Family office
From Wikipedia, the free encyclopedia
A family office is a private company that manages investments and trusts for a single wealthy family.[1] The company's financial capital is the family's own wealth, often accumulated over many family generations. Traditional family offices provide personal services such as managing household staff and making travel arrangements. Other services typically handled by the traditional family office include property management, day-to-day accounting and payroll activities, and management of legal affairs. A family office can cost over $1 million to operate, so the family's net worth usually exceeds $500 million. Recently, some family offices have accepted non-family members.[2]
More recently the term "family office" or multi family office is used to refer primarily to financial services for relatively wealthy families.[3]
[edit] Traditional and modern usage
A traditional family office is a business run by and for a single family. Its sole function is to centralize the management of a significant family fortune. Typically, these organizations employ staff to manage investments, taxes, philanthropic giving, trusts, and legal matters. The purpose of the family office is to effectively transfer established wealth across generations. The family office invests the family's money, manages all of the family's assets, and disburses payments to family members as required.
The office itself either is, or operates just like, a corporation (often, a limited liability company, or LLC), with a president, CFO, CIO, etc. and a support staff. The officers are compensated as per an arrangement with the family, usually with overrides based on the profits or capital gains generated by the office. Often, family offices are built around core assets that are professionally managed. In addition, a more aggressive and well-capitalized office may be engaged in private equity placement, venture capital opportunities, and real estate development.
A good example of such an investment office can be found with firms such as Fidelity Group of Companies or Guggenheim Partners. Some are associated with larger firms; some are independent. [4]
Private company multi-family offices are now opening to provide the same menu of personal services that a single wealthy family obtains from its own family office. Some of these multi-family office are housed in law firms and public accounting firms. Others are either stand-alone or are outgrowths of a single family's office.
[edit] Notes and references
- ^ Douglas, Craig M.; Todd Wollack (2007-06-08). "Case highlights family office risk". Boston Business Journal. http://boston.bizjournals.com/boston/stories/2007/06/11/story1.html. Retrieved on 2007-06-27.
- ^ Frank, Robert (2004-06-10). "How to Bank Like a Billionaire". The Wall Street Journal (Dow Jones). http://webreprints.djreprints.com/1005380530169.html. Retrieved on 2007-06-27.
- ^ Wakem, Maria (2005-03-22). "Family Matters". wallstreetandtech.com. http://www.wallstreetandtech.com/showArticle.jhtml?articleID=159904336. Retrieved on 2007-06-27.
- ^ Eric Konigsburg, "Advising, and Calming, the Worried Super-Rich" New York Times , Oct 24, 2008
[edit] See also
For more comprehensive reading on Family Offices, see the Doctoral Study based on empirical research and one-to-one interviews "Global Private Wealth Management - An international study on Private Wealth Management and Family Office Services for Ultra-High Net Worth Individuals" at the Swiss Banking Institute, from the University of Zurich, by Dr. Steen Ehlern.
