Todd Kesterson explains the appeal of Florida to family offices

Todd Kesterson is the principal of family office services at Kaufman Rossin, a leading CPA and advisory firm based in South Florida. Before joining the firm in 2014, he spent nearly 15 years managing the wealth of a high-net-worth family in Dallas.

You’re in South Florida. Describe the growth in family offices that you’re seeing down there.

At Kaufman Rossin, it’s mainly in consulting and outsourcing. A growing number of our clients spend only part of their time in South Florida and are choosing to engage a third-party service provider rather than investing in a full family office infrastructure and staffing here.

So even if it’s just for a part-time presence, what would you say is driving the movement to South Florida?

The COVID-19 pandemic has made a lasting impression. Miami was one of the most popular migration destinations of all U.S. metro areas in 2022, and we see that trend continuing. The year-round warm weather and relative affordability of homes contributed to many decisions to relocate here. And the potential tax savings — Florida does not have a state income tax.

South Florida real estate has been generating some crazy headlines lately. The listing of Constant Contact founder Randy Parker’s Boca Raton mansion comes to mind: a $52 million teardown! Any other striking examples that you can think of?

A Miami Beach mansion that sold for $14 million in 2021 sold for more than $38 million in 2022.

Has this growth changed the way you do business? Has it been all positive, or has it presented some challenges?

We’ve invested in new technology and talent to meet the increased demand for family office services. We’ve also expanded our talent in cybersecurity, because family offices and high-net-worth individuals are among the highest-value targets for cybercriminals. The sophistication of cyber threats continues to increase, with hackers now leveraging AI. In 2022, according to the RBC and Campden Wealth North America Family Office Report, 37% of family offices said they had experienced one or more cybersecurity attacks in the past 12 months. But only 17% of respondents in the same study said they have a “robust” cybersecurity plan in place, and just 19% said they are “very prepared.”

A lot of Latin American family offices are moving into South Florida, too, right?

Yes, from Colombia, Brazil, Argentina and Panama. We’re also seeing family offices from the Caribbean and the Bahamas.

Do the Latin American family offices do certain things differently from their U.S. counterparts?

One difference is with internal governance. U.S.-based family offices tend to have a more structured approach, with teams of employed professionals and frameworks for managing family dynamics and decision-making processes. Latin American family offices place a stronger emphasis on preserving family unity and family values and therefore rely more heavily on trusted advisers or family members for decision-making.

Regulatory requirements in Latin America can vary significantly from country to country, impacting issues such as tax planning, reporting obligations and governance practices. And they often face more political and economic instability, which may ultimately drive their decision to move money to the United States.

Back to family offices in the U.S. Do they do things differently in South Florida compared to Dallas, for example, another region where you’ve also got a lot of experience?

We’re seeing more outsourcing to firms like ours in Florida. Rather than investing directly in infrastructure and staffing, clients are choosing to enjoy their wealth without having to set up, manage and maintain a family office themselves.

Read the interview on Crain Currency.