Multi-Family Offices A Solution for Wealthy Families

MULTI-FAMILY OFFICES: A Solution for Wealthy Families YOUR INDEPENDENT WEALTH MANAGEMENT AND FAMILY OFFICE LAWYERS

Multi-family offices (MFOs) are commercial organizations that help families manage their finances and investments. They provide services for individuals, couples, and families and are privately owned or part of a financial institution. You’ll find a variety of multi-family offices in the industry, and thus it’s essential to make an informed decision when selecting an MFO.

Why Do You Need One? MFOs offer several benefits to families: First, they allow families to consolidate multiple portfolios with several banks into one place. Second, they make investment management activities straightforward because they can oversee the complete investment process. Third, they help families plan for retirement and achieve other financial goals. Finally, they help families stay organized concerning all wealth management activities, so they can focus on what matters most - the family. What Are Some Benefits of Multi-Family Offices? One benefit of working with a multi-family office is that it allows families to consolidate their wealth and invest in various asset classes. An MFO can assist in defining the family’s investment strategy and executing it with different service providers. In our view, you should follow one principle: investment management and control should not be performed by the same service provider. With such a separation, you can achieve an ideal alignment of interests, and the MFO will avoid potential conflicts of interest. Multi-family offices usually have the required expertise and experience to monitor and control the entire investment process that is performed by other service providers such as wealth managers or external asset managers.

What Does It Cost? Several pricing models span from hourly rates and fixed fees to compensation based on assets under management. Irrespective of the offered pricing model, you should have transparency on all costs and define the services you need. Furthermore, the multi-family office should not depend on other service providers to negotiate the best fees for you and not place their own financial products to avoid conflicts of interest. Is It Right For Me? It would be best if you first clarified which services you and your family need to answer this question. Your core needs and deliverables will determine the most suitable structure and solution. There’s no need to solve everything in one place since technology nowadays enables the collaboration of several service providers. If you already work with a service provider such as a wealth manager, the multi-family office can integrate the existing setup rather than replace it altogether. Since we recommend starting with core deliverables, you can add further services at a later stage.

How To Select The Ideal MFO? As mentioned above, defining your core needs and deliverables is the first step. You should then follow a structured evaluation approach that considers specific parameters such as ownership, service quality, costs, and potential conflicts of interest. An independent and specialized advisor, e.g., a private wealth or family office lawyer, can assist you in the evaluation process. Since, ideally, you are looking for long-term solutions and relationships, it’s worth investing time and effort in the planning and selection. Which Other Options Do I Have? Luckily you have many options to enhance your wealth management: you can work with a wealth manager offering comprehensive service or with an external asset manager that integrates into the custody bank’s platform. Single-family offices are another option. If you are scared of their costs, a virtual family can achieve similar results at lower expenses.

Where To Start? Your and your family’s needs and requirements are the starting point in every scenario. A thorough assessment will lead to the core services specification and subsequent evaluation of the various options a multi-family office can offer. With a modular approach, you can start with the most critical and imminent pressures and gradually develop your customized wealth management framework. A final recommendation: no need to solve everything at once and resort to standard services. The focus on essential components and high-quality services and solutions will guarantee better outcomes than a broad service delivery at average quality. CONTACT CENTRO LAW TO LEARN MORE ABOUT GETTING THE MOST VALUE FROM YOUR INDIVIDUALIZED FAMILY OFFICE SOLUTION.