‘Wealthy families don't tolerate lack of confidence or expertise’: Jamie Herman

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As a top Canadian competitor in the combination sport of Racketlon, he plays table tennis, badminton, squash and tennis one after the other in a single match. As the director of taxation at his father’s Richmond Hill accounting firm, Hennick Herman LLP, he assembled a client portfolio of high-net-worth individuals and owner-managers, foreign corporations operating in Canada, and wealthy immigrants and emigrants.

One of those individuals, who had just begun managing the family’s wealth on their own, eventually hired Herman as his chief financial officer.

“My client outlined his vision, and I took charge,” Herman recalls. “We delved into various ventures including the creation of residential communities, private lending and diverse fund investments.”

But it was Herman’s development of a customizable internal reporting model that ultimately led him to collaborate with similarly successful families as a principal, and then a partner, at the Toronto-based accounting firm Fruitman Kates LLP.

“It’s been a challenging yet exciting journey, as there’s no manual on how to navigate this exclusive world,” Herman says. “While there may be others in similar fields, I consider myself unique in my blend of accounting, family business experience and single-family office creation.”

Herman recently spent part of an afternoon with Canadian Family Offices discussing how ultra-high-net-worth individuals are building single-family offices, the convergence of accounting and financial advisory services, and the key challenges and opportunities ahead for Canada’s wealthiest families.

How have you carved out the niche you’re filling with Fruitman Kates?

“When I worked for the single-family office, we had relationships with other affluent families, and they were often disorganized. I would think, ‘Why not organize things?’ However, they faced challenges in knowing where to start or finding the right assistance.

For instance, while there are family office recruiters who help find CFOs, not many have experience in the unique requirements of managing finances for wealthy families. Unlike traditional CFO roles in operating companies, where the focus is on selling products, the responsibilities for a wealthy family involve diverse tasks such as hiring analysts, chauffeurs, bookkeepers and so on. This requires a distinct skill set and knowledge base, and I’ve encountered very few individuals who truly understand what it takes to fulfill these specific roles.”

What shaped your attitudes and approaches to wealth? Who are your greatest influences?

“My dad provided me with a strong foundation in accounting and tax knowledge. Even though he’s now slowing down, he remains an entrepreneur who successfully built his own practice. Growing up, I was surrounded by the example of someone tirelessly working to establish a business and support our family. As a young kid, I observed this dedication, and it influenced my mindset.

I developed a desire to be an entrepreneur, following in my dad’s footsteps, rather than simply working for someone else. I was inspired to build something of my own and create my own equity.”

When you’re dealing with people who are used to steering the ship, what kind of approach do you need to have?

“Given their success in building lucrative businesses, wealthy families don’t tolerate any lack of confidence or expertise. It’s crucial to assert your knowledge and demonstrate a clear understanding of how things should be done.

Being mentally strong and superior business owners, wealthier individuals demand practitioners who are equally strong, both mentally and in terms of their expertise, especially when dealing with diverse investments.”

How is Fruitman Kates different from other CPA firms in Canada?

“Our firm boasts a client base that spans back to the 1960s, which contributes to a strong brand and reputation. Yet we operate with minimal red tape.

This means that if I see an opportunity or have an idea, I don’t encounter hurdles like management committees or excessive oversight. This fosters a culture of openness to entrepreneurship. I’m trusted to contribute positively to the business without compromising the integrity of our brand.”

What kind of family or individual best suits your style?

“My sweet spot lies with families possessing a net worth exceeding $100 million. This demographic often finds themselves at a point where their wealth has grown significantly, but they haven’t considered the need for a full-time internal hire to manage it. I specialize in addressing the realities of their situation, especially when they start feeling overwhelmed and desire specific reporting that their current arrangements might not provide.

In such scenarios I often take on the role of a quarterback, attempting to streamline the process and ensure collaboration. Nevertheless, maintaining cohesion among disparate professionals can be an ongoing and demanding task.”

What are the most pressing financial challenges these families face?

“Many families engage with wealth management firms that offer quarterly asset and liability reports across personal and company assets. While this is valuable, some clients express the need to self-manage with more frequent reporting, perhaps on a monthly basis, and additional metrics. This is where the challenge arises, as managing multiple investments often involves navigating through various portals and statements, each associated with administrative burdens.

For those with a net worth of $100 million or more with a significant number of different assets, this administrative workload becomes impractical, and that’s where my services become invaluable.

Often, individuals who exit businesses with substantial wealth lack structure in managing their investments. I guide them in hiring their first internal team member, typically a bookkeeper or controller. I assist in developing internal reporting systems tailored to each family’s unique needs.”

What do you think the future holds for the family office industry?

“I foresee the convergence of accounting and wealth advisory services. Holistic planning becomes challenging when professionals operate in separate spheres, and I’ve been approached by individuals envisioning family offices that combine banking, law, accounting, mortgage brokerage and real estate brokerage, offering clients a seamless and comprehensive experience.

There’s a substantial opportunity here, but many within the industry hesitate to take on the associated workload of managing portfolios and staying updated on market trends. Clients tend to be loyal to their wealth managers, even in instances of underperformance, because of long-standing relationships.

However, there’s a notable opportunity for those who can leverage existing relationships to integrate wealth advisory services seamlessly. Once accomplished, this integration can add substantial value to assets under management.”

Responses have been lightly edited for clarity and length.

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