Increasing complexities for family offices and how to navigate them
Opinion 4 minute read

Increasing complexities for family offices and how to navigate them

15 May 2018

Recent years have seen an exponential growth in the creation of new billionaires and high-net-worth individuals as strong economies, new technologies, service innovations and product inventions spawn business empires around the world.

Regime changes in Russia and China have opened the countries to entrepreneurship and wealth generation for successful individuals. And traditional geographies for high net worth individuals, such as America, Europe, and the Middle East, are seeing second, third and even more generations of family wealth.

The younger the new billionaire, the greater the challenge to manage their wealth successfully for the benefit of current and future generations of the family. Using a family office to manage the financial and investment needs of themselves as an affluent individual or their family’s needs becomes an obvious solution. But in today’s data-driven environment, with issues over cyber security and the need for transparent financial compliance, family offices are increasingly turning to outsourcing providers such as TMF Group to provide a variety of support services.

In recent years, we have seen a lot of new wealth, and new family offices, on an increasingly global scale. And the amount of wealth generated by these individuals is so large that they begin to resemble corporate clients. Their needs are complex, international, and increasingly global – which is where TMF Group has a unique offering – global reach with local expertise. We have 126 offices in 83 countries, with the ability to reach 97% of the world’s GDP.

We can provide one touchpoint, no matter how many countries the family office has interests in. People don’t want to source multiple providers across borders and we can provide a global footprint of expertise to meet their needs – not just a fiduciary service but also front office, back office, and middle office with the full range of TMF group offerings, from accountancy and legal, to HR and payroll. This is much more cost-effective than a family office having to recruit internally to provide those services.

Data concerns

Families are increasingly concerned about control of data; who has access to the data and the necessary reporting of information. This is not about obscuring or hiding their activities - they recognise that transparency is necessary, but they want the comfort of knowing that data management is robust, minimising the number of intermediaries involved. A single provider across all the relevant geographies is an obvious asset to the business.

An increasing trend is establishing joint ventures between family offices – sharing investment strategies and maximising the potential of each other’s reputation. TMF Group has more than 30 years’ experience of working with family offices to create and implement solutions that provide for extended families, including the ability to manage multiple, complex cross-border assets. The Group’s network of offices across the world can navigate tax and regulatory issues compliantly; provide for estate and business succession planning; and facilitate investments.

Succession planning

A high net worth individual wants to protect the family wealth and be able to answer ‘yes’ to three key questions:

  • Will we have left a better future for our children?
  • Have we been able to give appropriate guidance to the next generation to find their path in life?
  • Will we be remembered fondly?

Philanthropy and reputation management are becoming increasingly important as the next generation looks at what impression they will leave behind, both in terms of the public perception of their business and their personal profile. Succession planning is crucial, and independent advice is invaluable.

Trustee independence

As trustees, we can play an important and strategic role. To first generation billionaires, trustees provide an element of guidance and support to the founder. For next generations, they become critically important with guidance on governance, estate management and succession planning. A neutral trustee acts as a diplomat, the sword and shield to protect the whole family.

The right support structure for the effective management of family wealth is crucial. Understanding the complexities of successful wealth management in today’s business, financial, regulatory environments should be the driving force behind any choice of business service provider to family office needs.

Talk to us

TMF Group has extensive and unique experience in providing family business wealth solutions. We can offer specialist support and services, with local knowledge and global reach.

Get in touch today to learn more about how our services can help you.

Find out more about we help our clients worldwide to maintain focus on what’s important to them.

Written by

Norson Harris

Former Director, Private Clients

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