Ultra-high-net-worth families can take advantage of a family office‘s full wealth and asset management services to help grow their wealth, as well as prepare for the next generation of family members. But what does a family office do? I aim to answer that question in the below guide.
Friends and family can sometimes access these services without meeting certain criteria. However, for those who don’t need a full family office service, a financial advisor can usually offer similar services at a more reasonable expense.
First Things First: What is a Family Office?
Family offices are designed to serve the extremely wealthy, typically those with a net worth of $30 million or more. As a one-stop financial shop, they act as wealth management and financial advisors to assist high-net-worth clients.
Unfortunately, their services generally do not cover those with a seven-figure net worth. Unless you utilize a service such as Familoff to make personal, DIY family office development a reality.
There are two main types of family offices: single-family and multi-family. Below is a quick comparison between the two.
Single-Family Offices (Traditional)
Established originally in Europe, the concept behind a Family Office was to provide financial advice tailored specifically for someone with an extensive fortune to invest. This eventually gave birth to the first single-family offices in the 19th Century and grew in popularity throughout the United States.
As such, a family office typically serves one client at a time, often run by a trusted member of the family or close friend. The goal is to manage dynastic wealth on a full-time basis.
For more information about single-family offices, please see our article What is a Single-Family Office? A 2023 Comparison Guide.
Multi-family offices have become increasingly popular in recent years, partly due to advances in technology. What was once an undertaking requiring the entire resources of a dedicated firm can now be done much more quickly and efficiently.
A great example is the Rockefeller Family Office: which initially only provided services for the Rockefeller dynasty but has since expanded its clientele to over 250 people. This model enables family offices to expand their services beyond ultra-high-net-worth individuals to include additional clients.
For more information about multi-family offices, please see our article What is a Multi-Family Office? A 2023 Comparison Guide.
The Main Question: What Does a Family Office Do?
The demand for family offices has significantly increased in recent years. According to the Wall Street Journal, the number of firms has risen by over a third since 2011, attributed in part to the growing number of multi-millionaire families.
The ultra-wealthy behave differently when it comes to their wealth. Rather than dealing with personal finance, they must think of it more like a business venture and seek out ways to maximize, preserve, and best utilize their resources. Family offices provide them with the services to manage this wealth – from tax planning to charitable giving, property management, and investment advice.
In addition to finance-related tasks, family offices often need to address a range of other responsibilities. These include sourcing legal advice, lobbying, and immigration services, career guidance, facilitating educational opportunities, arranging travel arrangements, and even acquiring art pieces. Essentially, family offices provide a comprehensive concierge service.
The goal of a family office is twofold – to assist wealthy individuals in building and protecting their fortunes over generations, and to provide the practical help needed to complete everyday tasks. From getting into college to launching a speaking career, family offices serve as the go-to resource for achieving one’s dreams.
Who Works At a Family Office? Meeting the Team
Family offices typically staff a diverse range of experienced professionals, offering a variety of services. These may include accountants, attorneys, financial advisors, estate planners, private bankers, tax advisors, and more.
Wealth and investment managers
Investment and wealth managers are responsible for overseeing the fortune of a family office’s clients. Depending on their size, family offices may have far-reaching investment and wealth management options, from placing money into existing mutual funds to creating new portfolios tailored to each client’s needs.
Tax advisors employed by family offices can provide clients with the most advantageous tax options. By expertly planning for taxes, these professionals can help save clients millions of dollars in taxes each year.
Family offices employ lawyers to ensure that each action taken is in the best interest of their clients. Legal advisors are knowledgeable in areas such as real estate law, investment decisions, trusts and estates, and criminal matters. By having reliable legal advice, family offices can guarantee that their client’s interests are always looked after.
…and many more!
A family office is a home to a range of experienced professionals, beyond the traditional support staff. These individuals specialize in meeting the requirements of the family and its clients, providing an array of services that goes beyond the scope outlined here.
Spotlight on Estate Management with Family Offices
At the heart of a family office lies the long-term stewardship of family wealth. This means creating structures to ensure that assets are passed down from generation to generation, overseen, and provided for according to trusts or other legal documents.
Furthermore, family offices manage estate taxes, addressing situations that most people don’t even need to consider. A family office ensures that the legacy of the client’s fortune is carried on for many years to come.
A family office also ensures the seamless transfer of illiquid assets like property, businesses, and real estate. Their priority is to maintain the strength of the fortune while still providing for future generations. Additionally, they offer financial education and assist families in navigating social dynamics to ensure that wealth persists over time.
Final Thoughts on What Family Offices Do
A family office is ideal for wealthy families that need to run like businesses, handling daily financial matters and long-term strategic planning. While few American households require such services, they can be immensely beneficial when needed.
A family office oversees the estate, manages legal affairs, and works to educate succeeding generations on how best to preserve the family’s fortune. All in all, a family office is an essential tool for safeguarding wealth throughout multiple generations.