What are Family Offices

BySofiya

What are Family Offices

Some years back I happen to be left hanging when I tried to define the meaning of a family office. Something tells me if I write it down in a simplified manner, my readers will be able to understand what a family office is. There are many definitions of a family office and as for me this is how I interpret it. A family office is an enterprise owned and managed by members of that particular family. The financial capital is the family’s’ own wealth. The enterprise offer various services ranging from insurance services, real estate development, solicitor services, financial management advice and manufacturing products.

History of family units

According to a worldwide initiative of independent experts, it is often assumed that Rockefellers, pioneered the family office in the 19th century. A historical example is that of Emperor August Ceasar, who ruled the Roman Empire from 27BC-14AD. He was one of the richest folks during his time because his empire generated approximately 25% of the global GDP. A big portion of the empires’ fortune, personally belonged to his family. American philanthropist, entrepreneur, and an industrialist, John.D. Rockefeller Sr. is often idolized as the pioneer of family office.

The family offices are sub divided to two categories which are: single-family office and multi-family office.

Single family office

It comprises of a couple and their children in its management ranks. It is operated and run by the family itself. They are their own clients and service providers. The public is not entitlement to receiving nay services from it. It is a private organization that manages the investments for a single wealth family. Other services typically handled by the single Family Office include property management, day-to-day accounting and payroll activities, and management of legal affairs. Family Offices often provide family management services, which includes family governance, financial and investment education, philanthropy coordination, and succession planning

Multifamily office

In a multifamily office, services are offered to many families and not only one. Their purpose is to generate profits to all parties involved. In today’s’ world, the law neither protects, nor regulates the use of the title ��family office’s; there is no specific qualification or experience needed. A professional multi-family office offers services such as administration, asset management, asset consolidation, asset performance monitoring, charity services, tax and legal services, trusteeship and risk management. These services are either offered in-house or the family office cooperates with dedicated external partners. Multi-family office provides:

• Investment strategy and performance reporting

• Wealth structuring – Tax, estate and succession planning

• Managing holding structures (trusts, foundations, companies)

• Philanthropic planning

• Global asset allocation

• Family business advisory

• Family governance

The family offices in general provide the following services: wealth creation, succession, asset management, asset allocation, family values and legacy, wealth protection, mentoring and risk management. The average staff of a family office consists of investment managers/specialists and a number of tax and legal experts. The benefit is all this professionals work as a team.

With the information provided above, you can get a good understanding of how family offices operate and the parameters therein, which at the end end of the day can prove to be very useful information.

 

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