In the world of wealth management, family offices stand out for their unique ability to cater to the multifaceted needs of affluent families. Despite their significance, there remains some confusion about what exactly a family office does. In this article, Gareth Bathgate, Relationship Director at Coriats Trust Company Limited headquartered in the Turks and Caicos Islands explores the importance of family offices in managing and preserving a family's wealth.
What is a Family Office?
A family office is a private advisory firm that provides comprehensive wealth management services to high-net-worth individuals and families. Unlike traditional financial institutions, family offices offer tailored solutions that address the complex requirements of substantial wealth. Their services encompass providing advice from either their own team or suitably qualified external professionals on investment management, estate planning, tax strategies, and philanthropic endeavours, and then implementing and monitoring the strategies the family decide upon.
The Evolution of Family Offices
Family offices have a rich history, dating back over a century with the establishment of entities like the Rockefeller Family Office. However, their prominence has surged in the past 15-20 years, fuelled by unprecedented wealth creation and globalisation. Modern family offices have become sophisticated entities, staffed by experts in finance, law, philanthropy, and lifestyle management.
Diverse Functions of Family Offices
Strategic Financial Management: At the heart of family office services is strategic financial management. These firms develop diversified investment portfolios that include traditional assets like stocks and bonds, as well as alternative investments such as real estate, private equity, and hedge funds. This comprehensive approach ensures the preservation and growth of family wealth.
Legacy Planning: Family offices play a pivotal role in ensuring seamless wealth transition across generations. Comprehensive estate planning involves setting up trusts to protect assets and facilitate inheritance, ensuring the family's legacy endures.
Comprehensive Risk Assessment: In a volatile financial world, risk assessment and mitigation are essential. Family offices evaluate various risks, including market fluctuations, geopolitical events, and family-specific issues, to safeguard financial well-being. HNWIs are not fixed in one location and may relocate based on a range of factors, with geopolitics being a major consideration, along with tax, planning, and risk. This can result in a multi-jurisdictional approach where the client is not bound to any one location, meaning the family office works with a team of advisors to ensure that each location meets the client's requirements.
Impactful Philanthropy: Many affluent families prioritise philanthropy and social impact. Family offices help design and implement charitable initiatives and impact investments that align with the family's values and goals, ensuring their wealth has a meaningful impact.
Lifestyle Management: Beyond financial management, family offices offer lifestyle management services to address the diverse needs of affluent families. This can include managing luxury real estate, private jets, household staff, and travel arrangements, providing a seamless and luxurious living experience. For example, we have clients whom we assist with crewing for their yachts, which includes due diligence, contracts and payroll. For other families, we assist with legal matters and immigration services, including visas, residency permits, and citizenship applications.
Types of Family Offices
Family offices are tailored to the needs of the families they serve and can be categorised into two main types:
Single Family Offices (SFOs): Dedicated to a single family's needs, SFOs offer highly personalised services. Estimates suggest there are about 9,100 SFOs globally. For an SFO to make financial sense, the family needs to have a net worth of $50m or more, depending on where the Family Office is located and how much support is needed.
Multi-Family Offices (MFOs): MFOs serve multiple families, providing a broader range of services. While they may not offer the same level of personalisation as SFOs, they benefit from shared resources and economies of scale. At Coriats, we offer something in the middle of SFO and MFO, providing a high level of personalised service with value for money. We suggest that our services work best for families with AUM of at least $5m.
The Significance of Family Offices
Family offices are effective resources for preserving family legacies and ensuring long-term success. They help navigate financial complexities, offer strategic guidance, and provide services beyond traditional wealth management. As the financial landscape evolves, family offices will continue to lead in innovative and personalised wealth management strategies, where consistency of approach and implementation of strategies can make all the difference over the long term.
One of the critical roles of family offices is succession planning, especially important with wealth transfer from the older generation to the next. Family offices help in structuring and managing this transition smoothly, ensuring that wealth is preserved and responsibilities are clearly defined for future generations.
For younger first-generation tech entrepreneurs, a family office serves as a trusted partner, guiding and supporting them through the complexities of wealth management. This partnership helps these entrepreneurs focus on innovation and growth, knowing their financial affairs are in capable hands.
Family offices are more than financial managers; they are partners in sustaining and growing generational wealth, helping families to achieve their long-term goals and maintain their legacies.
What Sets Us Apart
At Coriats Trust Company Limited, we understand that family governance is key to achieving a lasting legacy. With 45 years of experience, we are now welcoming the third generation of some of our longstanding clients into the fold. We excel in collaboration, ensuring that the entire family comprehends the reasons and benefits of our structures, which is paramount to their longevity. We're lawyer-led with David Stewart as Managing Director, an experienced former City Solicitor with a wealth of experience in dealing with HNWIs. Our approach integrates personalised service, cutting-edge financial strategies, and a deep commitment to client confidentiality, ensuring that every aspect of our clients' wealth management needs is meticulously handled.
Interested in how a family office can help manage your wealth? Contact Gareth Bathgate at gareth@coriats.com for a personalised consultation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
We operate a free-to-view policy, asking only that you register in order to read all of our content. Please login or register to view the rest of this article.