Understand the key functions of Family Offices: which aspects are best suited to highly qualified third-party providers and which to dedicated staff.  Some ways to think critically about directing and coordinating a family office network.

In our last article, Typical Needs of Wealthy Investors, we discussed planning, investment, and other needs of wealthy individuals and families (the “principals”) and the required expertise, resources and infrastructure to serve those needs.  We also noted that the term “Family Office” (“F.O.”) is now often used in various ways to describe either a dedicated organization or the types of services delivered by an ecosystem of providers. 

From a regulatory perspective, the term “Family Office” has a specific meaning in the United States.  Empowered by the Dodd-Frank Act, the SEC defined the term: “Family Offices are entities established by wealthy families to manage their wealth and provide other services to family members, such as tax and estate planning services.” The SEC did so to exempt those entities established for a single family from the burden of registering as advisors.  

While that practical definition is helpful, we at Bitterroot Capital Advisors view the concept of a Family Office slightly differently – as a network of resources and activities that serve wealthy individuals or families.  These networks can take many forms to serve various family needs and priorities.  As is so often the case, one size or shape does not fit all.

This paper examines that question more closely, describing several key functions of F.O.s, how they may be effectively organized, and which aspects are best suited to highly qualified third-party providers and which to dedicated (“in-house”) staff.  Lastly, we also address the critical consideration of directing and coordinating a family office network. 

This is part of the Ultra-High-Net-Worth Investors: Preparing for What’s Ahead series. Continue reading similar content below:

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