Family office
From Wikipedia, the free encyclopedia
A family office is a private company that manages investments and trusts for a single wealthy family.[1] The company's financial capital is the family's own wealth, often accumulated over many family generations. Traditional family offices provide personal services such as managing household staff and making travel arrangements. Other services typically handled by the traditional family office include property management, day-to-day accounting and payroll activities, and management of legal affairs. A family office can cost over $1 million to operate, so the family's net worth usually exceeds $500 million. Recently, some family offices have accepted non-family members.[2]
The first noteworthy family offices in the United States were formed during the late 19th and early 20th century as a result of the tremendous wealth created during the Industrial Revolution. Four of the most well known of these are the Robert Pitcairn, John D. Rockefeller, Henry Phipps and Andrew Carnegie families, who made their fortunes in railroads, glass, oil, and steel, respectively.
More recently the term "family office" or multi family office is used to refer primarily to financial services for relatively wealthy families.[3]
[edit] Traditional and modern usage
A traditional family office is a business run by and for a single family. Its sole function is to centralize the management of a significant family fortune. Typically, these organizations employ staff to manage investments, taxes, philanthropic giving, trusts, and legal matters. The purpose the family office is to effectively transfer established wealth across generations.
Sometimes (but less often these days), the family office is not a separate company. The family office invests the family's money, manages all of the family's assets, and disburses payments to family members as required. The office itself either is, or operates just like, a corporation (often, a limited liability company, or LLC), with a president, CFO, CIO, etc. and a support staff. The officers are compensated as per an arrangement with the family, usually with overrides based on the profits or capital gains generated by the office. Often, family offices are built around direct (like real estate) or indirect (like equity investments or funds), professionally managing a large portfolio of real estate or securities, often both. In addition, a more aggressive and well-capitalized office may be engaged in private equity placement, venture capital opportunities, and real estate development.
A good example of such an investment office can be found with firms such Fidequity Group of Companies or Guggenheim Partners.
[edit] Notes and references
- ^ Douglas, Craig M.; Todd Wollack (2007-06-08). Case highlights family office risk. Boston Business Journal. Retrieved on 2007-06-27.
- ^ Frank, Robert (2004-06-10). "How to Bank Like a Billionaire". The Wall Street Journal. Dow Jones.
- ^ Wakem, Maria (2005-03-22). Family Matters. wallstreetandtech.com. Retrieved on 2007-06-27.
[edit] See also
For a more comprehensive coverage of Family Wealth, Family Offices, Private Wealth Management and Ultra High Net Worth Individuals (UHNWI) see the Doctoral study at the Swiss Banking Institute of the University of Zurich by Dr. Steen Ehlern: "Global Private Wealth Management: An international study on Private Wealth Management and Family Office Services for Ultra-High Net Worth Individuals", London, 2007.
