Family Office Management

What is a Family Office?

A family office is a private wealth management advisory firm that serves high-net-worth individuals. The goal of a family office is to centralize the management of a family’s financial affairs and preserve their wealth across generations. Here are some key points about family offices:

Typical Services Offered:

• Investment Management: Creating and managing investment portfolios.
• Estate Planning: Ensuring the smooth transfer of wealth to future generations.
• Tax Planning and Preparation: Optimizing tax strategies and handling tax filings.
• Philanthropy: Managing charitable donations and setting up foundations or trusts.
• Family Governance: Establishing structures and processes to manage family dynamics and business.
• Lifestyle Management: Handling personal affairs such as travel, household management, and private staff.

Types of Family Offices:

• Single-Family Office (SFO): Serves one affluent family.
• Multi-Family Office (MFO): Provides services to multiple families, often to achieve economies of scale.

Advantages:

• Customization: Tailored financial strategies to meet the specific needs of the family.
• Control: Direct oversight and control over investments and financial decisions.
• Confidentiality: High level of privacy for family affairs.

Establishment and Costs:

• Family offices are typically established by families with significant wealth, often in the tens of millions or more. While there is no set definition when using the terms HNW (High Net Worth) or UNHW (Ultra High Net Worth), HNW families usually have investable liquid assets in the range of several hundred thousands to several million, and UHNW usually have tens of millions, or even billions.
• The cost of running a family office can be substantial, including salaries for professional staff, office space, and operational expenses. At a minimum, expect to retain the best counsel from lawyers whom specialize in asset protect strategies, estate planning, and creating tax efficiencies. The same is true for finding the best accountants and CPA’s firms with a specialized Family Office practice.

Family offices are becoming increasingly popular as wealthy individuals seek comprehensive and personalized financial management solutions.

Our family belongs to an informal network of other family offices, including SFO’s and MFO’s, which provide a great environment to learn and grow. This network has greater resources and can direct us towards others teams of professionals with the proper skill set needed to succeed. This includes lawyers, accountants, and other professionals with a variety of skill sets. In addition, we belong to networks which source and vet potential investment opportunities for us to evaluate.

Where do I start?

Start with knowledge. There are consultants, like us, and firms that specialize in helping families set up and manage family offices. These consultants provide expertise in various areas essential to establishing and operating a family office. Their services typically include:

1. Initial Assessment and Planning:
   • Evaluating the family’s needs, goals, and existing financial situation.
   • Recommending the structure and scope of the family office.
2. Legal and Regulatory Compliance:
   • Assisting with the legal setup, including incorporation and regulatory filings.
   • Ensuring compliance with relevant laws and regulations.
3. Governance and Management:
   • Establishing governance structures, such as family councils and advisory boards.
   • Developing policies and procedures for decision-making and conflict resolution.
4. Staffing and Operations:
   • Recruiting and hiring experienced professionals to manage investments, taxes, and administrative tasks.
   • Setting up office infrastructure, including technology and security systems.
5. Investment Strategy and Portfolio Management:
   • Designing and implementing investment strategies tailored to the family’s objectives.
   • Providing ongoing investment management and performance monitoring.
6. Risk Management and Insurance:
   • Identifying potential risks and recommending appropriate insurance solutions.
   • Developing strategies to protect family assets and mitigate risks.
7. Philanthropy and Legacy Planning:
   • Assisting with the creation and management of charitable foundations or trusts.
   • Advising on strategies for legacy planning and wealth transfer to future generations.
8. Ongoing Support and Advisory Services:
   • Providing continuous support and advisory services to adapt to changing needs and circumstances.
   • Offering education and training for family members on financial literacy and wealth management.

Prominent firms and consultants in the family office space include:

• Global Accounting and Consulting Firms: Deloitte, PwC, EY, and KPMG have specialized divisions for family office services.
• Boutique Advisory Firms: Companies like BNY Mellon Wealth Management, Rockefeller Capital Management, and multifamily office providers.
• Independent Consultants: Professionals and smaller firms specializing in bespoke family office consulting.

These consultants help ensure that the family office is established correctly and operates efficiently to meet the family’s long-term financial and personal goals. You get what you pay for. As my German wife says, “The Best or Nothing!”. (Yes, thank you Mercedes Benz)

Join a networking group, expand your circle and pick up a new hobby! Another expression I use a lot is “…you are a reflection of the ten people you surround yourself with most!” If you want to make a change and take control of your life, start by looking at the people you surround yourself with! Do they Inspire you? Do you Aspire to be more like them? Your business and family office should be the same.