What is a family office and how can it protect your wealth?
October 26, 2020 - 6 minutes readWhen you’ve lived a highly successful life, you’ll want to preserve and protect the significant wealth you’ve accumulated for you and your descendents.
One way to do that is with a private family office – designed to manage your family’s collective wealth in line with your wishes both now, and after you’ve passed on.
Here’s an overview of family offices, why you might need one, how you’ll benefit from setting one up and the types of services on offer.
Where did private family offices originate?
They began in the 1800s as a way to manage the wealth of the royal families in Europe and the ultra-rich families in the US, including the family of J.P. Morgan and the Rockefellers.
Today, it’s thought family offices handle the wealth of over 14 million High Net Worth Individuals worldwide, giving them the freedom to pursue higher returns than with private banks, which have become less trusted in recent years.
Add to that the sharp increase of global billionaires resulting from the technology boom of the 2000s, and it’s clear why so many wealthy individuals now need a dedicated team to manage their financial affairs.
Why might you need a family office?
This depends on your family’s circumstances, but the main reasons to look into a family office include:
• The preservation and organisation of family wealth
• Succession planning across generations
• Avoiding family conflict issues
• The complex management of assets
• Confidentiality and privacy of financial affairs
• Organisation and distribution of charitable funds
• Passing financial know-how to your next generation
• Keeping family and business matters separate
What types of family office are there?
There are two main types of private family office: the Single Family Office (SFO) and the Multi Family Office (MFO).
Single Family Office
This is a private company which exists to exclusively manage the wealth and affairs of a single individual or family, with the sole purpose of protecting and growing their overall wealth. Staff within the office are usually employed by the family itself (usually C-Suite executives, financial specialists and legal experts), making this option better suited to Ultra High Net Worth Individuals.
Multi Family Office
This is a platform that provides professional services to a group of families or individuals, similar to the way in which a professional practice offers their services. Many MFOs are run as standalone businesses, popular in places such as Monaco and Zurich. This makes them much more affordable than a single family office.
Services
Most standard family offices focus on protection of assets and potential investments, but services can stretch to almost anything a family might need, including:
• Financial planning – investment advice and management, risk analysis and performance of current investments
• Business strategy – formalisation of family mission, business development, project management, reputation management, marketing and insurance
• Wealth planning – Transfer of wealth, family governance, asset evaluation
• Philanthropic management – Donation strategy, formation of trusts or foundations
• Life management – immigration, education of heirs, management of properties, fleet management, memberships, holidays and family security
• Administration – HR, accounting, audits, insurance, bank accounts, tax record keeping, data security
Where should your family office be based?
It really depends on where you’re resident, how your assets are currently allocated, the tax and legal implications, and the overall costs.
But it would be wise to base your family office in a jurisdiction with a favourable tax and business climate, such as Monaco.
What does a family office cost?
This depends on the size and setup of your family office. A rough estimate is around 1-2% of the Assets Under Management. For a Single Family Office you will also need to factor in costs for creation of the SFO, office rental fees, staff salaries and technology costs.
Let us handle your Monaco private family office
We’ve got over 40 years’ experience helping successful people like you protect their wealth with a family office, and here in Monaco, we can act as your Multi Family Office or help you form your own Single Family Office.
Our services include:
• Advising you on the type of family office that will benefit you most
• Assisting with the Monaco application if you’d like to form a single family office
• Monitoring of your current investments and estate planning
• Administration (including accounting, tax and legal)
Even if you’re not already a Monaco resident, please get in touch for a free consultation.
It could pave the way for a more secure financial future for you and your family.
