Alex Sonkin is the founder of the Virtual Family Office Hub. Besides being a family-office entrepreneur, he is also the client of a family office as the husband of Jola Sonkin, co-founder of the organic-energy-bar brand GoMacro. Sonkin spoke with Crain Currency about what it means to run a “virtual” family office, the unsung hero that is the CPA and a “dirty little secret” of the financial industry.
The Virtual Family Office Hub focuses on CPAs and tax attorneys. Why?
When studying the family-office space, we saw that the real heavy lifting is really done by the tax people. The Virtual Family Office is a way for CPAs, who are really doing a lot of the most difficult work, to commingle and start talking about strategies. We’re building a community of tax professionals with at least 10,000 hours in audit or Tax Court, where they can vet out their favorite resources and strategies. Our members can offer clients project-based solutions. So if a client is selling a company or an appreciated asset, they might come to one of our members and say, “Hey, I just sold my company, and I want to meet with you six or 12 times a year to make sure the tax planning is right.” 
So is a virtual family office a replacement for a single-family office, a multifamily office or something else entirely?
VFO is truly the new thing. Here’s the challenge even with an SFO. Would the best people in the world want to work [full time] for Jeff Bezos? No, the best attorney in the world has an ego. It’d be much better for Jeff Bezos to convert his SFO into a VFO, to work with the very best attorneys in the world. Look at what is happening on the PGA Tour. The best people want to become contractors, to do projects and to get paid really well.
Does having a top CPA or tax lawyer really make the difference?
Eighteen percent of Fortune 500 companies are able to zero-out their tax returns, yet 82% don’t know how to do this. So what’s going on? Why are 18% of the most profitable companies not paying taxes legally? The answer is, those 18% are going deeper, they’re more focused on the tax planning. The 18% are finding resources and specialists, the top kids in their class.
A major part of VFO Hub’s strategy is to have tax professionals pooling resources and ideas.
Here’s the dirty little secret of the whole financial services industry: If you invest your money with Goldman Sachs, they’re not going to show their client what Morgan Stanley is doing. They just say, “We’re Goldman, we’re the best.” “But what are they doing at Morgan Stanley?” “Don’t worry about it.” It’s the same with CPA firms. Deloitte’s not going to call KPMG. But what we’re doing is creating an open-source model. Let’s bring every resource to the table.
What’s something you know now that you wish you had known 10 years ago?
That due diligence is really difficult. It’s hard work. A lot of people like to talk about doing due diligence, but actual due diligence is messy. It involves fighting, opinions and egos. I really wish I had known then that people pretend to be doing it and are not really doing it. We’ve come up with a real way to do it that is simple. It involves work, but it reduces that work by 10X.
Interview by David Zax, a freelance financial reporter whose work has appeared in Bloomberg CityLab, Entrepreneur Magazine, Fast Company and The New York Times.