Are You Ready to Start a Family Office?

Depending on who you ask, the term, “family office”, can have a broad range of meanings, but the bottom line is this: many families with substantial wealth require a dedicated team of advisors to help manage their complex planning needs. And while family offices can be as unique and different as the families themselves, the concept of pooling resources and hiring a coordinated management team is one that makes sense for a variety of wealthy families.

Ready to start a family office

Is it time for your family to take this step? Here are four questions to consider:

1. Is a large windfall in your family’s present or future?

While a family office often manages wealth that has been built over several generations, it may not be necessary until there is an event that creates a windfall or frees up financial capital for the family.

Consider the example of a family-owned business that has been managed by multiple generations and has continued to grow throughout the years. Though the family members that own the business may be very wealthy, a significant portion of their wealth is still tied up in the business. The family members work together to manage the business (which is, in effect, the same as managing their wealth), and they also hire advisors and professionals to assist with the responsibility. The family may not literally operate the business out of an office building, but in a very real sense, it is their “family office.”

Now, imagine that the family sells the business. With the sale, the nature of the family’s wealth will change drastically from business assets to financial assets. While managing financial assets may be very different from running a business, the family’s goal remains the same: to work together with a team of advisors and professionals to manage their wealth. That’s where a family office can come into play.

2. Does your family require coordinated planning across multiple generations or family units?

One very common characteristic of a family office is that it often involves multiple generations or family units that must work together to manage a shared set of goals and financial resources.

Wealthy families often have a litany of trusts, partnerships, foundations and other entities that can affect multiple family members’ financial lives. A family office can bring a more formal structure to the way in which family members work together to manage these entities and can cut down on duplication of effort. This structure can also help alleviate interfamily and intergenerational strife (more on this in a moment).

3. Are you running short on time?

The responsibility of overseeing a high-net-worth family’s financial affairs can be just as demanding as running a business. If you feel that the management of your family’s finances is becoming a full-time job, it may be time to consider starting a family office.

4. Has your family’s level of wealth led to concerns about stewardship and family governance?

Wealth can be a wonderful thing — it can empower individuals and families to chase their dreams, make a positive impact on their communities, and live happy and fulfilling lives. But if it is not managed properly, wealth can also be a curse — it has the potential to drive families apart, stifle motivation and self-esteem, and enable self-destructive behaviors.

The most important role of a family office is to educate and unite family members with a shared sense of purpose and values. A family office can be an incredibly powerful tool to prepare current and future generations to be better stewards of the family’s wealth, and to teach them the responsibilities, expectations and risks that come along with access to that wealth.

An effective family office also acts as a channel for open and honest conversations among family members, and can bring families together with a governance structure that minimizes conflict and promotes accountability. Put simply, a family office should maximize the positive impact that wealth has on a family for generations to come.

So, did you answer “yes” to any of these questions? Think a family office is the right fit for your family’s situation? Find out how our advisory team can help you navigate the process and position your family for future success.

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Hewins Financial Advisors, LLC d/b/a Wipfli Hewins Investment Advisors, LLC (“Hewins”) is an investment advisor registered with the U.S. Securities and Exchange Commission (SEC) under the Investment Advisers Act of 1940. Hewins is a proud affiliate of Wipfli LLP. Information pertaining to Hewins’ advisory operations, services and fees is set forth in Hewins’ current Form ADV Part 2A brochure, copies of which are available upon request at no cost or at www.adviserinfo.sec.gov. The views expressed by the author are the author’s alone and do not necessarily represent the views of Hewins or its affiliates. The information contained in any third-party resource cited herein is not owned or controlled by Hewins, and Hewins does not guarantee the accuracy or reliability of any information that may be found in such resources. Links to any third-party resource are provided as a courtesy for reference only and are not intended to be, and do not act as, an endorsement by Hewins of the third party or any of its content or use of its content. The standard information provided in this blog is for general purposes only and should not be construed as, or used as a substitute for, financial, investment or other professional advice. If you have questions regarding your financial situation, you should consult your financial planner, investment advisor, attorney or other professional. Hewins does not provide tax, accounting or legal services.
Anthony Perillo
Anthony Perillo

CFP® | Financial Advisor

Anthony Perillo, CFP®, is a Financial Advisor with Wipfli Hewins Investment Advisors in Milwaukee, WI. Anthony focuses on comprehensive financial planning for high-net-worth investors and families, and also specializes in tax-efficient investing strategies.

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Are You Ready to Start a Family Office?

time to read: 3 min