Some Common Questions about Family and Multi-Family Offices

January 8, 2022

Since the beginning of the 21st century, there has been a rapid increase in the number of Ultra High Net Worth (UHNW) families (more than $100 million in investable assets). A lot of this new wealth has been generated from technological innovations, but family wealth has also grown through real estate ownership and management, banking and investments, wholesale and retail activities, and sports and entertainment ventures.

To ensure this wealth will be transferred intact to the succeeding generations, wealthy individuals have turned to family offices.

Q - What is a family office?

As Colin Keddy who runs the Synergy Family Office in Ottawa says, “the cliché in the industry is ‘if you’ve seen one family office, you've seen one family office.’ No two family offices are the same.”

Generally, a family office is a private company that is created to provide any and all services that an extremely wealthy family requires to secure, manage and, where possible, increase its wealth while maintaining the overall well-being of the family.

Although various forms of family offices can be found throughout history, the concept of the dedicated family office emerged in the 19th and 20th centuries with ultra-wealthy families such as the DuPonts and the Rockefellers.

Q - What kinds of services do family offices provide?

Because the preservation of wealth is essential for both current family members and their heirs, many services provided by family offices are financial in nature such as:

  • investment advice and transactions (including commercial real estate, private equity, venture capital, and hedge fund activities)
  • tax and estate planning
  • risk management and insurance
  • financial counsel
  • day-to-day accounting and business management services (such as payroll and property management)

Another important objective is to create a permanent legacy for succeeding generations, so family offices also provide:

  • family governance and administration
  • succession planning
  • financial education
  • inter-generational wealth transfer
  • management of philanthropic foundations

For ultra-wealthy families, the most valuable commodity is time. To that end, the family office brings together into one place a whole range of professional and other concierge services such as:

  • legal affairs
  • travel management
  • procurement and real asset management
  • psychological services for family members
  • selection of educational facilities
  • management of inter-jurisdictional matters such as citizenship, immigration, residency, etc.
  • public relations and crisis management
  • privacy and security

Q – How does a family office differ from a bank wealth management service?

Unlike a bank wealth management organization that services many individuals, a family office is dedicated to the needs of a single-family. Also, a family office takes a much broader view of a family’s overall situation. As Colin Keddy asks, “When was the last time your financial advisor sat down with your lawyer, your banker, your accountant, your insurance agent, your property manager...? Do they even know each other?”

The family office takes a much more holistic approach, based as much on the family’s values, as on its assets. A family office can also provide a broader range of services than a banking institution which may be limited by its mandate or legislative restrictions.

Q – What is a Multi-Family Office?

“The idea of centralizing wealth management and ancillary services can be modified for families with less than $100 million”, says Colin Keddy. Keddy breaks family wealth down into three levels:

  • Ultra-High Net Worth (UHNW) ‒ $50 million-plus
  • Very High Net Worth (VHNW) ‒ $5-50 million
  • High Net Worth (HNW) ‒ $1-5 million

Keddy focuses on the $5-50 million (VHNW) segment. “Many of these families are still in the highest tax bracket (53%), but they are offered few of the services or opportunities that UHNW families can access.” Because the cost of running a dedicated family office can be expensive, Keddy says that there can be substantial savings when a number of VHNW families combine and use the services of a multi-family office.

Q – Would your family benefit from a family or multi-family office?

Many UHNW and VHNW families still do much of their wealth management and other family services internally. Transitioning to using outside dedicated services is a major decision.

To help with this decision, Keddy develops an Investment Policy Statement (IPS) for potential new families. The IPS is essentially a business plan that runs around 14-15 pages. The management of this business plan is then pulled together into a detailed written statement that includes such items as cash flow, costs, incomes, rents, etc. From this, a tax-based financial plan is developed that can range anywhere from 50 to 200 pages.

Once engaged, clients interact with the multi-family office as often as required—some weekly, some monthly, some annually, depending on their needs.

Q – Where do I go if I have further questions about family offices and their services?

A number of associations for family offices have emerged over the past few years. Their websites can provide additional information on the subject.

For specific questions, you may wish to Contact Us. Elite Accounting and Synergy Family Office already work closely with a number of clients and families.

Ian Sadinsky | Writer

Life. Beyond numbers.
This image has an empty alt attribute; its file name is twitter.pngThis image has an empty alt attribute; its file name is linked-in.pngThis image has an empty alt attribute; its file name is Insta.png
Colin Keddy | Contributor

Synergy Family Office

Published by Elite Accounting Inc.

© 2022 Elite Accounting

Attribution-NoDerivatives 4.0 International (CC BY-ND 4.0)

Back to the blog
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram