Switzerland-based attorney-at-law Edgar Paltzer provides clients with legal advice on wealth structuring services. This article will look at family offices, exploring different aspects to consider when setting up a family office structure.
The role of the family office is to protect a family’s interests. Family offices are typically associated with families that generate their wealth via a business. However, they may also be suitable for families who do not own a shared business but require the help of dedicated experts to manage their wealth.
Where the estate does include a shared enterprise, the family office may provide family members with reassurance, irrespective of their interest level in the business itself. Family offices are responsible for ensuring the continued stewardship of the business while providing the next generation with direction.
As families build wealth, many turn to family offices to help them manage their complex financial needs, with the family office helping them to create a solid foundation for an orderly transfer of wealth and business succession.
When differences of opinion regarding the running of a shared business arise among family members, a family office may serve as a neutral arbiter, helping to ensure that the major decisions are taken in the best interests of the family.
Families considering setting up a family office must first identify the most appropriate service level for them. A single-family office focuses on the needs of one family, often providing services that go beyond financial management. For a simple operation providing wealth planning and estate services, one or two employees may be sufficient.
The starting point for a family office is usually an investment manager. In essence, this is someone dedicated to protecting the family’s wealth. Another key role is the concierge, or all-purpose family assistant, who ensures that the wishes of the family are followed in respect of the enterprise. In a smaller family office, the concierge may perform several functions, including tasks such as organising international travel arrangements, etc.
Large family offices are more appropriate for multi-generational, high-net-worth families and typically include an accounting department, legal professionals and trustees to take care of different generations of the family.
A family office can be an effective means of developing a family’s human capital and preparing the next generation of stewards, whether they intend to play a role in the shared business or not. Getting involved in the family office enables descendants to learn the ropes, gain experience in finance and become involved in the family’s wealth.