Choosing a Family Office

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Published: 25th October 2012
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A family office (or FO) is an organisation that has been set up to manage the funds and assets of a wealthy family. A ‘single-family office’ will provide finance management for one family while a ‘multi-family office’ offers these services to a number of different families. Though many single-family offices still exist, a large number have expanded into multi-family offices. The history of family offices and an overview of the services they provide can be found in the article ‘Family Offices: An Overview’. This article, however, aims to look at what you need to think about when choosing a family office. There can be an overwhelming choice of FOs and it can be difficult to choose between them. There are a number of questions and factors that should be taken into account when trying to decide on a family office.

The first thing to think about is whether a family office is appropriate for you. In order to use the services of a single-family office, it is advisable that the family has assets and funds of at least $400 million (just under £250 million). Multi-family offices, on the other hand, as a result of taking on more clients can operate on lower amounts. Some MFOs have minimum asset requirements of $1 million (just over £610 000), but with other family offices it can be anywhere between this figure and $100 million (£61 million). If the family’s wealth is below these figures it is more likely that a wealth management service would be more appropriate than a family office.

The next thing that should be considered is the services on offer. What do you want from your family office? An important consideration is whether you can pick and choose what services the FO offers. This can be effective in some cases and can give you a more personalised service. However this approach may not work for everyone, there is the possibility that the overall coordination and management of the family’s assets may suffer and things may end up being overlooked. A full service FO may be the solution to this issue. You should look into how the prospective family office operates. Do you want it to conduct family meetings so that the whole family stays informed and the younger generations understand their role in the family’s assets? Do you want customised reports given in person or would you prefer a more hands off approach with standard reports updated on a web access platform?

Geography and size can also be influencing factors. Some families want their family offices to be based close by so that they can visit and be more involved in the process. However, this is not necessary and different families may prefer a different approach. With the internet, video conferencing and telephones readily available, having your family office next door is no longer a necessity for instant communication and updates. The size of a family office can also influence a decision. Smaller family offices only providing asset and fund management to a few families may provide a more personal service. Larger multi-family offices, however, will have more resources and personnel to manage important assets and funds. Make sure that you find the right family office for your needs.

Look carefully into the details of the family office you are considering. How is it structured and is it set up to continue operating in the future? Ask questions and do some digging. Make sure to do background checks on the family office you are considering - there are a number of fraudsters claiming to be legitimate family offices. Ask them how long they have been operating, who owns the family office and whether they are independent. You can also ask for references from clients and conduct interviews. You may also be able to get advice from families in similar situations about their experiences with different family offices. Investigate how the office is run – what are the experience levels of the advisors working there? How do they interact with and serve clients? It can be helpful to make a list of what you want from your family office before you start.

Deciding on how you want to manage funds and assets is an important decision and not one that should be taken lightly. You need to have clear ideas about what you want from the start as it can easily get confused later on when you are presented with a variety of different family offices. Make sure you do your research as it can pay off in the long run and try to find a family office that is right for your needs, rather than adapting to the methods and organisation of a family office.

© Izzy Evans 2012

If you would like to find out more about family offices in the UK then you can visit Family Office London.

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