In an article taken from our Guide to Family Offices [download here], Executive Director, Richard Joynt shines a spotlight on the reasons why the diverse array of businesses falling under the umbrella of 'family office' have surged in recent years.
Over the last 20 years or so, the nature and role of family offices has significantly evolved. With estimates from Campden Research suggesting there were 7,300 single family offices worldwide in 2019, up 38% from 2017, the family office has become a common way for families to organise their financial and administrative affairs.
<>The rise of the family office professional
Traditionally, the majority of wealthy client families delegated the management of their financial assets to investment managers. However, as target returns from such managers have fallen (especially in light of the prolonged low-income environment experienced since 2008's Global Financial Crisis) this appears to be a less appealing option and clients are left wondering if they can do better themselves, with family office executives managing the financial assets and reporting directly to family members. This also coincides with clients becoming more concerned about the security of information. Clients are showing an increasing interest in maintaining all data in one place and having far greater control; this can give them greater peace of mind.
There are other factors at work however. In order for clients to source good family office executives, the availability and willingness of professionals to move from traditional careers in financial services needs to be present. As private client wealth services is quite a mature sector in Europe, such high quality professionals do exist, and there is a growing pool of such individuals who are seeking a non-traditional career path. A family office can provide them with employment working directly for a client family, making them accountable for just one relationship. However, career progression and development routes are not so obvious once in a family office environment, meaning that due care and attention needs to be given to motivate and reward such individuals. Alternatively, if clients want to avoid the hassle of employing a dedicated individual, they can use a specialist family office provider such as Ocorian.
All family offices are unique, yet the operational aspect of them is becoming ever more distinct. Set up to meet the demands of a specific client family, wealth professionals' traditional ways of operating are being challenged by client demands for increased visibility and control of their affairs. As a result, we need to foster open and honest communication channels to deliver the bespoke services they request for the entirety of the family office's life cycle. Intricately tailored services well served by advisers and service providers alike put you in the very best position to retain a client for years to come.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.