Family Offices: What They Do & Who Uses Them
When you’re planning for your family’s future, finances are commonly a top priority. With the assistance of a family office, you can get a personalized financial plan from a trusted professional. Learn more about family offices, the services they provide, and who uses them.
Financial and personal affairs are heavy considerations when planning for the future, and wealth can be a huge implication. Consider the spread of your family’s financial assets and needs. How do those change ten to twenty years from now? When you have extensive assets to keep track of, it can often times be difficult to manage it and plan strategically on your own.
With the help of a family office in finance, you get personalized services to help strategize according to your family’s financial goals and needs moving forward without the stress of having to figure it out on your own. From investment management to estate planning and more, a family office can provide financial guidance and manage your estate, accounts, and related assets, ensuring financial health moving forward. Learn more about what a family office is, the services they provide, and who can benefit from using a family office in this article.
What Is a Family Office?
A family office is a private wealth management advisory firm that provides a range of services tailored to the financial and personal affairs of high-wealth individuals and families. Generally focused on multigenerational wealth, these personalized services help families maintain and grow the wealth while also planning for the future and what needs need to be met over time. Going beyond basic investment management and financial planning, family offices in wealth management also assist in planning for philanthropic commitments.
Types of Family Offices
There are two main types of family offices, both designed to help wealthy families preserve their wealth, plan for the future, and manage their assets.
Single-family Offices (SFOs) serve the personal and financial needs of a single family, often one that has accumulated a mass amount of wealth. Single family offices are generally set up when that family wealth reaches a certain level and gives the family their own dedicated team to manage assets moving forward.
Multi-family Offices (MFOs) serve multiple families and offer similar services. However, the costs are shared among the families that use the office. MFOs can offer a wider range of expertise and resources without a family having to establish their own office.
What Does a Family Office Do?
As a private company whose employees are financial experts and can assist in managing a family’s generational wealth and assets, a family office can provide services and support in multiple areas including trust and estate planning, investment and philanthropic management, accounting, and much more.
Investment Management: includes managing investment portfolios, asset allocation, and due diligence as well as providing investment insights.
Wealth and Estate Planning: includes tax planning and optimization to structure wealth and investments, development of plans to transfer wealth across generations, and succession plans to prepare families for the transition of ownership of families businesses and other assets to ensure a smooth transition and pass off to the next generation.
Philanthropy and Charitable Giving: includes helping families outline their charitable goals (i.e. supporting philanthropic causes, establishing foundations, etc.), aligning wealth with family values such as positive social or environmental causes, and overseeing charitable grants and donations for the family.
General Financial Reporting and Accounting: includes providing regular financial reports across all family assets and investments, managing the day-to-day finances of the family, and helping families ensure liquidity for ongoing expenses
Financial Education: includes financial literacy programs for younger generations as well as offering opportunities for next-generation planning (i.e. preparing younger family members to take on leadership roles in family wealth and businesses in the future).
Lifestyle Management: includes property and real estate asset management, personal concierge services such as travel and event planning or hiring personal staff, and coordination of healthcare and wellness programs for the family.
How Much Do Family Office Services Cost?
The cost of family office services can vary significantly based on several factors, including the nature of services required, the spread of family wealth, and the type of family office (single-family or multi-family) chosen to provide these services.
SFO office costs tend to be higher due to the individualized and customized services provided directly for that single family. Initial setup costs could generally range anywhere fromsix to seven figures while ongoing annual costs can start at seven figures, according to Charles Schwab.
MFO office costs help reduce the per-family cost by sharing expenses across resources. Annual fees for MFO services are usually based upon the assets under management of the office and can range from 0.5% to 1.5% of those assets depending on the family’s wealth and assets. However, MFOs can also offer tiered or customized pricing depending on the services required.
Who Needs a Family Office?
When considering your family’s wealth and asset management, selecting a family office as an option comes with several stipulations, including how much money you need for a family office.
To use a family office, you need a significant amount of wealth. The minimum requirements for a family office may depend on the type of office and the services offered.
SFO requirements generally require a minimum wealth threshold of $50 million to $100 million, while most MFOs have a minimum requirement of $25 million to $50 million in family wealth and assets. That being said, family offices are generally intended to be used by high net worth individuals and families looking for an external and expert resource to manage their generational wealth, assets, and future financial security.
Investing with Capstone Capital, Where Every Client is Family
Looking for the right private family office to assist in developing a strategy for the future of your family’s wealth comes down to trust and expertise. With Capstone Capital Partners, you get the assistance of financial experts with a proven track record all while treating clients like family and giving you the individual attention you deserve.
To learn more about Capstone’s expert financial team and services, let’s get in touch!
