Family offices have appeared in the U.S. in the late XIX century – after the big industrial businesses began to grow. Wealthy people needed qualified personal advisors and assistants. Initially they specialized on service personnel and organizing trips. Gradually, additional services were needed from them – such as legal and financial services, asset management and so on. One of the main purposes of family offices became to convey the wealth, accumulated by family, from generation to generation. That is what classic family offices offer today.
So, how the classic family office has to be arranged? The specialists say that the successful family office has to contain minimum of four members: a manager, a lawyer (often, he or she is an accountant at the same time), an investment manager and a lifestyle manager. The responsibility of the latter is the organization of schedules and leisure-activities: parties, concert tickets and even, for example, children’s education. In addition, if it is necessary, there can be a person in the office, who will work with charity projects. The office staff works as a standalone company and may hire service staff, such as security officers or cleaners. Of course, a family office is a very expensive service, which can be reasonably afforded only by people with a wealth more than fifty millions of dollars.
The classical family offices times stay in the past and the multi-family offices are overtaking their places. The multi-family office (MFO) is the structure, which serves several families at the same time. The multi-family office helps to get all the classic family office’s services – taxes, estate planning, risk management, trusteeship, lifestyle management and other; while saving money on their maintenance. Multi-family office is always interested in getting new customers and clients, and as a result – in constant development and high quality of their services – what is a big advantage.
Anyways, the choice between family office and multi-family office depends on how big is a client’s wealth and income; certainly, each service has its own advantages and disadvantages, which we will try to describe in our next posts.
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