For individuals and families of significant wealth, managing a substantial portfolio of assets and investments demands a sophisticated and comprehensive approach. From financial planning and asset management to legal and tax strategy, risk mitigation, and multi-generational legacy preservation, there are myriad intricate factors to navigate. This growing complexity has led many affluent individuals and families to establish private family offices—exclusive firms dedicated entirely to addressing the distinct challenges of significant wealth.
Family offices can take various structural forms. Sometimes, these offices evolve organically within a family-owned business over time to meet specific family needs. In other instances, they are established through a family-controlled holding company, often following a significant liquidity event or wealth transfer. Alternatively, they may be operated by a professional multi-family office firm, such as Whittier Trust, servicing the needs of multiple wealthy families collectively.
Regardless of their particular structure, family offices function as the private wealth management and advisory teams for ultra-high-net-worth individuals and families. Their primary goal is to centralize the comprehensive management and stewardship of substantial family assets. These offices offer a range of services, including investment management, estate planning, philanthropic guidance, tax planning, accounting/bookkeeping, real estate administration, and family business oversight. However, most tend to specialize in a few core areas based on the family's specific situation.
The evolution and particular needs of a family office can vary greatly depending on factors like whether the family operates an active business, their generational status, any significant past liquidity events, and the extent of their philanthropic goals. For families led by first-generation wealth creators, the office may concentrate operationally on accounting, bookkeeping, taxes, and growing the founder's assets. Transparency and outside advisory involvement can be more limited.
Families undergoing a liquidity event, such as selling a business or transferring to subsequent generations, often require more comprehensive services. This includes support with multi-generational wealth transition, estate and tax planning, family governance, and philanthropic engagement. Embracing change and collaborating with specialist advisors during this phase is key.
For families with an office spanning multiple generations after a full wealth transition, the focus may shift to maximizing core competencies like investments or charitable activities. These well-established offices rely heavily on robust governing protocols and targeted outside expertise. However, given the private nature of family offices, it can be difficult for them to find opportunities to share ideas and gain outside insight.
Defining family offices presents a challenge, as the industry's interpretation varies widely based on perspectives and context. As the saying goes, "If you've met one family office, you've met one family office." Each is uniquely tailored to individual client needs, current stage, and philosophies regarding legacy and wealth management. Understanding these nuances is crucial for affluent families assessing whether to establish a centralized family office or transition an existing one.
Families can face significant challenges when it comes to structuring a new family office, modifying an existing office, or winding down operations due to the retirement of key employees or shifts in priorities. The cost of setting up or maintaining a single-family office can start at $1.5 million annually and increase substantially from there. Additionally, the ability of a single-family office to adapt to rapidly changing landscapes in areas like cybersecurity, compliance, and technology efficiencies can be costly or difficult to implement effectively.
Partnering with a multi-family office like Whittier Trust can allow families to still look and feel independent while gaining enhanced benefits from leveraging an institutional-caliber platform. These firms provide families with seamless access to sophisticated resources, dedicated expertise across all wealth disciplines, and a permanent governance framework able to evolve with the family's needs over generations—all often with a significant decrease in overall operating cost.
Knowing when and where to partner with a firm that can provide scale, deep resources, and specialized implementation capabilities is vital for affluent families navigating critical family office decisions. By consulting seasoned multi-family office professionals well-versed in the entire lifecycle, families can gain invaluable guidance tailored specifically to their circumstances and long-term goals.
Written by Whit Bachelor, Senior Vice President, Client Advisor at Whittier Trust. Whit is based out of the Newport Beach Office .
Featured in the Las Vegas Review Journal. For more information about how Family Office services can bennefit your family, start a conversation with a Whittier Trust advisor today by visiting our contact page.
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