Things to Consider before Setting up Family Office for Wealth Management

As high-net-worth families accumulate wealth over a period of time, it is advisable to consult with a wealth management firm that can help them to their manage wealth. There are two kinds of family offices that they can set up to assist them with wealth management. They can choose to set up single-family offices or work with a multi-family office. Single-family offices have a dedicated team of wealth managers that looks after the assets and investments of the family. They will be able to provide the clients with a financial strategy that is in alignment with the financial goals and objectives of the client. A family office caters to the management of the finances of a single family. They are focused on the governance and management of assets and investments of the high-net-worth family. 

 

A multi-family office has a team of wealth managers that look after the finances of more than one family at a time. The team of wealth management professionals will be responsible for mapping out the investment strategy for these high-net-worth families. Wealth managers can help them to manage their finances by giving them constructive advice on tax planning, portfolio diversification, estate planning, etc. There are a few things that need to be considered when setting up multi-family offices or family offices. Here are some of the best practices for selecting a multi-family office, with tips and considerations for ultra-high-net-worth & high-net-worth families looking to outsource their wealth management.

 

1.     Clearly define the family's financial goals and needs

 

Before you start researching wealth management companies that offer family office services in India, take the time to clearly define your family's financial goals and needs. This includes assessing your current financial situation, identifying long-term objectives (such as estate planning and philanthropy), and determining the level of involvement you want in the wealth management process. Once there is a clear understanding of the family's unique situation, you can start looking for multi-family offices (MFOs) that offer services that align with your needs.

 

2.     Assess the services offered for family offices and multi-family offices

 

Once you've narrowed down your list of potential wealth management companies, it's time to assess the service that they are providing. Look for firms that offer a comprehensive suite of services, including investment management, estate planning, tax planning, and philanthropic services for multi-family offices. It's also important to consider the level of customization that the wealth management firm offers especially for multi-family offices. In addition to these, consider the firm’s investment philosophy and approach. You need to consider if they offer a range of investment strategies, including alternative investments and direct investments, or offer to invest in traditional asset classes like stocks and bonds. Make sure their approach aligns with your family's investment goals and risk tolerance as well.

 

 

3.     Evaluate the wealth management firm’s team and resources for family offices

 

The team of wealth managers that is assigned to your family office will prove to be critical in the successful management of your family's wealth. Look for firms with experienced professionals, including investment managers, tax and estate planning experts, and client service specialists. Consider the level of education, certification, and experience of the team members, as well as their track record of success. It's also important to evaluate the resources that they are using, including technology, research, and access to specialized expertise. You also need to consider the relationships the team of wealth managers has with specialized experts, such as art advisors or real estate professionals, so that they can provide you with additional support.

 

4.     Consider the fees and compensation structure

 

Finally, it's important to consider the fees and compensation structure that the wealth management company offers for family offices as well as for multi-family offices. Multi-family offices typically charge a fee based on a percentage of assets under management (AUM), which can vary depending on the level of services provided. Make sure you understand the fee structure, including any additional charges that you will need to pay.

 

High-net-worth families can consult with wealth management firms that can assist them to manage their assets and investments. Financial management firms offer family office services in India to ultra-high-net-worth and high-net-worth families. However, you need to have a definite understanding of your family's financial goals and requirements before taking assistance from a wealth management firm. This will help you to know if you want to set up a single-family or multi-family office. 

 

If you want a team of wealth managers that are focused just on your family’s financial assets you can set up a single-family office. The wealth managers for these kinds of family offices are responsible for tax planning, investment advisory, and estate planning for the assigned family. But setting up this type of family office can be expensive. If you are looking for a more economical option, you can go for multi-family offices. You will be able to get financial advisory services and assistance with lower fees and compensation charges. 

 

Getting assistance from wealth management firms with the governance and management of your assets becomes crucial for ultra-high-net-worth & high-net-worth families as they accumulate wealth over some time. These financial management firms can help them to grow their wealth and plan their retirement as well. Taking assistance from wealth management firms can help individuals and families have peace of mind as they won’t have to worry about their finances or keep researching to know the best investment opportunities available to them.