. And while it is `more difficult’ for us as well, it is not `too difficult’, which it often is for them. Our systems are designed to bring all this together for them in a central, comprehensive, true double entry accounting system so the complexity can be well understood and reported on,” she replied.  
Fitzsimmons agreed with the suggestion that clients can be misinformed about the amount of financial liquidity they require.

“Often, yes. We hear from clients after they onboard, and we provide them accurate reporting, that they had a “rough idea” of what they spend but are often surprised by where and how. Once we lay out their annual burn rate in black and white (or red) there is no ambiguity. That helps with funding ongoing cash needs,” Fitzsimmons said. “If we are tracking capital calls, we can also help clarify how much, and when, additional liquidity is needed. In some cases, we see clients keep excessive amounts of cash (that could be better utilized) because they are being overly cautious.”

Fitzsimmons said there are some clients Aquilance won’t take on board.

“There have been cases where clients have requested accounting that was `inappropriate’. Not necessarily from a legal standpoint, but from a best practices point of view. We refuse to provide information that we cannot stand behind. Just because someone `would like to see it this way’, doesn’t mean we will report it that way. We can certainly customize reports and provide selective data when appropriate (i.e. just someone’s real estate holdings), but we won’t paint a rosier picture than their reality warrants,” Fitzsimmons said.

Returning to the issue of “imposing order on chaos,” Fitzsimmons said people need to see matters in the round. 

“It is important that people do not feel like they need to get organized themselves to move forward with getting organized. This type of organizing requires a clean rebuild of their financial world, so spending excessive time trying to `tidy up’ is not time well spent. As gaps are discovered in the information that we receive, we can focus the right people on the right tasks,” she said. “Getting to a state of clarity and understanding can be a slow, steady, iterative process. Questions will be asked that lead to more discovery, that lead to more questions, that eventually lead to building an understanding of the whole picture. This process can be time consuming but is critical to get to the right place.”