Modern Family: adapting the family office structure to succeed in the new global environment
No two families, and therefore family offices, are the same. They may provide a similar range of services based around a hub for a future management structure, where information, advice, and an agreed collaborative network can protect and enhance the family's financial and legacy matters, but in order to manage a family's affairs completely the structure needs to adapt and flex with the changing needs of modern families.
A family office should be run much like a business with a mission statement, business plan, performance benchmarks, governance, budgets and various committees; from philanthropy to advisory to investment. While this sounds relatively straightforward long established family offices may represent three or even four generations and span multiple continents and cultures - how then can this be codified into one single vision?
The family office should have its own culture, which evolves over time as a result of traditions and personalities, dictating everything from investing to philanthropy. A successful family office knows how to recruit, manage and retain the right people to work within this culture. In addition, successful families recognise the importance of supporting education and training for future generations, to ensure they carry on with the same ethos. Focusing active family members and engaging younger generations in their passions is critical and philanthropy is often used as a teaching exercise for next-generation responsibility.
Advisors will consider many factors to ensure generational continuity, such as the location of the family office or the establishment of private family trust companies to assist with managing the family wealth in the context of the family's desire for even greater control and privacy. Tight-knit family groups are often considered a thing of the past. Multi-jurisdictional, multi-cultural, multi-relationship families are now the norm and tax management in particular has had to adapt to provide greater security for inheritances.
Technology is also playing an increasingly pivotal role in providing services to family offices in the light of these trends. It enables families to learn, innovate, cooperate and pursue opportunities around the world and if used correctly, can provide a holistic, integrated view across an entire family office, including real estate, alternative investments and foreign holdings, in real time to multiple members of the family. This provides complete transparency and accountability to all beneficiaries ensuring that no one member of the family office is able to abuse their position.
Like the family offices, Moore Stephens is constantly adapting its role in the family office environment. It can be part of your extended family; a trusted and experienced adviser who understands how to keep family offices up to speed with a changing world.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.