Applying Business Strategy To Family Wealth
Powerful Business Strategies change the trajectory of Family Wealth when backed by an experienced team of Professional Strategists delivering Strategy And Operational Management.
When liquid assets grow to a point, it becomes evident that a systematic, organised framework is essential to generate superior investment returns with managed risk. In the late 19th century, creators of large manufacturing empires were some of the first to recognise the need for family offices. However, today we observe professionals as well as founders of various industries forming family offices, especially following a significant liquidity event.
It is widely acknowledged that a well-crafted strategy, management direction, and competent execution teams are essential for the growth of a business. Adopting this same approach at a personal level dramatically changes the trajectory of wealth creation.
Why Do We Need Family Offices?
In developed economies like the US and Europe, Family Offices have been established for as long as a 100 years. Modern day entrepreneurs and seasoned management executives continue to see value in this model. An estimated 4,500 family offices across developed countries, manage about $2 trillion in assets. As family separations, sale of businesses, and generational change accelerate, the need for a systematic approach to managing wealth is only increasing. Also, stock options, supra normal bonuses, higher salaries and double incomes, are becoming the new norm. This necessitates that assets of professionals too receive the more structured approach that only a family office can provide.
What Does A Family Office Do For Me?
You may have already noticed that investment opportunities are a dime a dozen. However, is critical to sift through these and curate only those which are aligned to your own long-term objectives and risk-bearing abilities, that too in a tax savvy manner. Further, succession planning and family governance require thoughtful planning to enable efficient management, transfer and growth. External investment, tax and legal consultants generally provide a single view-single instance perspective. Without a systematic overview of all these matters, despite having an abundant asset base, your family may find itself entangled in complexities that deny them easeful access. A family office anticipates and addresses all these concerns, serving as a centralised co-ordinating hub, governing individual issues while keeping the holistic picture in mind at all times.
What services does a Family Office provide?
Multiple, diverse professional services are required to manage a family’s financial affairs comprehensively. Your Family Office will co-ordinate the addressal of all these needs from under one roof:
What strategies can I expect from a Multi-Family Office?
Strategies vary from Capital Protection, to Income Generation, to Wealth Creation over the long run. Each strategy entails a different product mix and review schedule. For example, those preferring to Protect Capital and Generate Income may choose to invest in debt funds, real estate or rental assets. Whereas families looking at Wealth Creation may consider high-risk investments, such as seed, venture and private equity funds, as well as co-investments with funds. As the relevant time horizon here would be 10 years, instead of a monthly look at assets, there would be detailed quarterly and annual reviews.
How does one select a Multi-Family Office?
One option is to work with a private bank. The drawback here is that it is entirely possible that some of their objectives may conflict with your investment preferences. Also, the person handling your funds at the bank can change(sometimes frequently).
On the other hand, individual advisors owning their businesses will stay with the family in the long run. Speak to known advisors, gauge your comfort and alignment with them, and do reference checks if needed.