Family Office Essay

926 Words2 Pages

Whilst setting up a family office can be a beneficial business adventure, the establishment of one is a big undertaking. Not all family offices become successful and you need to carefully consider the concerns surrounding the setting up a family office.

Cost

Due to the nature of a family office, with the regulatory and compliance reporting, costs of setting up a family office are high. Finding families, wealthy enough to meet these costs, can be difficult.

You should also note that the costs of running a family office have been increasing in the past few years. The Global Family Office Report 2015 found that costs have increased by seven basis points from the previous year, driven by family offices increased willingness to restructure and …show more content…

Some decide to outsource certain services, especially if the family office doesn’t meet the requirements of the specific task. For example, outsourcing educational training can be a cost effective option.

Legal and tax infrastructure is complicated

There are also other things to consider outside of pure costs. Setting up a family office is surrounded by a relatively complex legal and tax infrastructure. Finding the right structure for the company can therefore be difficult.

Although the legal structure of a family office is relatively flexible, you must consider a broad range of issues beforehand. The key issues you should consider before setting up a family office include:

• Selecting the right entity type – the entities part of the family office can be a company, partnership or a trust, with a combination of entity types available as well.
• Choosing the right funding structure – the family office can fund itself either through a fee structure, which can change from individual members to a collective …show more content…

Essentially, there are three questions to help determine your possible success in setting up a family office:

• Do I have enough expertise to satisfy my clients? As the services lists shows you, wealthy families are looking for comprehensive manager and advisor. In order to attract interest to your family office, you need to be able to highlight your expertise in a range of things. Furthermore, you need to offer something different to the countless other wealth management firms in order to attract clients and convince them to work with you.

• Do I have enough connections to get started? As mentioned above, competition for clients in the industry is tough. Since you are essentially asking a wealthy family to trust you with their money, you need a strong network of people who already trust you and know about your capabilities.

• Do I have enough money? Setting up a family business requires quite a bit of wealth. You also need to be able to comply with the legal requirements in order to start your

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