Family offices demystified
By Ida Beerhalter
F
amily offices structures can be traced back to the Romans. Individuals which acted as “chief of the house” — in Latin major domus —managed everything relating to the wealth owner’s (be it an individual or a family) lands and treasures. Their position came with a great influence on the wealth owner(s) — aka the principal(s) — in other, sometimes all, aspects of life and nobody will be surprised to learn that some misused this trust to serve their own agenda and fill their own coffers.
Fast forward two more widely known modern versions of a family office are accredited to J. P. Morgan founding the House of Morgan in 1838 and the Rockefeller family office in 1882, both of which are still operative today. A family office manages the always liquid and illiquid assets of a principal or a principal family. Sometimes the family office also provides advisory and also so called “concierge services”, i.e. it acts as a one stop shop covering every aspect of a principal’s life and needs, such as e.g. travel management, healthcare, pets, diet, and so on. There is no one size fits all and the exact role and scope a family office varies greatly—also depending on the character and attitude of the principal. There are SFO (Single Family Office) and MFO (Multi Family Offices). In short: a SFO is owned by one individual or by one family and manages the wealth of this individual/family. A MFO is owned by multiple individuals or of multiple families and manages the wealth of these individuals / families. Confusing? I know!
So where does this leave the so-called Family Offices who are not owned by the principals for which they manage the money for? For me there are not family offices but simply asset managers. To make it even more confusing there are also “genuine” SFO and MFO who decide to leverage their know-how (and lower their costs) as paid asset managers and invite other principals to mange their accounts for them. It is always good to check if a SFO or MFO has a website or not as the majority of the “genuine” SFO and MFO don’t have one as they don’t want / need to be found. There is a huge variety when it
comes to how a family office is set up. You could say all goes from a département — often headed by the CFO — within in the family business or a lawyer and an accountant on retainer, to a 2 person team (e.g. the principal and CIO) to an dedicated company — in some cases multiple companies — like structure(s) with over 100 full time employees.
However, the size of the wealth does not determine the structure but it determines what size of family office you should finance and still make decent returns without eating in your principal capital/wealth There are family offices which manage immense assets and are run by one CIO
who “only” hires experts on a need to basis to keep the Family Office very agile, lean, and cost-effective.
If you are a principal — be it the financial windfall because you are one of the lucky entrepreneurs or one of the lucky sperms — and you do not have the know-how and the passion to understand and manage your wealth you need professional advice. But you also need to make very sure that that advice serves first and foremost your best interests.
Advisory mostly works quite simple. If you have only a hammer you need to convince everyone else that he/she is a nail. Meaning, if you as a Advisory mostly works quite simple. If you have only a hammer you need to convince everyone else that he/she is a nail. Meaning, if you as a principal would ask a trust company if you need a trust, the answer is likely a very clear “yes”, and if you ask your bank advisor which products you should invest in the likeliness that you get offered products from this bank is also quite high.
So where does this leave the so-called Family Offices who are not owned by the principals for which they manage the money for? For me there are not family offices but simply asset managers. To make it even more confusing there are also “genuine” SFO and MFO who decide to leverage their know-how (and lower their costs) as paid asset managers and invite other principals to mange their accounts for them. It is always good to check if a SFO or MFO has a website or not as the majority of the “genuine” SFO and MFO don’t have one as they don’t want / need to be found. There is a huge variety when it
comes to how a family office is set up. You could say all goes from a département — often headed by the CFO — within in the family business or a lawyer and an accountant on retainer, to a 2 person team (e.g. the principal and CIO) to an dedicated company — in some cases multiple companies — like structure(s) with over 100 full time employees.
However, the size of the wealth does not determine the structure but it determines what size of family office you should finance and still make decent returns without eating in your principal capital/wealth There are family offices which manage immense assets and are run by one CIO
who “only” hires experts on a need to basis to keep the Family Office very agile, lean, and cost-effective.
If you are a principal — be it the financial windfall because you are one of the lucky entrepreneurs or one of the lucky sperms — and you do not have the know-how and the passion to understand and manage your wealth you need professional advice. But you also need to make very sure that that advice serves first and foremost your best interests.
Advisory mostly works quite simple. If you have only a hammer you need to convince everyone else that he/she is a nail. Meaning, if you as a Advisory mostly works quite simple. If you have only a hammer you need to convince everyone else that he/she is a nail. Meaning, if you as a principal would ask a trust company if you need a trust, the answer is likely a very clear “yes”, and if you ask your bank advisor which products you should invest in the likeliness that you get offered products from this bank is also quite high.
Fast forward two more widely known modern versions of a family office are accredited to J. P. Morgan founding the House of Morgan in 1838 and the Rockefeller family office in 1882, both of which are still operative today. A family office manages the always liquid and illiquid assets of a principal or a principal family. Sometimes the family office also provides advisory and also so called “concierge services”, i.e. it acts as a one stop shop covering every aspect of a principal’s life and needs, such as e.g. travel management, healthcare, pets, diet, and so on. There is no one size fits all and the exact role and scope a family office varies greatly—also depending on the character and attitude of the principal. There are SFO (Single Family Office) and MFO (Multi Family Offices). In short: a SFO is owned by one individual or by one family and manages the wealth of this individual/family. A MFO is owned by multiple individuals or of multiple families and manages
the wealth of these individuals / families. Confusing? I know!
So where does this leave the so-called Family Offices who are not owned by the principals for which they manage the money for? For me there are not family offices but simply asset managers. To make it even more confusing there are also “genuine” SFO and MFO who decide to leverage their know-how (and lower their costs) as paid asset managers and invite other principals to mange their accounts for them. It is always good to check if a SFO or MFO has a website or not as the majority of the “genuine” SFO and MFO don’t have one as they don’t want / need to be found. There is a huge variety when it
So where does this leave the so-called Family Offices who are not owned by the principals for which they manage the money for? For me there are not family offices but simply asset managers. To make it even more confusing there are also “genuine” SFO and MFO who decide to leverage their know-how (and lower their costs) as paid asset managers and invite other principals to mange their accounts for them. It is always good to check if a SFO or MFO has a website or not as the majority of the “genuine” SFO and MFO don’t have one as they don’t want / need to be found. There is a huge variety when it
comes to how a family office is set up. You could say all goes from a département — often headed by the CFO — within in the family business or a lawyer and an accountant on retainer, to a 2 person team (e.g. the principal and CIO) to an dedicated company — in some cases multiple companies — like structure(s) with over 100 full time employees.
However, the size of the wealth does not determine the structure but it determines what size of family office you should finance and still make decent returns without eating in your principal capital/wealth There are family offices which manage immense assets and are run by one CIO
However, the size of the wealth does not determine the structure but it determines what size of family office you should finance and still make decent returns without eating in your principal capital/wealth There are family offices which manage immense assets and are run by one CIO
who “only” hires experts on a need to basis to keep the Family Office very agile, lean, and cost-effective.
If you are a principal — be it the financial windfall because you are one of the lucky entrepreneurs or one of the lucky sperms — and you do not have the know-how and the passion to understand and manage your wealth you need professional advice. But you also need to make very sure that that advice serves first and foremost your best interests.
Advisory mostly works quite simple. If you have only a hammer you need to convince everyone else that he/she is a nail. Meaning, if you as a
If you are a principal — be it the financial windfall because you are one of the lucky entrepreneurs or one of the lucky sperms — and you do not have the know-how and the passion to understand and manage your wealth you need professional advice. But you also need to make very sure that that advice serves first and foremost your best interests.
Advisory mostly works quite simple. If you have only a hammer you need to convince everyone else that he/she is a nail. Meaning, if you as a
Advisory mostly works quite simple. If you have only a hammer you need to convince everyone else that he/she is a nail. Meaning, if you as a principal would ask a trust company if you need a trust, the answer is likely a very clear “yes”, and if you ask your bank advisor which products you should invest in the likeliness that you get offered products from this bank is also quite high.
In reality principals are often reduced to the “nominal owners” and benefiaries of their wealth, whereas the true ownership / control lies with the — often handsomely — paid non-principals who earned their trust or in the case of multi-generational wealth the trust of the principal who believed wealth could be managed better by 3rd parties beyond his/her grave.
So the minimum standard a principal should place on its SFO / MFO is that their IO (Investment Officers) have the network and know how to find
the best investments for your wealth and have your best interests in mind — or you as a principal have to be smart/strong enough to make them.
The question I am often ask is how to find the family offices and how to get into contact with them. There is no simple answer to that. There are so called “family office meetings” and conferences where — depending on their quality — more or less many family offices really attend. At the end it is a mix between serendipity and plan. You have to find an in and you need to have
clarity why you want to get into contact and what is the ask or the offer. A (co) Investment? Job? Service? Advise? Free Ride?
As a principle wealthy people and by default their Family Offices are contact shy for the simple reason, they are always asked for something or offered something they should / could acquire. However, most Family Office are very pro-active in the respective sector and have trusted in-roads into their eco-system.
At the end be just an authentic person who networks with other people — if there is a match with an Family Office or even principal and you it will happen.
So the minimum standard a principal should place on its SFO / MFO is that their IO (Investment Officers) have the network and know how to find
the best investments for your wealth and have your best interests in mind — or you as a principal have to be smart/strong enough to make them.
The question I am often ask is how to find the family offices and how to get into contact with them. There is no simple answer to that. There are so called “family office meetings” and conferences where — depending on their quality — more or less many family offices really attend. At the end it is a mix between serendipity and plan. You have to find an in and you need to have
clarity why you want to get into contact and what is the ask or the offer. A (co) Investment? Job? Service? Advise? Free Ride?
As a principle wealthy people and by default their Family Offices are contact shy for the simple reason, they are always asked for something or offered something they should / could acquire. However, most Family Office are very pro-active in the respective sector and have trusted in-roads into their eco-system.
At the end be just an authentic person who networks with other people — if there is a match with an Family Office or even principal and you it will happen.
In reality principals are often reduced to the “nominal owners” and benefiaries of their wealth, whereas the true ownership / control lies with the — often handsomely — paid non-principals who earned their trust or in the case of multi-generational wealth the trust of the principal who believed wealth could be managed better by 3rd parties beyond his/her grave.
So the minimum standard a principal should place on its SFO / MFO is that their IO (Investment Officers) have the network and know how to find
So the minimum standard a principal should place on its SFO / MFO is that their IO (Investment Officers) have the network and know how to find
the best investments for your wealth and have your best interests in mind — or you as a principal have to be smart/strong enough to make them.
The question I am often ask is how to find the family offices and how to get into contact with them. There is no simple answer to that. There are so called “family office meetings” and conferences where — depending on their quality — more or less many family offices really attend. At the end it is a mix between serendipity and plan. You have to find an in and you need to have
The question I am often ask is how to find the family offices and how to get into contact with them. There is no simple answer to that. There are so called “family office meetings” and conferences where — depending on their quality — more or less many family offices really attend. At the end it is a mix between serendipity and plan. You have to find an in and you need to have
clarity why you want to get into contact and what is the ask or the offer. A (co) Investment? Job? Service? Advise? Free Ride?
As a principle wealthy people and by default their Family Offices are contact shy for the simple reason, they are always asked for something or offered something they should / could acquire. However, most Family Office are very pro-active in the respective sector and have trusted in-roads into their eco-system.
At the end be just an authentic person who networks with other people — if there is a match with an Family Office or even principal and you it will happen.
As a principle wealthy people and by default their Family Offices are contact shy for the simple reason, they are always asked for something or offered something they should / could acquire. However, most Family Office are very pro-active in the respective sector and have trusted in-roads into their eco-system.
At the end be just an authentic person who networks with other people — if there is a match with an Family Office or even principal and you it will happen.
Ida Beerhalter co-heads IOME, a private investment partnership of women principals from the Gulf region with its head office in Riyadh, KSA. Additionally, Mrs. Beerhalter also serves as Ambassador, Member of the Board, Trustee, Committee Member, Advisor, and Expert to various for-profit and not-for-profit organizations around the globe -- amongst others: United Nations’ University for Peace (UPEACE), Costa Rica, Inside Out LLC, USA, Orcan Energy, Germany, Aescuvest, Europe, Gate College, Nepal. LP Council Superreturn, Informa, UK. Mrs. Beerhalter was awarded with the TIAW World of Difference Award in 2015.
