Oracle Capital Group was very proud to be named as “Family Office of the Year” for 2015 at the City of London Wealth Management Awards. This was high recognition by professionals in the wealth management field of Oracle Capital Group’s achievements. But a potential client looking for advice would be fully justified in posing the question: “What is a Family Office?”
There is a common phrase often said with a wry smile by those in the family office business: “When you’ve seen one family office, you’ve seen one family office!” In other words, each company is unique in what it offers its clients. But there are certain aspects of the business which most would agree fall under the remit of a family office.
First of all, there are the standard wealth management functions: management of investments; and planning of tax affairs, the family’s estate and philanthropy. But, a family office goes beyond this, and takes on the full day-to-day administration and management of a family’s affairs.
A family office should be able to provide for tax compliance work; access to private banking and private trust services; document management and record-keeping services; expense management; bill paying; book-keeping services; family member financial education; family support services; and family governance. A reliable family office should be able to advise on which property to buy and which schools would be most suitable for your children. And above all, the full scope of the family office’s work should be carried out with the utmost discretion.
Given all this, what is the particular attraction of a family office for High Net Worth and Ultra High Net Worth Individuals (HNWIs and UHNWIs)? Successful people, by the very nature that has made them successful and wealthy, tend to be busy people. Their days are full, and it makes perfect sense to have a trusted team alongside you to deal with day-to-day cares; cares which are important but can be delegated to people you know you can trust to use their own intelligence and experience to do the best for you. And there you have the key words for the relationship with the family office: trust, intelligence and experience.
There are two types of family office: the single-family office (SFO) and the multi-family office (MFO). The SFO manages the financial and personal affairs of just one wealthy family. As it is entirely driven by the needs of that family, there is no standard for how one should be structured. For some, the advantage is that as the office deals entirely with their affairs it becomes a virtual extension of the family.
The MFO, on the other hand, can offer much wider experience than the SFO. Because they deal with more families – though not so many that they risk losing the personal touch – MFOs are more likely to be aware of the wider range of challenges which their clients might face. MFOs tend to be larger than SFOs and so are more likely to have their own in-house specialists and should be able to cater for all their clients’ needs, be it in wealth management; real estate; education; or any other challenge which may arise.
Perhaps the key question which any HNWI or UHNWI should ask themselves is, how personal are the services which this MFO is proposing? It’s a lot like buying clothes. If you’re happy with off-the-peg solutions for your wealth management, simply go to your bank. But, just as you would go to your tailor for something made-to-measure, that should be what your family office is suggesting: working with you, listening to your needs and then using this information and their experience to offer you the best advice possible in all areas of life.