Private Family Office

The private family office, family office or multi-family office are terms that until recently, only the very wealthy, and those that managed their financial affairs were familiar with.

What is a Family Office?

The private family office became a way for some of the world's wealthier families to coordinate all of their finances under one roof. Their investments, trusts, insurance, estates and other financial affairs could be managed by one team, exclusively focused on managing family business. For wealthy families, this had a lot of appeal. First of all, by design they were inherently more private, and secondly, they could virtually guarantee the full attention of the family office's wealth advisors, asset protection team, and investment managers. The downside, of course, was that it was relatively expensive to setup your own exclusive private family office. What about families who had the unique financial needs that private banking through their own private family office could provide, but didn't have the desire or wherewithal to setup their own office?

Birth of the Multi-family Office

A multi-family office, as the name implies, provides private banking, wealth management, investment advice, legal services, and estate planning under one roof, like a private family office, only they do it for multiple families. Families that had taken the time to setup their own private family office soon figured out that there was a good deal of demand from other wealthy entities, and the considerable cost of setting up a private family office could be defrayed across several families without a noticeable degradation in service levels.

How Does A Private Family Office differ from Private Banking?

Services typically utilized by high net worth individuals or an HNWI, such as, private banking, wealth management, investment advice, tax-planning, asset management, asset protection, or legal advice are typically administered by a specialist directly to the client. While an HNWI may have some or all of these services, he often is the "go between" for all of these specialists. He is in effect acting as his own wealth "general contractor". In a private family office, the office acts as the 'general contractor' and coordinates communication and decisions amongst these individual experts. Often times, the expertise is also kept on staff in the office.

Future of the Private Family Office

$50MM USD has been the amount of assets under management to typically justify the creation of a family office. However, recently, predictions have been made that the 'moderately affluent', those with assets between 5-50MM USD would start to demand the level of integrated service and attention usually only possible through integrated wealth management. In fact, many wealth management firms have begun to embrace parts of the family-office model where one firm can handle and coordinate multiple aspects of the affluent person's financial, tax, and legal needs out of one office.