Finding your purpose through the Family Office

Family Offices is a relatively new term – and structure – that was barely heard of in Australia until this century.

The first Family Offices were established in the U.S., in the 19^th century, by some of the country’s wealthiest industrialists. Dissatisfied by the limited offerings of banks and brokerages, wealthy magnates such as J.P. Morgan and the Rockefellers chose to assemble their own teams of experts to oversee their finances.

What was once easy to manage quickly became a full-time job. Traditionally, wealthy families brought in a trusted advisor – often the family lawyer or accountant, or perhaps a banker or investment manager – to help them manage and coordinate the various components of their family and financial lives. Whether it was investment advice, trusts, tax planning, family education, wealth transition or financial administration – as the workload grew, more expertise was needed to look after the families interests.

The Family Office was born.

In the 21^st century, Family Offices have come into their own. As families become wealthier through business and investment growth, their affairs often become more complex and required dedicated management.

Prior to the 1980s, single Family Offices were primarily focused on investment advisory with little participation in tax planning, estate planning, philanthropy, succession planning and so on. However, they have evolved into more sophisticated entities, shifting specialised resources in-house and offering a more comprehensive and integrated suite of services.

Investment management is still the most important function of most Family Offices – but established, fully developed single Family Offices generally offer a lot more.

Wealth, when well managed, creates its own momentum. This drive has encouraged more wealthy Australian families to manage their wealth as a ‘business’.

Many now do so through a Family Office.

What’s more, Family Offices are now more accessible than ever before. In the past, at least $200 million in investable assets was needed to establish a Family Office. Whereas today, a Family Office can be created with $10 million or more in investable assets.

What’s changed? Better technology means more automated processes, as well increases in the number of advisers, mentors, brokers and other experts who can help support the sector.

A well-structured single Family Office will oversee myriad items such as legal, tax and structuring services, profit improvement, cashflow planning, property transactions, governance and more.

But the modern Family Office isn’t just focused on wealth creation. With society’s changing expectations, wealth and what it means to be wealthy, is also changing.

Having a ‘purpose’ and ensuring good citizenship is more essential than ever. It provides clarity and unity around what the family will own, why they own it, where they’re taking it and how they’re building it. It also helps wealthy families collaborate better and improve engagement. To work, the family’s purpose needs to be embraced by the entire family and everyone involved in the Family Office.

Succession planning and philanthropic services also connect to your family’s purpose. Just like families plan for wealth transitions, the Family Office requires a well-thought-out philanthropic strategy and succession plan.

Having these plans in place helps maintain one of the most important things in any Family Office: healthy and productive family relationships.