PART 2: A Family Office By Name Isn’t Always A Family Office

This blog will be considered 2 of a 3-Part series pertaining to Family Offices. Please view the Part 1 blog.

What Are The Services of a Family Office?

Although the range of services provided to families via a family office business can vary widely, our experience is that they typically fall into upwards of ten categories – which I’ve listed below. It’s important to note that not all family offices will offer all ten services – especially as it’s common for family offices, like any other business, to tailor their service offerings towards the actual needs of their clients.

Having said this, if a wealth management business is positioning itself as a family office and it isn’t able to deliver on at least a majority of the services listed below, my experience – combined with the reality that all affluent families have a baseline set of wealth needs – is that I would seriously question whether that wealth management business is actually a family office, or simply a wealth management business masquerading as a family office in order to attract affluent family clients. As the title of this article reads: A Family Office By Name Isn’t Always A Family Office.

1. Asset Management:

• The development of a family wealth plan that identifies funding goals and tolerances for risk in order to establish a set of family investment policy statements that define a suitable set of asset allocations and risk controls in the ongoing management of the family wealth.

2. Liability Management:

• Affluent families, despite their wealth, will often utilize debt for investment and business purposes. As a result, helping families ensure that they prudently optimize their utilization of debt is of extreme importance.

3. Tax Management:

• To help preserve the family wealth, it’s important that affluent families avail themselves to legal tax strategies that mitigate their exposure to taxation within and across family generations.

4. Risk Management:

• The identification of potential risks to the family wealth, including their balance sheet and cashflows, together with solutions that can mitigate these risks. An integrated insurance solution that spans life as well as property & casualty is typically also part of these solutions.

5. Estate Management:

• The structuring of the family wealth to ensure an efficient and effective transition of the family wealth between generations, so as to contribute to the sustainability of the family wealth.

6. Family Wealth Reporting:

• Periodic consolidated reporting that integrates the family’s various balance sheet assets, liabilities and cashflows.

7. Family Wealth Mentoring:

• The preparation of the family heirs to steward the family wealth for future generations.

8. Family Philanthropy:

• The identification and implementation – where applicable – of key philanthropic initiatives for families. Strategic giving is often a key component of the long-term planning for many affluent families who choose to ‘give back’ to society.

9. Family Wealth Governance:

• Who will participate and be responsible for the ongoing stewardship of the family wealth across generations to ensure long-term wealth sustainability.

10. Lifestyle Management:

• Also known as ‘Concierge Services’ which includes items such as personal bill payment and travel management. These types of services are more popular with family offices in the US and Europe than in Canada.

Stay tuned for the Part 3 blog pertaining to the Services of Family Offices. Please view the Part 1 blog