Family offices are private wealth management advisory firms that offer a wide range of solutions to managing the financial and investment interests of ultra-high net worth individuals or families.
The overall purpose of family offices is to protect, preserve, and propagate assets to benefit future generations. Traditionally, the average wealth for operating family offices is estimated at $100 million in investable assets, using the family’s private wealth as capital.
Over the past two decades, there has been a noticeable upsurge in the expansion and distribution in private wealth across all over the world. And as the ranks of the super-rich continue to multiply, more family offices are being created to serve them.
According to the 2020 UBS Global Family Office Report, over two thirds (69%) of family offices were founded in the past 20 years. A little over a quarter (26%) were founded from 1950 to 2000, and the remaining 5% before then.
And as the economically influential baby boomer generation prepares to transfer their wealth to their Gen X and millennial heirs, noticeable changes in attitudes, mindsets, and approaches to private wealth management are becoming increasingly evident.
For instance, while over half of family offices claim that the next-in-line are just as interested in traditional investments as their parents, studies also reveal a growing trend among the younger generation in pushing for more philanthropy and sustainable investing.
Meanwhile, laws that impact the family office industry are also being constantly created and updated around the world. Increased pressures for transparency and systemic reforms have prompted many family offices to move to offshore locations that offer more competitive legal and tax structures, as well as flexibility for future restructuring.
One of the most crucial factors in forming, structuring, and managing a successful family office would be to work with qualified and competent professionals who possess practical experience in advising private investment and wealth management groups all over the world.
One you can rely on for comprehensive, insightful, and business-oriented legal advice, like Veritas Global.
Security, confidentiality, and agility in protecting assets
Ultra-high net worth families are more inclined to take control over their investments in order to protect their assets with the utmost security and confidentiality.
One advantage of maintaining a family office is the ability to restrict access and decision-making privileges to the family and not have to deal within cursions by outside investors. Family members can also choose whether they want to be involved in daily operations or to allow their portfolio managers greater flexibility and autonomy in representing their interests.
Confidentiality is also a key factor that motivates extremely affluent families to sidestep large investment management companies and create their own family offices to manage their personal assets with absolute discretion.
With the inevitable hanging of the guard also comes an increased need for agility, to enable the company for keep up with emerging trends that would impact their operations in the foreseeable future.
Family offices that involve younger generations have also shown greater interest in capitalizing on digital and financial technologies as a pro-active response to the requisites of the new economy.
With the adoption of new technologies comes global mobility, wherein family offices can operate from multiple locations or have employees work virtually, allowing them to recruit the best people from a bigger talent pool outside their home market.
Leverage investment opportunities with a trusted partner
According to Forbes magazine, as ultra-wealthy families seek more agile ways of not only managing but also preserving their vast wealth and assets, we can anticipate a “changing face of the family office and new definitions of what this means.”
For both the newly wealthy and the heirs apparent of the ultra-rich, this translates to more diverse, flexible, and exciting options to leverage investment opportunities that are more aligned with their own goals and purpose.
At every stage and in any generation, trusted advisors play an important role in the management of family offices as they greatly influence major decisions that impact the firm’s performance.
The legal, tax and regulatory framework for family offices are usually complex and require the expertise of an experienced partner that is specifically adept with navigating both traditional and developing markets, like Veritas Global.
From due diligence and legal compliance, to structuring and managing your family office, Veritas Global provides targeted advice and customized solutions that will gainfully support and protect your investment transactions anywhere in the world, particularly in emerging growth areas.