Why start a family office?
Many clients think of family offices in terms of their net worth and wealth management. However, the role of family offices is more diverse than that. Above all, family offices allow families to securely store private information about many aspects of their life, including their health records, financial statements, or highly confidential documents. Families benefit from this form of gatekeeping in terms of governance and privacy.
As already stated, by using a family office to manage one’s wealth, families can avoid paying fees for services that they do not need, that could otherwise be included in a package offered by banks or other wealth managers. This ability to choose desired services and monitor the budget spent on outsourcing them helps families focus their investments where their interests are.
These are the four main reasons to start a family office:
1. Complex financial needs
The financial needs of ultra-high-net-worth families can be extremely complicated, which is why a family office provides significant value through its integrated service model. Managing a large pool of wealth can also be time-consuming and difficult and therefore, an external partner can ease the process.
2. Gaining an overview
Family offices are designed to help families best leverage assets and preserve wealth through legal support and wealth management services. When families work with multiple professional partners, it is often the case that important items fall through the cracks. Working with a family office can therefore provide oversight and reduce the silo effect.
3. Dedicated support
Family offices focus on few clients and rely on good relationships with family members for income. As a result, they are incentivised to deliver high-quality service and support. Many financial advisory firms provide advisors a stable salary and a commission, which can mean the interest to serve isn’t quite at the same level.
4. Trust-based relationships
Where financial advisory firms often experience high turnover, family offices are built around the idea of long-lasting relationships. This personal touch creates the much-needed trust for ultra-wealthy families – where the family office advisors are in some ways seen as extensions of the family. This trust is crucial with advisors gaining deep insight into the business and finance operations and as a result, being able to provide more strategic guidance.