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FAMILY OFFICE TRENDS


“As second and third generations are assuming control of the family offices established by their parents and grandparents, significant structural and philosophical changes are being initiated”


new leadership has reinforced this by increasing the resources dedicated to managing the pooled family assets. Furthermore, services that were perceived as secondary or tertiary to the primary goal of investing have been sacrificed or outsourced. Some of the most pronounced changes include setting new organizational and investment objectives, and replacing long-standing employees and vendors. Between 85 per cent and 95 per cent of family offices report changing key personnel (executive director or chief investment officer) after transition; similar proportions report changing vendors (investment managers, accounting firms or consultants) after transition.


85-95%


PROPORTION OF FAMILY OFFICES THAT REPORT CHANGING KEY PERSONNEL (EXECUTIVE DIRECTOR OR CHIEF INVESTMENT OFFICER) AFTER TRANSITION; SIMILAR PROPORTIONS REPORT CHANGING VENDORS (INVESTMENT MANAGERS,


ACCOUNTING FIRMS OR CONSULTANTS) AFTER TRANSITION


Specialty family offices MFOs that specialize in a specific type of client are becoming the norm. For instance, as celebrity wealth hits an all-time-high, the by-products of compressed earning timeframes and byzantine payout schedules have helped to spotlight the financial issues facing many actors, musicians, writers, artists, models and other entertainers. One solution is the “celebrity family office,” a structure both experienced and equipped to deal with the challenges of fame and fortune. Examples of other specialty family offices include those that are dedicated to professional athletes, family-owned businesses and multigenerational philanthropy.


Leadership transitions As second and third generations are assuming


control of the family offices established by their parents and grandparents, significant structural and philosophical changes are being initiated to promote a more formal operating environment and greater efficiency. Investment management has long been the central focus of most family office structures, and


Outpost family offices As private wealth becomes a more global proposition, family offices must stay abreast of the cross-border affairs of their clients who have business interests, homes and investment holdings in more than one country. It’s customary to rely on a local expert to help navigate the maze of foreign currencies, languages and regulations, but those arrangements are becoming more formal as MFOs forge alliances that are mutually beneficial.


The advisory migration As competition for the attention and assets of the super- rich mounts, the MFO construct offers a more viable and client-focused platform for advisory professionals and firms in search of new business. Between 2004 and 2008, interest in the MFO business model increased steadily (see table). Most anticipate that a broader platform of capabilities and a higher-touch service model will allow for greater personalization that ultimately leads to stronger client satisfaction, higher profitability, greater competitiveness and more qualified referral prospects.


Hannah Shaw Grove is a speaker and consultant, and the author of ten books on private wealth and family offices, including The Family Office: Advising the Financial Elite and Inside the Family Office: Managing Fortunes of Exceptional Wealth.


FAMILY OFFICE: ASIA TOMORROW 39


THE FAMILY OFFICE


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