The term ‘family office’ gets used a lot these days. Much like the term ‘cappuccino’, it’s not always used to genuinely describe what’s being sold. Unlike a bad cappuccino, though, there’s a lot more serious downside in choosing a wealth management firm that inaccurately represents itself as a true family office.
A family office, in the simplest sense, is a wealth management firm that works with affluent individuals to review and advise on a client’s financial and lifestyle goals. But just gathering a group of number crunchers together in a room does not make a true family office. A true family office provides a team that works in tandem with each other, in a variety of professional disciplines, and ensures that the advice you receive is consistent across all those disciplines.
Without a taste test, it can be hard to tell a real cappuccino from the Tim Hortons version, and this holds true for family offices, too. To help you evaluate your family office options, here’s a checklist of what to look for when choosing a family office for yourself.
1. Discovery:
A true family office will spend significant time performing discovery tasks with you. Your advisors need to derive a deep understanding of your personal and family values, and your personal and corporate goals; it is only then can they fully uncover the opportunities and frustrations that the family faces in a highly dynamic environment.
2. Collaboration:
It’s not just having good advisors, but advisors all sharply focused on your family’s agenda. Once all advisors have a clear picture of a situation, and are experienced with working together, they can effectively collaborate on your specific goals and needs in a highly cost- and time-effective manner.
3. Fiduciary responsibility:
A credible family office will complete actions and strategies that are in the best interest of your family. This requires a total understanding of your circumstances to deliver optimal and timely results.
What is IP Private Wealth?
IP Private Wealth is a Family Office—a team of wealth advisors that operates as a round-table board of advisors. Our 360° approach to examining your goals, wealth, and future needs is what makes us the first and only choice of family office for our clients. If you’ve been looking for a way to manage your wealth more effectively, reach out to us.
4. Clear reporting:
You cannot manage what you cannot measure. A true family office will provide robust reports for both households, as well as for individuals and entities with a predetermined goal benchmark.
5. Digital document directory:
As a supplement to reporting, a document repository of all key documents and information should be retained; this is for the benefit of all family members and is kept in a secure yet accessible portal.
6. Leading Investment Strategies:
A good family office will provide you with a range of investment options, from the traditional investment selection (eg. Stocks and bonds), to alternative investments such as private credit, hedge strategies and real estate investments. This is all with the goal of providing a robust investment platform.
7. Tax overlay oversight:
By understanding various tax planning strategies, the family can manage current and long-term taxation effectively. Your family office should aim to mitigate the impact of tax on wealth creation strategies, and these strategies should be directed by taxation advisors—all part of the true family office.
8. Cash Flow Management:
In the hands of a good family office, the focus will be on generating independent and passive income strategies, to ensure lifetime cash flow and capital while providing capital growth for future generations.
9. Asset Protection:
It’s important to implement prudent strategies to provide protection for your hard-earned wealth. Your family office team should be experienced in handling creditors, litigation, and family law issues; and, they should be ready to advise both your family and corporate interests. This is a key, but often overlooked, area of review.
10. Intergenerational Wealth and Philanthropy:
The key to the family office is to secure cash flow and capital to achieve the financial objectives of the current family members. It’s crucial to ensure the family legacy though comprehensive strategies for the transfer of wealth to the next generation, while reducing the impact of long-term taxation. It is imperative that this is done on the foundation of the family philosophies and values. A good family office will be ready and equipped to guide you through these processes.
After reviewing this checklist, you’ll have a better idea of whether or not you’re talking to the right family office. The important thing is not to compromise on what you’re seeking. This list is imperative for a clear perspective on your wealth and goals—it’s why IP Private Wealth meets and exceeds this checklist with our own family office model.
