Wealth gives a person many opportunities but also no less responsibility. Effective management of riches requires expertise in many areas, including law, economics, finance, etc. The more wealth a family has, the more time it takes to draw up strategic plans, review regular reports, and manage assets. In situations of unstable economics, this becomes particularly challenging because the reaction must be rapid to mitigate any possible risks. This enormity of the tasks and responsibilities that high net worth families face impels them to look for experts. And as practice shows, family offices have become the most effective form of interaction with experts in various fields for wealthy families.

Wealth Management Advisory: Advantages of Family Office

There are many organizational solutions for obtaining the support of professionals in wealth management. At one extreme, there will be the hiring of individual experts on all emerging issues, and at the other — collaboration with the family office. Interim solutions in the form of wealth advisory firms are also possible. To understand why high net worth (HNW) families prefer such a comprehensive solution as family offices, you need to understand the value that they bring to the lives of wealthy families.

Type of wealth management advisory	Advantages	Disadvantages
Individual experts	Wide selection of expertsContacting only those specialists whose help is needed at the moment	Great risks associated with the involvement of a large number of diverse experts in family affairsNo teamworkLack of a coordinating center
Wealth advisory firms	Working solutions for managing finances and investmentsServing clients with different economic backgrounds	Low level of customization, desire to follow ready-made solutionsNarrow scope of advisory functionsLarge flow of clients
Family offices	Holistic approachA broad scope of advisory functionsWide professional team compositionSingle coordinating centerPlans tailored to the needs of each family memberFocus on serving only one or several HNW families	Higher cost of services

If a family chooses wealth advisory firms, many issues relevant to HNW families turn out to be beyond their competence. As a result, such a compromise solution forces families to hire additional firms or individual experts to relieve their pressures. At the same time, family offices offer comprehensive solutions that cover all the needs of wealthy families.

The Most Important Functions of a Family Office

Managing Family Finances

Family offices are involved in developing investment strategies, preparing financial statements, risk management, etc. They can offer both traditional investment methods and alternative investment opportunities. For example, high net worth family office Certuity is an expert in dynamic wealth management strategies. Therefore, you will be able to jointly develop comprehensive investment solutions that are focused not only on preserving wealth but also on increasing it in conditions of new emerging opportunities.

Family Governance

Family offices deal with numerous organizational issues that take much time and require careful consideration. It could be:

• Organization of trips, including selection and booking of hotels, tickets, etc.;
• Selection of educational programs for the younger generation and supervision of all issues related to education;
• Organization of receptions, parties, family celebrations, etc.

The specific range of tasks that a family office can handle depends on the composition of the family and the needs of each of its members.

Legacy Planning

The transition of wealth from older to younger generations requires special attention for many weighty reasons:

• Wise management of inheritance makes the family united and does not create conflicts.
• Timely legacy planning prepares family members to take on new roles and responsibilities in managing family wealth.
• The amount of tax you pay depends on which inheritance strategy you choose.

Philanthropy

Philanthropy is vital to wealthy families as it allows them to contribute to society both locally and globally. Thus, the Milken Institute Center for Strategic Philanthropy (CSP) estimates that 99% of all charitable gifts worldwide come from the wealthy 1%. 

For charity to bring maximum benefit, it is not enough to allocate some money from family income. It is necessary to be actively involved in charitable projects and lead and control them. Family offices effectively perform this function, which contributes to the implementation of the civic mission of a wealthy family and enhances its reputation in the community.

How a Family Office Ensures Prosperity for Rich Families

The key secret of family offices’ success is a holistic approach. It implies that it is impossible to achieve harmony and well-being without taking into account all the factors in any given situation:

• Financial opportunities require risk assessment.
• The distribution of wealth within the family should ensure the interests of everyone.
• Interaction with the local community should be based on the principles of cooperation, not confrontation.
• The desire to preserve wealth should not prevent its growth.

To find the perfect balance in any situation, it is important to have a team based on both professional knowledge and an awareness of the value of a cohesive and thriving family. Since the mission of a family office is to provide comprehensive assistance to wealthy families, it helps turn wealth into prosperity. Other wealth management advisory solutions don’t rise to this level because they focus on narrow investment and financial management issues.

Therefore, if you want to find a solution that will cover all areas of family life, the family office has no competitors. It has become a superior form of assistance to HNW families, which contributes to their prosperity in various senses.