Brief history of the family office
A family office is a private wealth management advisory firm that serves ultra-high-net-worth individuals (HNWI). The concept of the family office can be traced back to the days when baby boomers – those born in the years immediately following the Second World War – began to accumulate their wealth.
Over time, baby boomers went from being considered “beatnik rebels,” in their youth, to lawyers, bankers, politicians, and business owners. For the record, I am at the very tail end of that generation.
Boomers channeled their considerable energy – that, in the 1960s, had originally been directed toward the intransigence of the “establishment” – into a focus on their careers, and eventually reaped the rewards. In the process, they built up substantial wealth, setting the stage for the largest inter-generational wealth transition in history.
By and large, these folks are very astute, and used to getting their way, even if it doesn’t exist at the moment. It’s a classic case of envisioning and executing. They weren’t content with the accepted norms or status quo. Their approach was disruption.
Today, we are seeing the results of this focus and disruption. Many boomers are wealthy, they are fit, they are living longer and healthier lives. In the process, they want to make their money work for them, as well as enjoying the fruits of their labours without the hassles of daily management.
In the domain of the extraordinarily wealthy of bygone times, there was always a key advisor behind the scenes. This person was the one who acted on behalf of the family, and kept everything running like a well-oiled machine – from ensuring the mansion on the Riviera was ready for the weekend visit, to coordinating the flow of funds to the right accounts. His or her list of contacts was like an encyclopaedia of who’s who in specialized services.
The family office of today
Fast forward to modern times, and the mass market response to the fickle, but flush boomers was to re-create this key advisor in the form of a centralized suite of services for these families, coining the term “family office.” The concept was to bring all the services required by sophisticated and wealthy clients into a one-stop solution for all their needs.
These family offices would not only act for one wealthy family but would often take on several and create a stable of clients to access their in-house suite of services. And so was conceived the multi-family office.
What tends to happen with a multi-family office though, is that the family ends up with a watered-down version of what they initially wanted – specialized services focusing on their specific needs. Instead of getting a box of high-quality specialized tools, they got the multi-tool. It looked and sounded good, but like a multi-tool, you got some things you didn’t need, and the things you did need weren’t what you hoped for.
Specialists know their realm exceedingly well. They create their own domain from which to operate at maximum efficiency. They interact with other specialized teams that complement their area of specialty. They are rarely found in a watered-down team. They stand alone, and people seek them out.
So, what these wealthy families are really looking for is a team of specialists, a team of the best in their respective fields. This team will act in response to the complexity of the family, expanding to include more complex situations, or contracting as the situation dictates. The family only pays for what they need, and the services are tailored, specifically focused on their requirements. The team leader, or quarterback, is often independent and enlists the services of these teams as required. He or she is the current incarnation of the invisible advisor of bygone times, and the team of specialists are his or her resources.
Our family office approach
Over the years, I have been a part of the evolution of wealth management and have connected with many specialists who are the best in their respective fields. I have developed my own team of specialists across the realms of investment management, banking (personal and business), trusts, tax planning, succession planning, wills and estate planning, and much more, all while positioning myself as the team leader, or quarterback.
My team of specialists understands the complexities that come with family wealth, and more importantly, convey their knowledge in specialized advice and execute on behalf of the family. This very often means planning to ensure the family legacy endures through life’s transitions, and across generations.
Which leads us back to dealing with the boomers. This generation of mavericks is now contending with passing a portion of their considerable wealth to the next generation – who are no less mavericks than themselves. Older generations rarely “get” the younger folks who follow them, and this transition is no different. The Gen 2 ethic, style and approach is entirely different, though Gen 2 has also shown its own capacity to envision and create ideas and wealth in its own form.
The time-honoured role of the family advisor is to also think beyond current needs. It is to anticipate and plan for eventualities. The role is to understand the nature and responsibility of wealth, and to help educate the next generation to be prepared for it.
My task is to be there for the family, and very often my team and I become a part of the family. It’s what my team of specialists does. It’s who we are.
If you, or someone you know, would like to learn more about the planning services that my team of specialists and I offer, please feel free to contact us.
