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What is a Family Office and Should I Consider Using One?

Family offices are by no means a recent phenomenon. The concept of a family office approach to managing wealth can be traced back to monarchs appointing stewards to manage royal wealth.

This type of wealth administration service later filtered down to the upper nobility, creating the enduring concept of engaging highly competent and experienced professionals to manage, preserve and build wealth and expand legacy—akin to today’s family offices.

In this article, we discuss family offices with particular focus on the difference between a family office and a traditional wealth or investment management firm, and outline two considerations that may help you decide whether a family office approach to managing your, your family’s and/or multigenerational wealth is for you.

What is a Family Office?

A family office provides high-net-worth individuals and/or families with a dedicated multidisciplinary team of professionals who oversee and provide a wide range of highly specialized and personalized services under one roof to manage their clients’ financial affairs.

These services may include, among others, financial administration and planning, tax planning, estate planning, and philanthropy and legacy consultation, with the ultimate goal to preserve and build your, your family’s and/or multigenerational wealth.

How is a Family Office Different from a Traditional Wealth or Investment Management Firm?

The primary difference between a family office and a traditional wealth or investment management firm is that family offices provide a range of financial services. They generally outsource investment management to an appropriate traditional wealth or investment management firm as one of the many important pieces of their approach to preserving and building lasting wealth.

Should You Consider a Family Office Approach to Managing Wealth?

The first question you should ask yourself before considering a family office is whether a Single-Family Office (SFO) or a Multi-Family Office (MFO) is right for you given the size of your investible assets and the complexity of your financial affairs.

A small SFO could be costly to operate annually and therefore personal or family investible assets have to be at a certain magnitude and complexity to justify the cost. On the other hand, a MFO aggregates investible assets of multiple high-net-worth families.

If you are wondering if a family office approach to managing wealth is right for you, here are two considerations that may help you decide:

  1. You have global financial affairs: Given increased regulatory scrutiny of offshore structures, you may wish to consider a family office to institutionalize the management of the family’s financial affairs to assist with complex compliance and tax planning tasks.
  2. You would like to have one person or a team of people overseeing your investment manager, accounting and estate planning, allowing for a more seamless transfer of wealth between generations.

The Bottom Line

High-net-worth individuals and families for whom a family office approach to managing wealth is not appropriate may find that working directly with a traditional investment management firm is a more accessible and cost-effective solution, and these firms can in fact refer individuals and families to accounting and law firms that they have used or who have come highly recommended to them. An independent, privately-owned, boutique investment management firm can provide you with the superior level of personalized, highly dedicated and responsive service you wish to receive.

Preserve and Build Your Wealth with Bloom

As automated forms of investment management services become more widely available, you can manage your investments autonomously through an online investment platform—but you may miss out on the dedicated personal touch, portfolio customization and expertise offered by real and experienced investment management professionals. Instead, you can engage a professional investment manager who will devise and manage a personalized solution to help you and your family preserve and grow your wealth without risking future security and legacy goals. The answers to you and your family’s most complex financial questions come when you connect with real people.

At Bloom Investment Counsel, Inc., you and your family’s financial situation is private, personal and unique—and so is your investment portfolio. Visit Bloom’s website to learn more about our investment approach or get in touch with Bloom to find out what we can do to help you and your family protect and build wealth.

This content is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this content should consult with his or her financial partner or advisor.

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