What should one expect from a multi-family office?
We see it often. A service provider advertising and publicising itself as a multi-family office. The website looks great, the content is interesting and it explains very well why that service provider should be the multi-family office of choice. Those who are interested should begin to ask: Are you only interested in managing our assets? What about our other needs and requirements? What about our succession plan, can you help prepare our family? What solutions to you have, or do you sell only your own singular product or fund?
A quality multi-family office should provide holistic solutions to families. By implication, a multi-family office must be able to provide, or at least have access to, a wide range of services and solutions that will benefit any family. Key to the success of its service delivery are the professionals who work closely with families.
The main objective of any multi-family office is to fulfil the needs of its client families, and to ensure that both the families and their wealth are protected and well taken care of. Although there may be similarities in the needs of families, each is unique and the implementation of an appropriate service or solution should be shaped and formed to fit any particular family.
Besides protecting the wealth of families, another crucial function of a multi-family office is to ensure that the wealth is transferred successfully to upcoming generations. Having legal structures to facilitate succession is fundamental. Preparing individual family members to accept, protect and grow their wealth is often overlooked and a major cause of failed succession plans.
Let’s look at the primary services a reliable multi-office should offer.
Finances and cash management
Attending to the financial needs of a family is a basic requirement. Without cash, and its proper management, a family may be left destitute. Over-spending may ruin the wealth of a family in one generation. The expectations of individual family members need to be prudently managed in alignment with the extent of wealth. Educating upcoming generations on cash management and budgeting may also be required.
General legal assistance
A family office must be able to assist with all legal matters a family as a whole, or individual family members, may need. While a family office may not have all the required expertise in house, it must have access to a multi-jurisdictional network of legal service providers who can be called upon to provide services as and when needed.
Investment services and entrepreneurial endeavours
Attending to the investments of a family is core to what family offices do. If investments are not grown consistently, the demise of the family is likely. A family office provides oversight of investments and puts in place appropriate structures to facilitate growth.
Fiduciary assistance (trust, company and foundation management).
Key to the longevity of any wealth is the quality with which its assets are governed and managed. A succession plan is vital for safeguarding and maintaining family wealth. The resultant structure usually involves trusts, companies and foundations. Keeping legal structures intact and well managed ensures the integrity of the plan. Should unforeseen circumstance give rise to the structure being questioned or tested, its integrity will determine success or failure.
Family and corporate governance
The governance structure of a family, in basic terms, comprises the communication and voting systems that ensure the flow of information and facilitate balanced decision making. All systems within family governance must dove-tail with each other, and information must flow freely from one sphere to another.
Written by Roelf Odendaal, Managing Director of Turnstone Multi-Family Office (email@example.com) and co-author of Family Wealth Guide: The practical guide for wealthy families and family offices.