The first family offices opened in the late 19th century. To this day, the family office is a hallmark of super-wealthy households. But what are family offices?
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| Image source: clydeco.com |
Family offices are fundamentally private investment offices that aim to manage the often complex affairs of high net worth households. Although industry experts are divided on what services a family office must deliver clients, almost all of them are started with the expressed purpose of managing a family’s investment options.
Growing and maintaining wealth is the crux of many family offices. The typical services delivered by a family office go beyond mere wealth management. Many experts recognize an all-in-one roof approach to finance and investing, encompassing tax compliance, private banking and private trust services, document management and recordkeeping, and budgetary and bookkeeping functions.
Managing the financial affairs (including financial education) of the family may also fall under the family office’s work. They may also take on a concierge function for their clients, doing everything from booking appointments to facilitating meetings between members of the family.
Because they manage the affair of no more than a few families at a time, they aren’t as regulated as hedge funds or other similar financial institutions. Often, billionaires choose them specifically to avoid excess oversight.
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| Image source: internationalinvestment.net |
They are, however, very costly. Hence most family offices cater to a billionaire clientele with long-established fortune whose immense assets would warrant the need for specialist services. Because of their complexities, family offices cannot rely solely on run-on-the-mill software solutions, instead relying on specialists both in-house and outsourced to manage their systems.
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