Family Office SG
Main Concerns about setting up a family office
Creating a Family Office is a huge task, and there are also cases where the family office fails to meet the expectations of the family.
Some potential concerns about establishing a family office include:
Expenses
Cost is a content that every family must understand. The cost of supervision and compliance reporting will remain high, which means that the amount of assets under the management of the family office needs to be large enough to offset these fixed costs.
Market, legal and tax infrastructure
If the family office operates in a central area with a mature market, legal and tax structure, its functions will be better utilized.
Multi Family Office Service
In order to solve the problem of high operating costs of family offices, multiple families usually set up a multifamily office (multifamily offices, MFOs), that is, several families centrally manage their wealth. These multi-family offices are usually led by the originating family. In a multi-family office, all assets are placed under one umbrella. However, in general, multi-family offices serve multiple families with different family sizes, wealth, and maturity. This means that this model may have such a risk that compared to the one-to-one proprietary services provided by a single family office, individual families may not be able to obtain personalized advice consistent with their level under the alliance family office model.
Treating some potential positive aspects as negative.
When considering the establishment of a family office, some people regard some potential positives as negatives. This tendency is particularly common in the following areas
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Dedication to privacy
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Some families may hesitate to integrate wealth information into a centralized family office structure
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Trust in EAM of external asset managers
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The establishment of a family office often depends on the family’s trust and acceptance of the external asset manager EAM. However, trust usually comes from a long-term cooperative relationship with external asset managers
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Expectation of return
In the final analysis, the family office must be able to achieve wealth preservation is the long-term solution. In recent years, the difficulties in obtaining market returns have made this not so easy. In addition, in the process of intergenerational inheritance, family offices often face devastating tests, because the next generation strives to pursue different goals and results in managing family wealth.
