FINANCIAL SERVICES
Investment management services
When considering establishing a family office, some can see potential positives as negatives. This tends to be particularly prevalent in the following areas:
► The preference for privacy
Typically, this will be the main reason for setting up a family office, as it is central to ensuring wealth
preservation. These services will include:
Some families may be hesitant about consolidating their wealth information through a centralized family office structure.
► Evaluation of the overall financial situation
► Determining the investment objectives and philosophy of the family ► Trust of external managers
Setting up a family office is typically contingent on the level of trust and comfort families have with external asset managers. However, trust typically stems from long-standing relationships with external managers.
► Determining risk profiles and investment horizons
► Asset allocation — determining mix between capital market and non-capital market investing ► Supporting banking relationships
► Managing liquidity for the family
► Expectations on returns
► Providing due diligence on investments and external managers
Ultimately, family offices rely on their longevity through ensuring wealth preservation. This difficulty of securing market returns in recent years has led to some tension in this respect. Furthermore, during generational transitions, family office structures are tested, often to the point of destruction, as the next generation presses for different goals and objectives to manage the family’s wealth.
Life management and budgeting
Some of these services are typically defined as “concierge” in nature, but they are broader in scope, inasmuch as they also include budgeting services. Services under this heading will include:
► Club (golf, private, etc.) memberships
► Management of holiday properties, private jets and yachts
► Budget services, including wealth reviews, analysis of short- and medium-term liquidity requirements and long-term objectives
Philanthropic Management
An increasingly important part of the role of a family office is managing its philanthropic efforts. This will include the establishment and management of a foundation, and advice on donating to charitable causes. These services would typically involve:
► Philanthropic planning
► Assistance with establishment and administration of charitable institutions ► Guidance in planning a donation strategy
► Advice on technical and operational management of charities
► Formation of grant-making foundations and trusts
► Organizing charitable activities and related due diligence
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