Thursday, October 4, 2012

How about a "miniature" family office?

FAMILY OFFICE might be relativley new here in Singapore, however, at the rate we are moving, more family offices could be setting up here in Singapore due to our favourable economic environment.
Briefly, Family Office is not for everyone. It is targeted mainly for the Ultra-High Net Worth (UHNW) whereby a team of dedicated financial specialists would be managing an expecting assets of $100,000,000. We need good and quality people to manage the fund and making sure that wealth is maintained and transferred generation after generation. Besides expertise in their fields, fiduciary duties need to be uphold too. So it is not for the planners-on-the-street. 

While searching for information in this area recently, I've found the discussion group at LinkedIN is really a great way to search for relevant topics to hear views from different perspective.  

Here is the as follow:
and the respective article for discussion

IN this article, the writer has mentioned many benefits of setting up a family office. In addition, the 2 main types of family office could be modelled. As Investopedia explains, "There are two types of family offices, single family offices and multi-family offices sometimes referred to as MFOs."

"I feel that the Family Office is not just managed by a group of financial specialists, it is also managed by other non-financial experts. Besides the concierge services & financial services provided, there is medical and healthcare services that could further value-add to the family. I feel that no single talent specific be able to make the necessary decisions, instead a credible board of specialists in various field should come together to work for the common goal for the family. Best is to engaged the next generation to be trained and groom them into the respective office bearers. This might be the best proposition where they have the best interest at "heart"."

HOWEVER, I believed that I, rather we, have the solution for this UHNW. At the current firm that I working with, we do have the essential and necessary resources to set up a decent "miniature" family office. We could start small. "The journey of thousand miles begins with a single steps - Lao Tzu."

For such office to be set up, the appointment of chairperson would naturally be one of the business owners. He would be tasked to appoint the financial specialists to work out the financial objectives based on time and needs and what do they want to achieve. Besides profit making for their business, these Business Owners would be thinking how are they going to pass on their business to their successor so that they could get to enjoy their retired years. It is not just about building wealth and wealth enhancement, searching for the most appropriate and efficient way to transfer this wealth to their respective heirs and beneficiaries. Of course, at times things might not go on as planned. Situation changed. Hence, risk management or contingent plan need to be in place. 

You might want to refer to 2 of my earlier blogs on funded succession plan as follows:

IN addition, at the end of the day, we are not passing on the financial wealth to their heirs or successors, but also the wealth of values they have received from their pre-successors. A finale note, food for thoughts: "Is the money be safe with our children or will our children be safe with the money?" What's your take?

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