Setting up a Family Office
Barbara R Hauser, Keith Drewery
Published: 2020
Pages: 80
eBook: 9781787423206
This Special Report provides a practical guide to the main factors to consider when setting up a family office and helps families and their advisers navigate a path through the wide range of family office models in use today.
In addition to a brief history of family offices and their evolution, the report covers how families can be encouraged to spend quality time thinking about their needs and aspirations – as well as their relationship to the family wealth – and explores how advisers can work alongside families most effectively. Written in an engaging, accessible style Setting Up a Family Office looks at who can benefit most from a family office and walks the reader through each key step in the process, including:
•how to hire;
•where to locate;
•what structure to use;
•how to ensure privacy and loyalty; and
•the evolution of the office and the family.
This report makes essential reading for anyone considering setting up a family office including advisers working alongside families on these key issues.
Authors Barbara Hauser and Keith Drewery have decades of practical experience working with family offices, in all stages, and in many countries.
Table of Contents
| Cover | Cover | |
|---|---|---|
| Halftitle Page | 1 | |
| Copyright Page | 2 | |
| Table of Contents | 3 | |
| I. Introduction | 7 | |
| 1. What is a family office? | 7 | |
| 2. The increasing popularity of the family office | 9 | |
| II. How to use this Special Report | 11 | |
| III. Should I have a family office? | 13 | |
| 1. Structure | 14 | |
| 2. Key questions | 14 | |
| 2.1 What does being wealthy mean to me and my family? | 14 | |
| 2.2 What aspirations do I have for my children? | 15 | |
| 2.3 What legacy would I like to leave behind? | 15 | |
| 2.4 How close would I like my family to be in 20 years’ time? | 15 | |
| 3. Alternatives to an SFO | 17 | |
| 3.1 Join a multi-family office | 17 | |
| 3.2 Become a client of an institution’s family office practice | 17 | |
| 3.3 Form a virtual family office | 17 | |
| 3.4 Form a ‘hybrid’ | 18 | |
| 3.5 Partner with a multi-family office | 18 | |
| 4. The need for a family office | 18 | |
| 5. It’s not all about assets | 21 | |
| 6. The benefits of having a family office | 22 | |
| IV. Preliminary matters | 25 | |
| 1. The nature of the capital to be managed | 26 | |
| 2. The purpose of your family office | 27 | |
| 3. The scope of the family office | 29 | |
| 4. Will the family play a role? | 29 | |
| V. Starting the process | 33 | |
| 1. The priorities | 33 | |
| 1.1 Short term (first three months) | 34 | |
| 1.2 Medium term (twelve to eighteen months) | 35 | |
| 1.3 Long term (continuing obligations) | 36 | |
| VI. What will the family office look like? | 37 | |
| 1. Services | 38 | |
| 2. Location | 38 | |
| 3. Name | 38 | |
| VII. What will the family office do? | 39 | |
| 1. To build or to buy? | 39 | |
| 2. Investment management and oversight | 40 | |
| 3. Cash flow management and projections | 40 | |
| 4. Consolidated financial reports | 40 | |
| 5. Budget preparation, for all family members | 41 | |
| 6. Bank financing | 41 | |
| 7. Residences management | 41 | |
| 8. Yacht and aircraft management | 41 | |
| 9. Art collection management | 42 | |
| 10. Risk management procedures and policies | 42 | |
| 10.1 Health and life insurance | 42 | |
| 10.2 Personal security, including kidnap and ransom coverage | 42 | |
| 10.3 Reputational risk and social media policies | 42 | |
| 11. Coordination of estate planning and life insurance | 42 | |
| 12. Bill-paying | 43 | |
| 13. Reporting and compliance | 43 | |
| 14. Hiring, overseeing and firing | 44 | |
| 14.1 Household staff | 44 | |
| 14.2 Other staff | 44 | |
| 15. Record-keeping | 44 | |
| 16. Tax returns and projections | 44 | |
| 17. Trust oversight | 44 | |
| 18. Philanthropy | 45 | |
| 19. Family education | 45 | |
| 20. Family meetings | 46 | |
| 21. Lifestyle and concierge services | 46 | |
| VIII. Location | 49 | |
| IX. Staffing | 51 | |
| 1. Recruitment | 51 | |
| 2. Remuneration | 53 | |
| X. Cost of running the family office | 55 | |
| 1. Start small | 57 | |
| 2. Benchmarking the costs | 57 | |
| 3. Family member funding – service costs versus contributions to corpus | 58 | |
| 4. Outsourced investment management | 59 | |
| XI. Managing risk | 61 | |
| 1. Fiduciary liability | 64 | |
| 2. Kidnap risk protection | 64 | |
| 3. Health and wellbeing | 64 | |
| XII. Infrastructure | 65 | |
| XIII. Governance | 69 | |
| 1. Board of directors | 70 | |
| 2. Committees | 70 | |
| 3. Family council | 71 | |
| 4. Reporting to the family | 71 | |
| XIV. The life cycle of a family office | 73 | |
| Notes | 75 | |
| Additional resources | 76 | |
| About the authors | 78 | |
| About Globe Law and Business | 80 |
This report is extremely apt and valuable in raising key questions to assist those considering setting up an SFO in particular, as well as those advising families in this connection. Moreover, it includes various useful additional resources and links that are helpfully set out at the end. In view of the trend in favour of the use of a family office in today’s economic circumstances in many parts of the world, there is no doubt that the accessible style enables the reader to grasp not only the challenges but also key solutions that are available.
Linda Spedding
Barbara R Hauser
Independent family adviser
[email protected]
Barbara Hauser has extensive experience advising families, family businesses and family offices, first as a private client lawyer and later with a focus on governance. She has helped families to develop their unique governance process, which may include a family constitution, a family council and a holding company board. She is a sought-after speaker and prolific writer, and is often referred to as a true thought leader in the family office field. Her books include International Family Governance, International Estate Planning, Trusts in Prime Jurisdictions (advisory editor), Family Offices Handbook (chapter entitled “Mommy, are we Rich?”); Talking to Children about Family Money (co-author); Never Ask Where You Are; Saudi-Girl Barbara; and Selling Dog Food in Japan. Articles include “The Family Office: Insights into Their Development in the US, A Proposed Prototype and Advice for Adaptation in Other Countries”, “Family Office Trends: Lessons from Dubai?” and “The Family Office Landscape: Today’s Trends & Five Predictions for the Family Office of Tomorrow” (with Kirby Rosplock). Barbara is also the editor of Globe Law and Business’s International Family Offices Journal and is listed in the Spears 500.
Keith Drewery
Director, Drewery Consulting
[email protected]
Keith Drewery has provided advice to private clients and their families for over thirty years. He began his career in London, emigrating to Sydney in 1994 and working for KPMG as a tax adviser. He then joined Perpetual Limited, working in national roles before becoming regional manager of its private client business.
In 2006, he opened the Sydney office of the Myer Family Office, at the time Australia’s leading multi-family office, where he worked to develop the business in the Sydney marketplace. In 2012 he rejoined KPMG before starting his own consultancy practice.
Latterly his work has concentrated on consulting to wealth owners, family offices and professional services firms, with a focus on intergenerational wealth management services including succession and legacy development through philanthropy. Keith lives in Sydney and is married with three daughters.