3 Reasons for Considering a Family Office
A family office provides management services to a family whose businesses and wealth have become too complex and significant to manage by themselves. A family office often combines investment, legal, and tax services along with lifestyle and administrative services, such as making travel arrangements or coordinating the use of a vacation property. In addition to supporting and simplifying a high-net-worth family’s lives, here are three more reasons for considering a family office.
Reason 1: Passing Lessons and Values On to the Next Generation
With the structure and support processes of a family office in place, families are more likely to create an overall mission and cohesive vision for the legacy they would like to build. A family’s long-term vision will likely include such things as charitable giving or making a social impact on the world. A family office can coordinate projects and plans that can help the next generation understand their potential role in executing the family’s long-term vision, as well as provide education and training to ensure that younger family members are ready to step into management or ownership roles.
Reason 2: Comprehensive Investment Solution with Higher Returns
Families often think of their wealth in terms of separate silos: the family’s primary business is separate from its investment portfolio, which is separate from its real estate, which is separate from its charitable efforts. However, this disconnected mindset often inhibits a coordinated planning strategy. Because a family office provides a centralized investment solution tailored to the family’s unique values, goals, and competencies, family offices can often lead to higher returns without creating additional risk.
Reason 3: Maintain Privacy and Relationships
Working with a private family office instead of several different service providers minimizes both the number of people who have confidential and sensitive information about the family as well as the disruption that comes with change at the service provider level. By limiting the sharing of private information to a need-to-know-basis in the family office, the family can better minimize the risk of, and protect itself from, external threats such as extortion or fraud.
While creating a family office may seem overwhelming, there are many good reasons to begin exploring the idea if your family’s wealth is becoming increasingly too complex to continue managing alone. Given the many reasons to consider a family office, not having one could be more costly to your family in the long run.