What Family Offices Are All About And The Services They Provide

1604 WordsFeb 16, 20167 Pages
Financial advisory firms have become popular among affluent individuals and families. Whilst there are a number of options available for wealthy families, many choose to go down the route of starting a family office. This guide will examine what family offices are all about and the services they provide. We’ll also look into the benefits of using a family office and the risks involved in setting up a family office. What is a family office? You might be surprised to hear that family offices have their roots in the sixth century. Then, the steward of the king had to take responsibility of managing the royal wealth. The concept has since developed, with the Rockefellers setting up a family office famously in 1882. Family offices are…show more content…
SFOs focus on catering for the needs of a single family. Therefore, SFOs often look after other non-financial issues aside from the financial management. SFOs often manage aspects such as private schooling and household arrangements. On the other hand, MFOs are traditionally mainly focused on operating as a wealth management firm on a commercial basis. MFOs look after a number of clients at the same time and often sell services to interested families. In certain occasions MFOs can also be private, whereby they provide services exclusive for certain families. In many cases, the success of a SFO will eventually push it to become an MFO. This is due to other families wanting to gain access to the services, which have helped the family to succeed. There are different ways to classify family offices, depending on the type of services they offer. Scott D. Gardner outlined the three-model classification of family offices in the following manner: • Class A family office: Offers comprehensive financial and non-financial services for a wealthy family. The family office can look after the finances of the family, together with providing estate management. The office is always run as a third party company with oversight from a family trustee or administrator. The family office will oversee all liquid and often illiquid assets of the family. The firm must provide advice, which is free of conflict of interests. The fee structure is often a monthly or annual flat fee.
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