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Ultra-rich protect wealth with spread of 'family offices'

20 March 2017

Ultra-rich protect wealth with spread of 'family offices'

According to the BBC on the 16th March 2017, the use of family offices is spreading. This refers to the employment of teams of professionals, such as lawyers, financiers and psychologists to ensure the maintenance, protection and enhancement of "dynastic wealth" by the super-rich.

These teams of specialists are employed full-time to protect the interests of their "elite family” employers; supporting the way of life of these "global super-rich".

The concept of the family office has grown and developed alongside the increasing concentrations of the ultra-rich in cities such as London, Geneva and New York.  Families have moved on a step from buying in specialist advisers to contracting directly with full-time professional staff, which could include investment experts, property advisers, economists, trust fund advisers and lawyers.  These individuals then specialise and work with and for either a single family, or a small group of select families; in the same way that a corporation might have its own dedicated staff.

A US report from 2010 that found that 50 of the wealthiest such family offices were looking after $500bn (£407bn).  The use of a private family office is seen by wealthy families as preferable to buying in external advice from bankers and financiers who might have their own agendas and targets to meet.  By employing and contracting direct with these specialises a family is keeping sensitive information and investment activity private and in-house.

The role of the family office goes far beyond that of private bankers; they are about creating dynasties, ensuring the smooth l transfers of wealth between generations, as well as maximising financial interests and investments.  Indeed, such family offices can and will look after every aspect of the private lives of their employers.  Everything from buying clothes and organising holidays to arranging divorces and making financial arrangements to prevent money being lost to in-laws.

According to the BBC, for an individual family to have a family office, they would need to be worth at least £200m and probably much more, however there are many cases of "multi-family offices", where families worth from £80m upwards share the services of such professionals.

These family offices "play a crucial role" in how advantages are handed on between generations, with full-time staff able to make long-term, strategic planning. 

For more information about establishing a family office structure or using our Multi-family office services please Frederick Deacon or Kiran Patel 

 

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