9 Common Types of Family Offices & Citi Bank Survey
Family Offices Strategieshttps://blog.mountglobal.com/publish/settings/preamble
DEFINITION OF FAMILY OFFICE
Family Offices are private wealth management advisory firms. They serve high-net-worth individuals and families and provide a range of services to manage and preserve the financial state of wealthy families across generations.
TYPES
There are nine common types of Family Offices. They all vary in size, structure, and the services they offer. The choice of the type of Family Office depends on the family's wealth, goals, complexity of assets, and service delivery. Some Family Offices provide services covering everything from financial management to lifestyle management, while others might specialize in very specific areas. Here are the most common types:
SINGLE FAMILY OFFICE
A Single-Family Office is established by a single wealthy family to manage its financial affairs, investments, estate planning, and other services. It is exclusively dedicated to serving the needs of one family. It offers highly personalized services.
MULTI-FAMILY OFFICE
A Multi-Family Office serves the financial needs of multiple high-net-worth families. This type of office pools resources from several families, allowing them to benefit from shared services, cost efficiencies, and access to a broader range of investment opportunities.
VIRTUAL FAMILY OFFICE
Virtual family offices provide a range of services similar to traditional family offices, but they outsource certain functions to third-party providers. This can include investment management, accounting, legal services, and more.
OUTSOURCED CHIEF INVESTMENT OFFICER
Some families hire an outsourced chief investment officer to manage their investment portfolio. They typically offer strategic asset allocation, investment selection, risk management, performance monitoring and reporting.
PHILANTROPIC FAMILY OFFICE
Wealthy families focused on philanthropic activities fit this type of a Family Office.
It helps the family develop and execute their charity strategies, manage charitable giving and projects, and measure the social impact of their donations.
OPERATIONAL FAMILY OFFICE
Operational Family Offices go beyond financial management and investment services. They may handle day-to-day administrative tasks, property management, and coordination of various aspects of the family's life.
PRIVATE TRUST COMPANY
Some families establish a private trust company to manage their wealth, estate planning, and fiduciary responsibilities. This structure can provide greater control and customization over trust and estate matters.
TECHNOLOGY-DRIVEN FAMILY OFFICE
These offices may still offer traditional services but incorporate technology for efficiency and convenience. These Family Offices leverage digital tools and platforms for investment analysis, reporting, marketing, and communication.
SPECIALIZED FAMILY OFFICE
It focuses on specific industries or niches, such as real estate, healthcare, energy, or sustainable investments. Their expertise in a particular field allows them to tailor their services to the unique needs of families in that industry.
GLOBAL FAMILY OFFICE
Families with international assets and interests might establish a global family office to manage their affairs across multiple jurisdictions. These offices navigate complex cross-border legal, tax, and regulatory issues.
BDO mentioned in their report that Family offices are increasingly preferred as the go-to-choice for wealth and private asset management, ultra-high-net-worth individuals, families.
Greater control, flexibility, lower cost, strong performance versus traditional wealth management
Succession planning, wealth transfer
Shifting economic and market forces
Continued globalization, cross-border tax support
Geographical dispersal of investments, individuals
Some Key Insights about Family Offices from Citi Group Survey
Citi Group performed Family Offices Survey in 2022 and the key objective was to take a more holistic view of family office issues. Some highlights from the survey report:
What are the top economic concerns for family offices?
Inflation, fear of recession and geopolitical uncertainty are the top-three economic concerns for family offices globally.
What are the top family concerns for family offices?
Preserving the value of their assets, preparing the next generation and managing transitions are top concerns for family offices globally.
How have family offices’ portfolios fared in 2022?
As a result of the market volatility and downturn that began in early 2022, 73% of family offices experienced a decline in overall portfolio mark-to-market values since the beginning of the year.
What key challenges are family offices expecting in the coming years?
Leadership successions at the family, family office or trustee levels are among the key transitions that the majority of respondents are expecting to face in the next five years.
Learn more about the survey results here:
2022 Family Office Survey Report | Citi Private Bank (citibank.com)