Establishing a family office can provide a wide range of beneficial services crafted to the needs of high-net-worth individuals and their families. Family office services tend to be a one-stop shop for a complete package of wealth management assistance. A member firm can offer philanthropy work, wealth transfer, tax solutions, investment management, and even insurance.
These can be both single-family offices as well as multi-family offices that allow for cost-sharing and pooling of resources among several clients. Unlike traditional private wealth management options, family offices can deal with non-financial aspects, including education, travel arrangements, and household affairs.
The Aspen Trust Group breaks down the varying components of family office planning as well as critical factors when selecting the right jurisdiction for quality, tailor-made family office services.
The Start to a Tradition
The Rockefeller family shaped many aspects of modern wealth planning. In the 19th century, they were also the first family to champion the first family office for the management and preservation of wealth.
Room 5600 of the Rockefeller Center in New York was the birthplace of family offices. Here, the advisors managed the expanding family’s tax and legal concerns. The suite was the headquarters for philanthropy endeavors by the family and the epicenter of insurance policy negotiations. All this to say that the operation was a quiet, one-room financial planning hub for John D. Rockefeller, the oil baron that would shape so much of the finance world, and his family since 1882.
From the birth of the concept by the Rockefellers, family office services gradually became increasingly popular. Successive generations, mindful of the demands and complexities of family businesses and community projects, looked to the administrators overseeing the Rockefeller financial empire, which led the expanding operation to move to a nearby building. Thus, the Rockefeller Financial Services was born and a new way of envisioning wealth preservation and wealth management. In the 1980s, wealthy families again began to seek out the benefits of family offices to help meet the goals of the family and a resurgence of interests in services surfaced.
With the new millennium, the rise in family offices has increased exponentially as the era of technology has brought in diverse, modern avenues for wealth creation.
Different Aspects of Family Office Services
The scope of family office services is beyond the capability of one single financial advisor; thus, a member firm can combine the professional expertise of a team to coordinate the entire range of family wealth needs. From investment, business, legal, real estate, insurance, tax, charity, philanthropy and education the team’s collaboration ensures that every aspect of a family’s life is covered not only in the current generation but also for successive generations.
Cash management, asset management, risk assessments and management, financial planning, tax optimization and lifestyle management are all significant factors that shape family office services and their clients. Strategic coordination is a necessary component to guarantee that the complexity of family governance and the transfer of wealth is met with a streamlined and effective process to minimize familial conflicts or disruptions to legacy desires.
Family Ownership is Like a Business
Preserving family legacy is much more than just preserving family wealth. Families are complex socio-economic ecosystems that center around unique values and traditions as well as goals for the future. Family office services provide families greater control over the continuation of important family dynamics throughout generations and establish the core values and communication pathways that play a pivotal role in the success of a family’s legacy.
In many ways, the management of a family is similar to the management of a business but with many more layers of social and emotional factors. Determining the schooling of children, responsible investment opportunities, and coordination of significant travels are just a few of the many responsibilities of family office services.
Four key business areas become the foundation of family office planning:
Establishing Values and Assets – Just like any business, a family must define and set some of its core values as a whole. From this, the decisions of the family will have better guiding principles and assessments for decision-making situations whether it be for investment opportunities or lifestyle choices. The commitment to a unified set of family values and significant assets helps families stay focused and on target while navigating the challenges and rewards of daily life.
Enhancing Processing Abilities – Any good business needs to be able to adjust and weather difficult and unexpected situations. Family office services offer the same flexibility and quick response preparation for families to respond to changing environments with tools and systems in place to ensure the family makes the best move. Moreover, family offices can also improve the efficiency of taking advantage of great opportunities that might otherwise be missed.
Building Better Protections – There are always going to be unforeseen risks surrounding the business of family investments and operations. Family offices help assess these risks and make preparations to lessen the possibility of threats – be it reputation, residency, personal safety, or data and cybersecurity.
Staying Ahead – Some trends come and go while others become key evolutions in investment strategies, locales, governance, and more. Preserving family legacy also entails deciding what to hold onto and what to capitalize on. A family office generates understanding and access to the latest advice and options across several areas to keep a family moving forward.
Factors to Consider
There is no one-size-fits-all package for family office services. A family office could be a single-generation with a common goal of the family or it could be a multigenerational family with conflicting, but intersecting objectives. Single family offices often serve the needs of one large, ultra-affluent family, while multi-family offices coordinate the services between a few families in order to provide greater resources, more diverse range of services, and cost-saving advantages.
The core foundation of any family office should meet the needs and challenges of:
- Preserving family wealth
- Handling investment risk
- Tackle generational transitions and overall family coordination
- Clarify confusing family governance issues
- Personal affair management of each family member
- Structuring lifestyle accommodations
A combination of advisors, seasoned staff, policies, processes, control checks, governance, operation, technology, and service scope shape the success of the family office and remove the burden of strategic planning and implementation for families. In doing so, a family’s legacy can continue and grow through the support of professional management.
Five areas distinguish the right service provider for your family office.
- Infrastructure of Operations: For ease of establishing close relationships and effective lines of communication
- Availability and Access of Talented Staff: For higher quality, tailor-made solutions for each unique family
- Supportive, Advantageous Tax Regimes: For increased optimization of financial wealth preservation
- Attractive Regulatory Bodies: For intergenerational stability, financial security, and greater overall protection of assets
- Jurisdiction Governance Stability: For enhanced protection against economic fluctuations, privacy concerns, as well as personal and asset security
All of these factors are important to find the right jurisdiction and provider for a sustainable and rewarding family office services for the priorities of each dynamic family.
Modernizing the Family Office Concept
The Covid-19 pandemic is challenging the way families address difficulties and changing times, and family office services are proving to be an effective tool in combating these trends over time and focusing on more worthwhile affairs. Governance and travel have added complexities to the family dynamic as well as the education and preparations for the next generation. Establishing the correct passage of control and fundamental skills in succession and estate planning are major priorities.
To add to this, families are more interested in finding the best internal and external resources for insight into the development of a family legacy. This generation is more concerned than ever about the oversight and execution capabilities of the next generation as the pandemic has demonstrated the risks and abrupt global changes that could impact asset, investment, and business continuity.
Greater transparency and compliance regulations worldwide also demonstrate the importance of estate and succession planning. While families are also faced with more questions about technology, data, reputation, and cybersecurity. Family members may be more scattered across the globe and rely more heavily on online networks for business and affairs, leaving them more vulnerable as digital targets.
Remote work or necessary travel to maintain networks and business opportunities in a fast-paced, globalized environment further increase the need for family offices to correspond and coordinate on a normal basis and when unexpected situations, such as pandemics or governmental instability, arise rapidly. Family office services can provide safety nets and facilitate important cross-border transactions much easier to ensure that your family is protected wherever they are.
Preserving Family Wealth is Rewarding
Of course, family offices can also be rewarding for both the family members and the community at large. Family office services can set up incentives such as roles or monetary benefits for family members who reach certain criteria. Performance metrics and reward structures are integral parts of a family enterprise that maintain sustainability and re-emphasize family values, bringing family goals closer.
The rewards are not just internal, however. Family office services can promote social awareness and more robust activity across generations on important philanthropic endeavors of a family’s legacy. Families who establish family offices can encourage the participation of younger family members in charitable foundations and use the opportunities as useful entry points into more viable decision-making and leadership roles within the family structure. This introduction into the duties and responsibilities that come with wealth management provides valuable life skills that can be used to manage and operate larger family affairs later.
Advisors of family offices deliver services that help all family members communicate using a common language, determine the necessary resources, monitor and report performance and progress, and evaluate the dimensions of a family for consistency and higher standards. In turn, family members and their communities see lifetimes of rewards.
How Much Do Family Office Services cost?
In the past, the family office concept was for ultra-wealthy families but more families in any wealth bracket are finding family offices convenient and affordable at all levels. Many professional providers such as The Aspen Trust Group can tailor services to meet the needs of their clients and provide quality assistance for the management and operation of your family office for the areas in your life you need help focusing on. The extent to how great a role family office providers play in your life depends on your unique dynamic and assets. Families can choose to outsource a few substantial areas or set up a full-fledged family enterprise.
Some family office service providers require initial investment and wealth portfolios where others can build a package based on the in-house services you will need. This makes modern family office services economically viable as well as flexible regardless of the complexity of your family estate.
One of the largest benefits of setting up a family office is having all the tools, coordination, and processes relating to a family under one roof of professionals who can cross-analyze and manage the various components of your family. Further, the array of duties falls into the hands of experts who are understanding and invested in your success and legacy.
Where to Set Up a Family Office
To investors, choosing the right jurisdiction has always been key to maximizing investment potential and securing important tax services. However, location also makes a big difference in financial planning opportunities for high net worth families. There are many considerations when starting a family office and finding the right financial advisor with quality family office services.
London and New York both offer a sophisticated market and a community of professional, established talent. Switzerland and other European locales boast ease of doing business and advantageous tax regimes that attract family members looking for well-established family office services. In Asia, Hong Kong and Singapore provide a gateway into new markets as well as a safe environment for wealth management services. There is also the UAE for those interested in Asia and the Middle East.
Quickly becoming a developed financial and business center, Cyprus merges the benefits of market access across several strategic regions – Europe, Asia, and Africa. The location is also ideal for high net worth families that are drawn to the benefits of the EU as well as those considering travel arrangements to different parts of the globe. With no succession taxes and a range of other tax incentives, Cyprus makes wealth transfer and succession planning more optimal than other sophisticated jurisdictions.
The financial services industry in Cyprus, while new, has developed into a pool of highly-skilled providers in the industry while maintaining competitive fees for financial services, management services, and tax services. Cyprus is an international jurisdiction that preserves your family’s wealth legacy while providing the best range of new-age services and expertise. There are also plenty of additional benefits for families considering relocating to a new destination for wealth optimization.
The professionals at The Aspen Trust Group endeavors to assist you effectively grow your wealth and successfully transfer that wealth across generations. We handle everything from investments to wealth and treasury management with experts in a range of fields to cover all the aspects of your family life.
Our family office services include property management, daily accounting, payroll assistance, travel assistance, legal affairs management, family management services, philanthropy coordination, family governance, private foundation operation, and succession planning. Beyond just our family office services, we have been serving our clients in all their business and finance needs through relocation services, tax optimization, company formation, trust establishment and management, as well as IP protections. Consult with a team member today to see how our legacy can help protect yours!
