When making any significant financial decision in life it pays to undertake a detailed benefits and cost analysis.
Far more than just a number crunching exercise, it requires an understanding of your unique personal situation and lifestyle factors beyond the short term.
The same rule applies when deciding to establish a Family Office.
A Family Office is a family-owned and controlled structure that provides a hub of resources for managing private wealth. It’s an increasingly popular vehicle of choice for Australians who run highly successful businesses, well established investors or members of multigenerational family businesses.
So why are Family Offices on the rise and should your family consider one?
Benefits of the Family Office
There are various benefits in adopting this structure for those wishing to take greater control of their finances for future generations. Here are just a few:
- Build and protect the family wealth
A Family Office can bring a more structured and disciplined approach to the management of succession and intergenerational wealth transfer. It does this by introducing a high level of family governance into the process of managing and administering wealth as well as coaching and education services to assist and prepare the next generation.
- Greater coordination and administrative clarity
Having an impartial and experienced guiding hand in managing vast, complex and varied wealth portfolios can be of great benefit to individuals and their families.
A Family Office can provide clearer direction and administrative simplicity to the management of family wealth. This can involve working in unison with a family’s existing advisers and looking after reporting and compliance tasks.
- Tailored approach to private wealth and asset management
A Family Office can provide greater focus, due diligence and access to unique ‘best of breed’ investment opportunities aligned to the family’s stated objectives.
Having an overarching structure and purpose helps ensure all the various objectives – from wealth generation, asset protection, control and privacy to succession and legacy – remain top of mind during the process.
- Philanthropy that matters
Creating a lasting legacy and having a positive impact on community is a common objective among successful Australians.
A Family Office brings together the right people, processes and structures to maximise your chosen social footprint. As well as connecting with relevant causes, it can act as the “gatekeeper” between donors and charities to ensure gifts are being used as intended.
Costs of a Family Office
Firstly, it’s important to point out that there is no one blueprint for a Family Office. with advice and assistance from their advisor, every family designs their own unique structure to suit their needs.
A Single-Family Office serves one family while a Multi-Family Office is an outsourced service that serves more than one family where costs are pooled.
Other types of Family Office services are technical and require expertise in coordinating tax and legal advice, money management, compliance, cyber security, bookkeeping and concierge.
As such, the costs of running a Family Office will vary depending on the size and scope of services required. For instance, how many family members will be involved and what services the family requires.
However, a global cost benchmark is around 1% of the total assets under management. This generally accounts for set up and operational costs.
At William Buck we find that a Family Office is an appealing offering for clients with assets in excess of $10 million.