The concept of a family office is not one that is prescribed, as people in different parts of the world and environment have different views and practices when it comes to maintaining a ‘Family Office’. The cultural differences and philosophy of families sometimes dictate the practices. Typically, the family office would have people from different backgrounds supporting it and these would include professionals in the legal, finance / banking and investment fields in addition to the conventional Trustees and Fiduciaries. In many instances, the finance and legal expertise are found within the family business and very often these are people who have been with the family for many years. Although some families prefer to have people from outside the family business to handle the family office affairs, and therefore people from professional firms with the relevant background and expertise are hired.
There is normally a close family professional employed by the family office, this could be anyone from the professionals mentioned above who typically and essentially has known the family for many years and on whom the family can rely to represent them. This person will lead and usually coordinate the family office relationship and ensure that those involve with the family office understand the ultimate objective and appreciate the risk appetite of the family. It is common to see family offices started by a Private / Investment Banker who has known the family for a long time and who may be related to the family. In certain instances, the family office is run independently of the family business which funds the family office and the professionals looking after the family office affairs proactively plan, manages and review the overall business and financial risks.
In order to add value, generally, the family office is likely to seek to invest in different sectors from which the family’s core business generates its source of wealth. This, at the same time satisfies the requirement for diversification. It is also important to understand how to handle depreciating assets such as private yachts and jets, used regularly by the family and how to optimize the use and value of these private items.
In terms of Asset Under Management and number of single family offices, in the USA for instance, it is estimated that there are around 3,000 single-family offices managing in excess of USD1.00 trillion in assets. The typical size of a family office asset varies from USD100million upwards, although in Asia for instance the establishment of a family office becomes justifiable for families with assets of at least say USD30million as the cost ratio may become just too high.
The structures for family offices are typically Private Trust companies (PTC) which are used to maintain the family trusts in an appropriate jurisdiction under which you will find sitting various corporate vehicles holding the family portfolio of assets. These are now being extended to investment into Private Equity Funds or funds generally to further spread the portfolio. In-house Investment Managers may also be employed by the family office Investment Management vehicle to manage the family office private Fund.
At CKLB Family Office Support, we provide the framework for the family office by establishing the relevant structures and manage and administer such structures whilst facilitating the relationship management of the family office team as appropriate. From establishing the licensed PTC’s and providing the Trusteeship for the family trusts through to managing and administering the corporate vehicles and setting up the Funds and the administration thereof, we tailor-made our support services as far as possible. For further info on our family office support services please feel free to contact Christian Li. (Email : firstname.lastname@example.org)