What are 'Family Offices'

Family offices are private wealth management advisory firms that serve ultra-high-net-worth investors. They are different from traditional wealth management shops in that they offer a total outsourced solution to managing the financial and investment side of an affluent individual or family. For example, many family offices offer budgeting, insurance, charitable giving, family-owned businesses, wealth transfer and tax services.

BREAKING DOWN 'Family Offices'

There are two types of family offices: single family offices and multi-family offices sometimes referred to as MFOs. Single family offices serve one ultra-affluent family while multi-family offices are more closely related to traditional private wealth management practices, seeking to build their business upon serving many clients. In addition, the family office can also handle nonfinancial issues such as private schooling, travel arrangements and miscellaneous other household arrangements.

The Many Disciplines of a Family Office

Providing the advice and services for ultra-wealthy families under a comprehensive wealth management plan is far beyond the capacity of any one professional advisor. It requires a well-coordinated, collaborative effort by a team of professionals from the legal, insurance, investment, estate, business and tax disciplines to provide the scale of planning, advice and resources needed. Most family offices combine asset management, cash management, risk management, financial planning, lifestyle management and other services to provide each family with the essential elements for addressing the pivotal issues it faces as it navigates the complex world of wealth management.

Legacy Planning and Management

After a lifetime of accumulating wealth, high-net-worth families are confronted with several obstacles when trying to maximize their legacy including confiscatory estate taxes, complex estate laws, and complicated family or business issues. A comprehensive wealth transfer plan must take into account all facets of the family’s wealth including the transfer or management of business interests, the disposition of the estate, management of family trusts, philanthropic desires and continuity of family governance. Family education is an important aspect of a family office; this includes educating family members on financial matters and instilling the family values to minimize intergenerational conflicts. Family offices work collaboratively with a team of advisors from each of the necessary disciplines to ensure the family’s wealth transfer plan is well-coordinated and optimized for its legacy desires.

Lifestyle Management

Many family offices act as a personal concierge for families, handling their personal affairs and catering to their lifestyle needs. This could include conducting background checks on personal and business staff; providing personal security for home and travel; aircraft and yacht management; travel planning and fulfillment; and streamlining business affairs.

RELATED TERMS
  1. Immediate Family

    The immediate family is a person's smallest family unit, consisting ...
  2. Family of Funds

    A family of funds includes all the funds managed by one investment ...
  3. Friends and Family Shares

    Friends and family shares are often the very first form of outside ...
  4. Family And Medical Leave Act (FMLA)

    The Family and Medical Leave Act (FMLA) is a labor law requiring ...
  5. Attribution Rules

    A set of rules created by Canada Revenue Agency (CRA) that prevents ...
  6. Estate

    The collective sum of an individual's net worth, including all ...
Related Articles
  1. Managing Wealth

    Top 3 Trends Affecting Private Wealth Management

    Don't miss out on high-net-worth clients because you aren't prepared for their service demands.
  2. Managing Wealth

    The Most Important Component of True Family Wealth

    The most important component in family wealth comes from people, and it has to be nurtured.
  3. Managing Wealth

    Establishing Rules for Family Wealth

    To maintain family wealth it is important to establish rules that everyone agrees on.
  4. Retirement

    The New Way to Leave a Lasting Legacy

    Following these steps can help you leave a lasting legacy that reflects your values and goals.
  5. Personal Finance

    Run Your Family Finances Like a Business

    By using the techniques employed by thriving corporations, your family can be more successful.
  6. Personal Finance

    Succession Planning: One Size Does Not Fit All

    There is no one size fits all succession planning solution for family businesses.
  7. Managing Wealth

    How to Lend Money to Family and Not Regret It

    It’s hard to refuse a family member’s request for a loan, but be sure to go into such arrangements with your eyes open.
  8. Personal Finance

    How to Avoid Family Financial Sabotage

    Here are a few tips to keep in mind when a family member asks for financial assistance.
  9. Managing Wealth

    Family Wealth Depends on Maintaining Financial Capital

    Maintaining the financial capital of family wealth through generations can be difficult.
  10. Financial Advisor

    Top Tips for Family Wealth Transfers

    Essential tips for tackling family wealth transfers.
RELATED FAQS
  1. What is private wealth management?

    Understand what private wealth management is from the perspective of both the private client as well as the private wealth ... Read Answer >>
Hot Definitions
  1. Ethereum

    Ethereum is a decentralized software platform that enables SmartContracts and Distributed Applications (ĐApps) to be built ...
  2. Cryptocurrency

    A digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of ...
  3. Financial Industry Regulatory Authority - FINRA

    A regulatory body created after the merger of the National Association of Securities Dealers and the New York Stock Exchange's ...
  4. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by companies seeking the capital to expand ...
  5. Cost of Goods Sold - COGS

    Cost of goods sold (COGS) is the direct costs attributable to the production of the goods sold in a company.
  6. Profit and Loss Statement (P&L)

    A financial statement that summarizes the revenues, costs and expenses incurred during a specified period of time, usually ...
Trading Center