Advantages of a multi-family office
Each family, and its needs, is unique and therefore the reasons why you should consider a family office or joining a multi-family office is unique to your family. A few points to consider:
- Complex financial needs and asset base.
It is important to note that it is not necessarily the extent of a family’s wealth that creates the need for a family office but rather the complexity thereof. This complexity arises from a family’s ability to control, manage and stay on top of their investments and assets. As an example, a family whose main asset is their business (valued at £100m) may not need the services of a family office if the business is a simple single entity operating a single entertainment business. On the other hand, a family with an asset value of £100m, comprising of private equity investments in 2 start-ups, 3 complex investment portfolios and a portfolio of residential rental properties in 3 countries, may well need a few strong individuals to help guide them through the technical intricacies of running their business and making decisions.
Maintaining control is one of the biggest challenges for families. A family office allows the family to maintain a significant measure of control while professionals assist with the management of their affairs. The choice between a single or multi-family office is influenced by the measure of control a family wishes to retain.
One of the hurdles to success is the lack of having a “big picture” of where a family finds itself. In both single and multi-family offices, clients receive full reviews of their wealth with the added benefit of a team of professionals at hand to provide guidance and assistance if required. The professional team act independently and is giving client families easy access to the best of the best.
A wealthy family is by nature vulnerable to exploitation and family members may feel they have no privacy. Dealing with a variety of advisors or faceless corporates may exacerbate their need for privacy.
Employees of family offices are often treated almost as extended family members. The reality of such professionals dealing with a family over a long period of time engenders trust.
In the case of a multi-family office, the multi-family office representative can foster a high level of trust through the quality of assistance provided and how the relationship with the family is maintained.
Wealthy families may need consistent support when dealing with their wealth. It is important for them to have easy access to professionals who provide consistent and reliable advice and services.
Family offices, and especially multi-family offices, are able to provide families with the support they need as well as with consistent service delivery.
Succession planning should not end once the estate planning of the patriarch or matriarch has been completed. How beneficiaries are groomed to deal with the structures and wealth they inherit should remain high on the agenda. Recent studies have shown that succession planning actually outweighs capital preservation as the number one issue for wealthy families. Educating the next generation and ensuring that appropriate family members operate in suitable roles are part of the process, Successful succession planning comes to fruition when a family business is able to continue seamlessly after the death of a family head.
Next: How does a multi-family office function?
Resources and additional reading:
- Paul Roper, Roelf Odendaal and Heinrich Odendaal: The Practical guide for wealthy families and family offices; 2020. If you are interested in reading more about family wealth and family offices, please contact Turnstone (firstname.lastname@example.org) for a copy of “The Practical Guide for Wealthy Families and Family Offices” at £12.00 + postage.
- Dennis T Jaffe, Borrowed from your Grandchildren: The Evolution of 100 year family enterprises, John Wiley & Sons, New Jersey, 2020
- James E Hughes Jr, Family Wealth. Keeping it in the Family, Bloomberg, 2004
- B Hauser (Ed), Family Office: The STEP Handbook for Advisors, Globe Law and Business Ltd, 2019