Why set up a family office?
There is an ever increasing number of family offices being established by wealthy families. Executive Directors and family office specialists, Richard Joynt and Amy Collins take a quick look at some of the main reasons these offices are being set up.
Confidentiality & discretion
High-net-worth individuals (HNWIs) are highly sensitive to maintaining confidentiality for a variety of legitimate reasons, and setting up their own single family office (SFO) or hand-picked multi-family office (MFO) gives them the confidence and peace of mind that their information and data is being kept confidential.
Often HNWIs will employ professional advisers who they have worked with for some time and who they have grown to trust with their affairs. By engaging those advisers directly in their own family office, they can maintain that trusted relationship.
By employing their own staff or engaging with an independently owned MFO, HNWIs can ensure that their family office's interests are closely aligned to their own with no conflicts of interest.
Most wealthy families quickly realise that with great wealth comes the burden of managing that wealth. In this sense, time is truly precious and a family office may be used to manage personal homes, luxury assets, take care of travel arrangements and deal with what can sometimes be sensitive tasks.
Not only can the family office provide a more holistic solution, it can also be more cost effective than utilising a range of external advisers.
HNWIs want the staff reporting to them to be directly accountable for their actions. Consistency of personnel and a 'long life' employer-employee relationship means that family office staff understand the long-term effect of their role and actions.
Staff in an SFO are entirely dedicated to one client family and can therefore easily prioritise their work loads. Increasingly we are seeing MFOs employing staff dedicated to a single client.
As the staff are reporting directly to the HNWI in an SFO or based on a bespoke service agreement in an MFO, their roles and responsibilities can be as flexible and varied as the HNWI requires.
The HNWIs directly instruct staff within the family office. This means that the family office recruits and mentors staff who are highly skilled and very focused on their client family's needs.
Tailored advice based on full and historical knowledge
The staff of the family office can know the whole picture - the tax and legal structure, the likes and dislikes of the HNWI and their family, together with a very deep and personal historic knowledge of the family's affairs. This in-depth knowledge means that the service offered can be extremely profound and personalised.
Download our Guide to Family Offices
With each family office set up to meet the demands of a specific client family, there is no blueprint for how an effective family office should operate. Therefore, wealth professionals often need to access specialist family office expertise in order to fully understand the bespoke operational aspects their client's family office requires.
In response to this need for clarity and to act as a helpful indicator of what key issues are worth considering when establishing or operating a family office, we have produced A Guide to Family Offices. Download the full guide via the form below.