variant. Whilst multi-family offices exist to serve the needs of the service provider and their various product lines, single family office exist to serve the family and only the family. Total independence, loyalty, discretion and the delivery of a bespoke high end service are at the core of what single family offices are all about.
And family offices are bespoke. Yes, there will be common themes that arise in terms of the structuring of the services within them, whether that be accounting, legal, investment management, lifestyle concierge or tax. They will generally be structured like proper businesses with departments, policies, procedures and reporting lines, but no two family offices are the same because no two families are the same. In fact, even branches of the same family can have totally different needs.
Family offices evolve with the family and their different generations. So do the services they need to offer if they are to justify their cost. One certainty is that putting together an infrastructure of decent professionals and taking them out of industry is not a cheap thing to do. They have to add value collectively to the family, deliver economies of scale and service levels that exceed those of the standard fiduciary, banking, legal and accounting businesses. Another key difference that separates family offices from the traditional service providers is that family offices are very cautious about who they hire and they expect their advisors to stay around for a long time. They expect them to really understand the family needs and the dynamics within the family that comes with a long standing relationship of trust. The kind of understanding that would be lost by a continual turn-over of staff, mergers, re-brands, changes of ownership and direction.
Continuing to look through the smoke and mirrors, economies of scale are another area where it is difficult to see where a multi-family office managed by a fiduciary business can offer much that is distinct to their mainline business. It cannot offer pooling of assets, entering into joint enterprises, better investment management fees or better rates for third party professionals than that which can be attained in the main business.
So, assuming for a moment that there is something genuinely different about institutional multi-family offices, the only thing left is the people who will provide the services. Are the people in the family office division
any more qualified than those in the main line business? Do they have particular skills that are only relevant to a family? Do you get more in terms of total number of professionals looking after your affairs in the family office division than you would in the mainstream? Our marketing friends have done a good job at answering these questions for us. Generic literature and information on websites about mainstream service lines tend to assure you of excellent service, a high calibre of wealth professionals who will look after your affairs and all of this is focused on your individual needs. Sound familiar? When a teenager buys their first car they might modify it a bit by putting on some sparkling wheels, the odd sticker, maybe a dustbin exhaust and some flashy lights. It may be ‘packaged’ or ‘branded’ differently but under the surface, it is still the same car that they started with.
At the coolest nightclubs it does not matter what you wear or how you look. If your name is not on the list, you are not going to get in. Next time you hear the words ‘family office’ in a marketing pitch wave your magic wand and say ‘abracadabra’.
20/20 Finance & Investment Page 81
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