Delegating the administrative burden of managing wealth to a Family Office frees up time and can significantly increase quality of life.
As far back as the 6th century, Italian upper nobility had Major Domos taking charge of household and financial affairs. Today, wealthy families are more global than ever, and often rely on professional teams to navigate these increasingly complex responsibilities.
The benefits are plentiful.
With significant wealth, the administration of liquid, tangible and corporate assets can easily become a full-time endeavor. This presents a unique challenge, especially for business owners, who may find greater satisfaction in attending to their enterprises, the source of the family’s wealth.
Delegating wealth management to a family office can free time and energy for the wealth owner without sacrificing diligence and control. In fact, an experienced and well-run family office can enhance investment outcomes and improve the sustainability of a family’s resources.
Control, Independence, and Objectivity
It is an unfortunate reality that many advisors are incentivized to sell high-margin products or services to wealthy clients. Even sophisticated investors often lack the time or experience to conduct sufficient diligence, and personal relationships can further complicate the process.
A dedicated family office takes on this responsibility by providing independent and highly-skilled analysis of investment opportunities. Advice is free from personal or financial conflicts, and thus it is given solely in support of the family’s best financial interest.
Centralized Reporting and Risk Management
Wealthy families typically have assets and liabilities dispersed across multiple managers and jurisdictions. A family office consolidates strategy, oversight and reporting. Such centralized control improves transparency, facilitates holistic risk management and makes it possible to initiate timely interventions when needed.
Cost Savings and Deal Flow Management
Fees and taxes have a material negative impact on investment returns. With greater wealth, every fraction of a percentage point in unnecessary costs and losses becomes a concern, especially for those with multi-generation time horizons.
A family office helps to generate economies of scale and thus access to institutional pricing. Because investment opportunities are not constrained by the offerings of a single financial institution, the family office can flexibly manage the deal pipeline and build relationships with top level managers. Ongoing coordination with the family’s tax attorneys helps to manage jurisdictional issues and improve tax efficiency.