I periodically recycle old posts on my blog to ensure that new clients can benefit from valuable content they may have missed. Today, I’m revisiting a post on family offices that are experiencing a surge in popularity based on my meetings with investors.
I want to talk about something that does not typically get a lot of local press: family offices. A family office is a private wealth management advisory firm that serves ultra-high-net-worth investors. It is a team of different professionals (legal, tax, investment advisors, etc.) working for their wealthy clients.
The idea behind the family office is to go beyond a typical money management and hire your own team of people to take care of portfolio management, budgeting, taxes, charitable giving, generational planning and so on. To the wealthy folks, a family office represents something of a status symbol.
There are so many different kinds of family offices out there and the industry is increasing in size. You would be surprised how many solution providers call themselves a family office.
Most banks have a dedicated department looking after ultra wealthy clients. They themselves call these departments family office. Anyone in our business calls these a bank department offering anyone anything as long as he or she can afford it.
More and more families want to manage their wealth themselves. This combined with the search for privacy and confidentiality is one of the reasons why the family office industry is increasing in size. Wow, one of the world’s richest families has a family charter that says they want complete or absolute privacy in their best interest.
They have to put a lot of effort into finding the few managers and investments per year they can trust their capital with and believe will protect and grow their wealth. The problem is most are drowning in “normal”.
They are approached by industry players that invest like most everyone else and that the family office should be happy paying them those fees. I would be surprised if anyone would still entertain a hard pitch in the institutional world.
There are other opportunities to do things differently. Family offices have their own red-carpet tradition but at the same time, they must be open to innovation. In this tradition/innovation paradox, they should look at differences as opportunities.
All of this sounds so great on paper. In reality, it can be a challenge because not every family has the right resources and skills to find the best investment deals out there. It is not something that they can run passively.
Not only do they have to gain access to and choose the right deals, but they also have to monitor once they invest in them. Most smaller family offices are better off outsourcing the task or avoiding it altogether. Do not forget, time is more precious than money.
That brings us to what me and my team of partners have been doing over the years that captures the benefits of the world’s top family offices and brings them to smaller family offices and private investors.
In an increasingly complex world, our global resources provide investors access to the world’s truly talented fund managers who know what they are doing and they are usually not on the radar of institutions or the “big boys”. That is really worth celebrating.