How Plumb Securely Handles Wire Transfers, ACH, & Check Payments for the HNWI

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When managing the bill pay needs of high-net-worth individuals and families, it’s imperative to have bank-level security for all payments being sent – whether those are wire transfers, ACH, or old-school checks.

Plumb has the strictest of protocols to protect our clients and their money. And with our decades of experience working with HNWI, families, and family offices we have our payment security procedures down to a science.

First-time wire safety procedures

Any first-time wire transfer requests require verbal confirmation on a recorded line with the client or designee to confirm the transaction.

  • To authenticate the individual, they are asked a series of security questions.
  • Additionally, we reach out to the beneficiary on a recorded line to verbally confirm the written wire instructions that were provided.
  • A change to wire instructions also prompts a verbal confirmation from both the client and the vendor to reconfirm the instructions.

New vendor safety procedures

Any new vendor, an invoice with a 200% variance, or a vendor that hasn’t been paid in over a year requires a verbal with the client/designee before processing.

Employee cybersecurity training

Our team is also wholly trained in cybersecurity and participates in monthly security updates. They know what to look out for, how to spot a “scam” and what to do in the event that they suspect malintent: pick up the phone and confirm with the beneficiary, their designee, and the vendor. This step is as imperative as it is simple, and it can prevent fraud, months of headaches, loss of funds, and loss of the trust we have built with our clients. Preventing these events is of paramount importance to the Plumb team.

Is one payment option better than the other?

Although each payment option varies slightly in terms of how quickly a payment will be delivered or their associated costs (see below for more details), Plumb remains impartial when it comes to these different options.

Due to our stringent security measures and our internal system of checks and balances to ensure accuracy, payments made on behalf of clients via wire transfer, ACH, or check are all equally safe. While approximately 80% of our payments are made via wire transfer – especially those payments that are more urgent –  if a client prefers ACH over wires due to the fees incurred with wire transfers, we will always honor the client’s wish.

What’s next?

As a result of the pandemic and the improvements in bill pay technology, we have noticed a shift towards more electronic payments over the past couple of years. We don’t expect this trend to slow down any time soon. What we know for sure is that wherever the future of bill pay takes us, Plumb will be prepared with our best-in-class bill pay staff, high-touch service, and the latest security measures.

Glossary of Payment Terms

Wire Transfers

  • Speed of Payment: Same day.
  • Associated Costs: Fees can be incurred for both the sender and recipient depending on the bank. (Typically, $15-$30).
  • Safety: Funds are accessible immediately, so recipient is technically at an advantage.
  • Recourse in case of fraud: Once completed, there is no way of reversing. Internal process with the bank to handle the funds being returned (if applicable).
  • $ Limit: No limit for Plumb. (Daily limits with specified bank that can be increased as needed.)
  • Other Info: Currency rate/exchange fees can be incurred.

ACH (Automated Clearinghouse Network)

  • Speed of Payment: 1-3 business days.
  • Associated Costs: No cost.
  • Safety: More secure for the sender as funds can be reversed after funds have been sent (in most cases).
  • Recourse in case of fraud: Payments can be reversed by the bank (sender advantage).
  • $ Limit: $1MM limit.
  • Other Info: Limited to the US.

Check

  • Speed of Payment: Can take up to a week (or longer) to be delivered to a vendor.
  • Associated Costs: No cost associated with sending aside from postage fees.
  • Safety: Safe; Plumb’s policy is to send any high dollar checks, DMV payments, or tax payments via certified mail with tracking.
  • Recourse in case of fraud: Dispute and open a case with the bank.
  • $ Limit: No limit.
  • Other Info: International checks are typically sent using alternative methods like UPS or FedEx.

 

Plumb Shortlisted for 3 Awards

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We are thrilled to be recognized by two different organizations for our contributions to the family office accounting and bill pay space this year.

Plumb has been shortlisted for the Technology Innovator of the Year Award at Citywealth’s Magic Circle Awards – and you can vote for us by visiting this link.

We’ve also been shortlisted for the Best General Ledger System and the Best Partnership Accounting System at the Private Asset Management (PAM) Awards. We appreciate this acknowledgement from both Citywealth and PAM.

This recognition comes on the heels of a year of tremendous growth for Plumb Family Office Accounting & Bill Pay, and the development of our proprietary bill pay app. We are in great company as our fellow shortlisted firms are the best in the business, and we wish them all the luck.

We are grateful to our clients, our partners in wealth management, and our incredible Plumb team.

The Wealth Mosaic Interviews Anneke Stender

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Great interview with Plumb Family Office Accounting & Bill Pay EVP and Co-Founder Anneke Stender featured on The Wealth Mosaic.

In this series, The Wealth Mosaic (TWM) interviews leading members of the wealth management and FinTech communities to find out more about them, their journey, their perspectives on the market and how they see the future.

Read Anneke’s interview here.

 

Plumb Family Office Accounting is an expert at delivering the clarity and financial peace of mind high-net-worth individuals and family offices need. Let us know if you would like to get in touch for more information. We work in partnership with your team — wealth, CPA, and other advisors — to provide the highest quality financial reporting. This gives you true control of your wealth and establishes the foundation for effectively implementing your financial strategies.

 

 

Confidentiality is King: How Plumb Protects Clients

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How do you keep my information confidential?

We are often asked this question by prospective clients, and we are always happy to provide our answer because we are confident in the proven protocols we’ve established to protect our clients confidentiality.

As long-standing experts in the family office accounting and outsourced bill pay fields, and with decades of experience working with high-net-worth-individuals and family offices, Plumb understands that financial privacy and security is of paramount importance.

We proactively protect sensitive data in several vital ways.

  • We have a customized cloud network built on unique specifications, backed on a singular data center that keeps all data stored and safe from localized data loss. This data center is certified PCI 3.0 compliant, HIPAA compliant, and SSAE-16 Type II compliant.
  • We maintain state-of-the-art bank-level security and an in-house IT department that provides constant monitoring and oversight. Our vigilant IT department educates and updates our meticulous Plumb team on cyber-safety on a regular basis.
  • We have strict supervision over internal access to client information.
    • Only select designated Plumb team members have access to client records.
    • Only our Executive Team has wire and other approval rights.
  • We focus on a clear segregation of duties among our team.
    • This provides not only protection of confidentiality, but also the essential checks, balances, and oversight that only multiple reviews and sets of eyes can offer.

We pride ourselves on our effective and all-important quality controls, security measures and confidentiality guardianship. Please let us know how we can assist you in your family office accounting or bill pay needs.

Plumb Family Office Accounting delivers financial peace of mind by assisting high-net-worth individuals and family offices know where your money is going, so your trusted advisors can effectively manage it. We work in partnership with your team — including wealth, CPA, and other advisors — to provide the highest quality of data and financial reporting to establish a holistic view of your assets and financial holdings. This gives you true control of your wealth and establishes the foundation for effectively implementing your financial strategies.

 

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Understanding the Accounting Needs of Hedge Fund and Private Equity Investments

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Hedge Funds and Private Equity Investments have a few similarities but have different end-goals.

They are similar in that they:

  • Typically appeal to high-net-worth individuals due to the high cost of entry.
  • Are often structured as limited partnerships.
  • Both pay managing partners in a similar fashion: with management fees as well as a percentage of the profits earned.

One other key similarity between the two is that the accounting of both types of investments require specialized experts who are trained and knowledgeable about the nuances involved in these complex investment platforms.

This article will explain the differences between hedge funds and private equity funds as well as the accounting requirements necessary for reporting on these investments.

First, let’s dive a little further into the definitions – and the differences between – hedge funds and private equity funds.

Hedge Funds

Hedge funds are actively managed alternative investments that use pooled money and an assortment of strategies to earn returns for their investors.

The goal of a hedge fund is to get the highest investment returns possible as quickly as possible and they are focused on short-term profits. Hedge Funds are not regulated by the SEC. These types of funds are viewed as riskier than others for a few reasons:

  • They require a significant minimum investment or net worth to participate in the fund.
  • They employ risky investment strategies and often rely on borrowed money.
  • They expect high returns in a short period of time.

business documents on office table with smart phone and digital tablet and graph financial with social network diagram and man working in the background-1

Private Equity Funds

Private equity funds are the funds used by investors to invest directly in companies. They might purchase a private company but are equally as likely to purchase stock shares of publicly traded companies. These funds are focused on long-term earning potential.

Unlike hedge funds who are only required to make a one-time investment, those who invest in private equity funds are required to invest their capital whenever called upon to do so.

Even still, private equity investments are seen as less risky than hedge funds because of their focus on long-term viability and returns. They typically seek to purchase a controlling interest in a company, and then bring on new management or provide guidance to the existing management team of that company. Their aim is to improve profitability with the ultimate goal of selling the company after their improvements have been implemented, and the increase in profits has been realized.

Hedge Fund Accounting

The accounting related to hedge funds requires the compilation of all brokerage statements that reflect on the fund. Every investment must be accounted for and included.

In addition, hedge fund accounting will help to determine the break periods. Or, in other words, the accounting helps to regulate the timing of when earnings made by the fund will be paid out to the principles and partners of the fund.

Perhaps the most important report issued by a hedge fund accountant is the NAV, or the net asset value report. This report is required once a year, and it is used to demonstrate the hedge fund performance record. It is this use that makes it such an important deliverable: it is based on these results that many investors decide where to invest. In addition, hedge fund accountants must also provide the annual income tax reports to the investors of the fund.

Working business woman with global reports and stock market change concept

Private Equity Accounting

Private equity funds must follow the standards set forth by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). However, the operations and financial situation of the private equity fund might – and most likely will – require modifications to the accounting format of these standards. This is because these original standards were not created with private equity funds in mind.

Another important aspect to private equity accounting is an understanding of and reporting about the amount of control the fund has over an entity.

And of course, the accounting standards used by the private equity will have an impact on how and what is reported. The US GAAP (generally accepted accounting principles) differs from the UK GAAP, and both can be different from the IFRS (international financial reporting standards).

Plumb Family Office Accounting & Bill Pay has decades of experience working with both hedge fund and private equity investors. We understand the refinement, complexity, and intricacy involved in the accounting required for both investments. If you are a hedge fund or private equity investor – or a financial advisor to a client who is – please let us know if we can help.

Sources

www.wallstreetmojo.com

www.investopedia.com

www.smartcapitalmind.com

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Q3 Means BBQs, Swimming… and Schedule K-1s

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K-1s are often the last in the long line of documentation needed when filing taxes. As such, we always recommend to our clients that they begin this process as early as possible. In fact, it is our policy to begin collecting and reconciling K-1s in July and August, and even into September.

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