A family office is a private wealth management advisory firm that provides high-net-worth individuals and their families with the solutions and expertise needed to manage their complex financial and investment needs. Typically, family offices function as financial concierges, offering a complete suite of services including tax planning, insurance brokerage, estate planning, charitable giving assistance, and more.
With decades of experience working for and with families to help manage their estates, My colleagues at Whittier Trust and I have compiled our thoughts on what makes a family office effective and pose a few questions any high-net-worth individual should ask themselves to make sure they’re getting the most out of their family office.
Who Needs a Family Office?
For high net worth individuals, estates can be large, complex, and borderline unruly. It’s much easier to handle the demands and responsibilities of the family and all its accompanying assets with a team to bolster you. A family office not only provides support in key areas of wealth management but also can provide professional expertise where members of the family lack experience.
Family offices also provide more holistic services through interconnected functionalities. Clients originally looking for philanthropic help may discover better tax planning and new investment vehicles.
Why Should You Choose A Family Office?
Family offices do a better job of protecting wealth through multiple generations by helping the family maintain their relationships, cohesion, and vision. This can take the form of more drastic interventions like mediation to cool down tensions, or systematic stability like helping an owner of a family business plan where best to incorporate members of the family based on their strengths and interests.
A family business team can even operate more subtly, strengthening bonds between family members and generations by encouraging and enabling participation in philanthropic efforts. Families pursuing shared goals determined by shared values are less likely to splinter into competing factions.
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Is Your Family Office Giving You Back Time Out Of Your Day?
Family offices, at their core, are designed to take the burden off of an individual and their family on a day-to-day basis. This is why you need to know your family office investment strategy. If you find yourself worrying about your investments or paying bills, you may have the wrong family office. A well-staffed and experienced family office will build a team of specialists to handle the details of tax planning, philanthropic efforts, investments, accounting, legal issues, real estate, and more, allowing you to focus your attention on the bigger picture or the aspects you care about most.
Now ask yourself if you’re satisfied with the level of communication you receive from your family office team. Reducing the burdens of daily duties is one thing, but eliminating stress through consistent and clear communication provides real peace of mind.
How Is Your Family Office Preparing You For The Future?
What is your long-term plan? This shouldn’t be a mystery. Your family office should have sat you down at the beginning of your time together, and continued to adjust as situations, values and objectives changed. You should always discuss the family investment strategy with your office prior to choosing.
Regardless of outside conditions, you should be able to ask your advisor at any time what the correct decision is, with the plan acting as true north. Part of that plan should be trust services. Transitioning wealth, especially for families with a family business, is one of the most important functions in protecting generational wealth.
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Your family office should be prepared to help responsibly choose a successor, and the family office should have no issues assuming the role of the trustee if the family needs an objective third party to effectively balance the needs of the family with the desires of the trustee.
How familiar are you and your family with your family office advisors? Great advisors will have made the effort to get to know everyone whom they serve. With permission, these offices will seek to help educate future generations as well.
Wealth education helps give all members of the family a proper understanding of how to handle wealth and how it can or should be used in accordance with family values. It can also teach an appreciation for wealth and the responsibility it brings while opening the door for important conversations about how wealth can affect relationships and how to avoid detrimental conflict.
Does Your Family Office Go Above and Beyond Fiduciary Duty?
Family offices, by nature, offer concierge assistance, but a true white glove service goes above and beyond their mandate. The best family offices notice the little things and take action before the idea even crosses the client’s mind. How much time did your family office spend getting to know you before forming your team and creating your plan? It’s a simple, yet key indicator of how seriously they take you, as understanding your history and the origins of your family’s achievements are integral to the success of current and future generations. How well do they listen? Do even the most offhanded of remarks result in positive actions?
When it comes to family offices, there are many questions high-net-worth individuals should ask themselves. However, the question above all others, the one at the core of everything we’ve already talked about, is: how much do they care? If that question is not easy to answer, it may be time to find another family office.
