Despite the growth in popularity of family offices, many families with multigenerational wealth still struggle with whether to create a family office at all. Is it needed? Does the family have the time and capacity to manage a family office? At what level of wealth does a family office make sense?
Define your goals
As with any significant endeavour, begin with the end in mind. What does the family hope to accomplish by establishing a family office? What are the goals for investments? Should there be goals related to next-generation education? How about philanthropic goals?
Additional issues to consider
• Architecture, governance, succession planning and education: With goals in place, explore how the family office would be governed. No off-the-shelf structure exists for a family office, precisely because there is no off-the-shelf set of goals for a family office.
- Complexity of life versus complexity of structure:With any major decision, and the creation of a family office ranks up there with big decisions, it is important to weigh the pros and cons. Compare the potential financial benefits against the complexity that could be added to your life
“Renting” versus “owning” family office resources: Family offices take many forms. They can be fully staffed, stand-alone operations where the family “owns” all aspects of the office. That can provide for more control and autonomy. It can also be a waste of resources. For example, if the family business is not large enough, it may not make sense for a single-family office to cater for the operation. It may be more practical to “rent” this function from an external firm. Here in Malta as in anywhere else in the world, family businesses vary in size and the decision to own versus rent resources will be purely based on the size/affordability factor.
(All factual and statistical information presented in this blog has been obtained from an extract of a blog from familybusinessmagazine.com ) Follow us on our Facebook page and Family Business Office website at www.familybusiness.org.mt
At the Family Business Office we can offer you assistance in dealing with family business succession planning issues through incentives supporting advisory and mediation services. Contact us today on firstname.lastname@example.org.