Compelling reasons to join a multi-family office
Family offices have become increasingly popular. With the added distress of the Covid 19 pandemic, families are being compelled to either join multi-family offices or to set up their own single family offices. In this article we examine some of the benefits of joining a multi-family office.
Complex financial needs and asset bases.
It is not necessarily the extent of a family’s wealth that creates the need for a family office, but rather the complexity thereof. The level of complexity is determined by a family’s ability to control, manage and stay on top of its business, investments and assets. For example, the services of a family office may not be needed by a family whose main asset is its £100m business and the business is a single entity operating in straightforward environment. On the other hand, a family with an asset value of £100m, comprising private equity investments in 2 start-ups, 3 complex investment portfolios and a portfolio of residential rental properties in 3 countries, may well need a few strong individuals to provide guidance on the technical intricacies of running the business and making decisions.
Control and overview
Maintaining sufficient control is one of the biggest challenges facing a family with assets in multiple jurisdictions. A family office allows the family to maintain adequate control while professionals assist with the management of its affairs. The choice between a single or multi-family office is influenced, amongst other factors, by the measure of control a family wishes to retain.
One of the hurdles to success is the lack of a family having a “big picture” of its relative position. Both single and multi-family offices provide clients with full reviews of their wealth. Some offices offer the added benefit of teams of professionals to give guidance and assistance if required. The professional teams act independently thus giving client families easy access to the best of the best.
Trusted relationships
A wealthy family is by nature vulnerable to exploitation and family members may feel protective of their privacy. Dealing with a variety of advisors or faceless corporates may exacerbate their need for privacy.
Employees of family offices often become so trusted they are regarded as extended family members. The reality of such professionals dealing with a particular family over a long period engenders trust across all generations of the family.
In the case of a multi-family office, the multi-family office representative can similarly foster a high level of trust through the quality of assistance provided, and the manner in which the relationship with the family is maintained.
Dedicated support
Wealthy families sometimes need dedicated and ongoing support in dealing with their wealth. It is important for them to have easy access to professionals who provide consistent and reliable advice and services.
Family offices, and especially multi-family offices, are able to provide families with the support they need as well as with reliable service delivery.
Succession planning
Succession planning should not end once the estate planning of the patriarch or matriarch has been completed. How beneficiaries are groomed to deal with the structures and wealth they inherit should remain high on the agenda. Recent studies have shown that succession planning actually outweighs capital preservation as the number one issue for wealthy families. Educating the next generation and ensuring that appropriate family members operate in suitable roles are part of the process, Successful succession planning comes to fruition when a family business is able to continue seamlessly after the death of a family head.
Written by Roelf Odendaal, Managing Director of Turnstone Multi-Family Office (roelf.odendaal@turnstone-group.com) and co-author of Family Wealth Guide: The practical guide for wealthy families and family offices.
Sources: Simple’s Family Office Guide
Paul Roper, Roelf Odendaal and Heinrich Odendaal: The Practical guide for wealthy families and family offices; 2020.