The following article was published recently on the site of Family Office Exchange (FOX) ©2015 Family Office Exchange. We believe the subject will resonate across APAC too and is published today on AWT with the kind permission of our friends at FOX.
Alexandre Monnier, President, Family Office Exchange
Recently, I presented on the topic of “When Do You Form a Family Office?” at the AICPA Tax Strategy for the High-Income Individual conference in Las Vegas. I shared that the goals of the family drive the focus of the office and, therefore, every family office is different.
However, having served over 1,000 families during the past 25 years, FOX has been able to identify 10 key reasons to start a family office:
1) Education of Owners - One of the key roles of a family office is to be an educator and mentor, preparing owners to be responsible stewards of the wealth through formal and informal initiatives.
2) Financial Security for Owners – Financial security means different things to different people. But the goal is typically to ensure that family members can continue to pursue their current lifestyles while optimizing the wealth transfer to future generations.
3) Confidentiality of Information - Family offices are controlled, dedicated entities that provide tight protection for the family’s privacy and security of financial information.
4) Continuity of the Family - Many families rely on the office to foster a sense of community and family unity over time. The family office serves as a partner for the owners in the work of sustaining their assets.
5) Customization of Financial Services - The menu of services, educational offerings, and customized financial reporting are developed with the clients and for the clients, and they just pay for what they need.
6) Coordination of Advisors – The family office serves as a conductor, coordinating the expertise and talents of many external advisors—ranging from attorneys to investment professionals—in concert with the resources of the dedicated office staff, to provide comprehensive financial support to the family. No other service provider has access to all of the pieces of a family’s puzzle—personal histories, values, preferences, financial detail and long-term goals.
7) Development of Wealth Strategy and Investment Strategy – A core purpose of the family office is developing an integrated wealth strategy and coordinating wealth transfer, tax planning, and investment considerations. Ultimately, one of its key roles is to be an integrator of financial strategies.
8) Purchasing Power to Access Products and Reduce Fees – Utilize the buying power of the group through pooled investment vehicles to provide efficient access to best-in-class resources.
9) Alignment of Interests and Integration of Goals – Offices help families understand and capture the benefits of shared ownership by assessing the impact of each decision on individual and family goals.
10) Coordination of Trustee and Beneficiary Responsibilities – The family office provides invaluable services in helping trustees successfully assume their responsibilities in administering family trusts and educating the beneficiaries.
When a family identifies several of these key reasons as a main objective, then they are ready to consider forming a family office.
