Money management is important for any family, but for families with an extremely high net worth, managing financial assets is a job unto itself. 

Recent years have seen the emergence of the “family office,” an organizational scheme that aims to help ultra-high-net-worth (UHNW) families to manage their assets and maintain family harmony. 

In this article, we’ll look at the role and benefit of a family office, a growing business structure for our nation’s wealthiest families.

What is a Family Office?

What is a family office? A family office consists of a private advisory firm that serves an individual or family. These firms specialize in wealth management for UHNW investors. 

A family office can offer services that include:

  • Budgeting and financial planning
  • Insurance
  • Charitable giving
  • Services related to family-owned businesses
  • Wealth transfers
  • Tax services

Today, you can expect to find three main types of family office, which include:

Traditional Family Office

In this model, a single wealthy family forms a legal entity and relies on a family office that is staffed with professionals to help manage the family’s assets and lifestyle.

Multi-Family Office

A multi-family office performs the same essential duties as a traditional family office, though in this model, the family office serves multiple client families. 

Outside firms can offer a more affordable solution to the traditional family office, though client families may discover they don’t have the same level of control as they would if they had a staff that focused entirely on their family.

Outsourced Family Office

An outsourced family office goes one step further by offering a collaborative network of financial support personnel. 

For example, an outsourced family office might include a financial advisor to cover the family’s stock portfolio along with an accountant to cover the tax preparation and pay the bills. This approach allows wealthy families to have access to a variety of advisory and management services, providing the most affordable option of these three family office strategies.

What Does a Family Office Do?

A family office can offer a variety of financial services, ranging from budgeting to long-range estate planning. You can break down their services into three main categories:

Asset Management

A family office can provide UHNW families with advice and strategy for managing their current assets. This might include such services as:

  • Managing stock portfolio
  • Handling the books of the family-owned business
  • Tax preparation
  • Charitable donations

In an outsourced family office model, these services might be handled by a variety of financial professionals, ranging from financial advisors to specialized accountants.

Lifestyle Management

A family office can also act as something of a personal concierge for UHNW families, paying particular attention to their personal affairs and their lifestyle needs. The exact duties will vary considerably between families, but a family office may be called upon to assist with duties such as:

  • Performing background checks on staff
  • Providing security for home and travel
  • Providing private schooling and tutoring
  • Managing privately-owned aircraft
  • Managing family-owned yachts
  • Managing family vehicles
  • Property management
  • Travel planning

A family office may therefore have something of a “human resources” role in managing the support staff of family vacation homes, boats, drivers, etc.

Legacy Planning

Finally, a family office can provide valuable assistance in estate and legacy planning. In most cases, UHNW families will be leaving a substantial inheritance to their children, and family-owned businesses will need to establish a business succession plan to determine the way that power will be transferred. 

Since the beneficiaries of the estate may not have been principally involved in the generation of their family’s wealth, a family office can offer invaluable education to ensure that the family values are transferred to the next generation. This can ensure that the transfer of power and assets will not generate conflict between surviving family members. This ensures a smooth succession from one generation to the next.

Who Works at a Family Office?

Because most of the duties of a family office include financial and legal counsel, you can typically expect to find the following professionals involved in a family office:

  • Accountants
  • Financial advisors
  • Lawyers

These individuals may also manage teams of other support staff relating to every aspect of a family’s property, assets, and family. They might include private chefs, gardeners, drivers, and private tutors, as well.

Do I Need a Family Office?

On the surface, it may sound elitist for a family to need their own team of wealth management personnel. But many UHNW families find themselves faced with challenges they did not expect. 

When it’s managed poorly, wealth can have a corrupting influence on individuals. It can also harm relationships. Having a team of advisors and personnel can ensure relational harmony within wealthy families. 

If you or your family have a large number of assets, you may want to consider investing in some kind of family office. An outsourced model could be an affordable solution, allowing your family to handle your affairs with minimal stress.

In the end, your family is worth more than your money. A family office can help keep your priorities in order so you can focus on what truly matters.

Looking to learn more about family offices? Controllers Council is a national community and platform of Controllers, Accounting and Finance professionals focused on accounting best practices, information and resources, recognition and networking. Membership has many features and benefits to propel your career and expertise, and to be an active participant in our exciting community. Discuss topics like accounting and CPA compensation and more in our forum. Become a member today.

Additional Resources

Family Offices (Investopedia)

Do I Need a Family Office? A Guide for the Rich and Not So Famous (Kiplinger)

What Is A Family Office And Do I Need One? (Forbes)

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