What is family office?
What is family office?
A family office is "designed to provide a full range of wealth management and family services for families of super-rich or ultra-high net worth clients, so that the long-term development of their assets meets family expectations and expectations, and their assets can be passed on smoothly across generations. And value-preserving and increasing institutions."
Origin of Family Office History
Origin of family office
The family office began in the 6th century, when the king’s butler was responsible for managing the royal family's wealth. Later, the nobles asked to participate, and the concept of management came into and continues till today. The modern family office was developed in the 19th century. In 1838, as financiers and art collectors, the JP Morgan family founded the Morgan Consortium to manage family assets. In 1882, the Rockefeller family established their own family office. The family office is still in operation today and provides services to other families. The family office covers various organizations and service forms for managing private wealth.
Core Services of Family Office
The family office can be a family company that gathers family wealth, or it can be a company that provides financial services to these customers while the family maintains the decision-maker or the EAM department of a private bank. Many family offices were originally single-family offices. In this case, the family is the owner of the office and enjoys its services exclusively. In order to avoid a single family bearing too high operating costs, these families usually decide to provide their family office services to other families. At this time, the single-family office becomes a multi-family office.
Personalized services of family offices
A single-family office provides personalized services to the family, and its cost is relatively high. The family wealth asset under management is usually at least US$100 million. However, the minimum value of wealth management calculated based on the expected return value and target, as well as the cost incurred by the family office, are more illustrative. This shows that for a family office, there is no obvious lower limit for the family wealth to be managed. The cost of the family office, and its target return value, must be achieved through the selected asset allocation and structure.
Benefits of Family Offices
As wealthy families see the benefits of setting up a family office, the family office is undoubtedly the fastest growing investment tool in the world today. Due to various definitions of the composition of family offices, it is difficult to estimate how many family offices there are. However, there are at least 3,000 single-family offices in the world, and at least half of them have been established in the past 15 years.
The increasing number of ultra high networth wealthy families and the process of globalization have contributed to the high growth of family offices. More importantly, in the next few years, family offices will achieve strong growth in emerging markets. Although these economies already have a large number of large family businesses, family offices basically has still plenty room to grow particulary in Singapore.
