Family offices provide an attractive and confidential way to manage the personal financial affairs of ultra-high-net-worth families. Built with a family’s specific needs and goals in mind, family offices are businesses structured around custom financial management with services for a family’s investments, legal needs, accounting, taxes, philanthropy and household management.

But with the ever-changing landscape of technology and the increased competition for top talent, an efficient and modern family office can prove challenging to maintain. Understanding the benefits and complications of building and maintaining their infrastructure is critical.

Such business structures offer benefits such as privacy, confidentiality and strategic oversight to the wealthy for financial decision-making. But the backbone of the operation is the team of professionals running it, guided by the goals of the family, which must be clearly identified. Still, the family’s interests must be balanced with the everyday challenges of running a business, which includes staffing, putting technology in place and building infrastructure. It’s sometimes hard to strike that balance.

Single-family offices and multifamily offices share the same types of clients: families of significant wealth who desire financial coordination for long-term wealth preservation. In the 2016 Family Office Guide, accounting firm EY estimated that there were more than 10,000 single-family offices in existence globally, and that number is expected to grow as families seek more transparency and customization for their wealth management.

For large, revenue-generating families looking to sustain their legacy and transfer wealth over time, it’s often a great fit. A Bloomberg 2017 family office report suggests that $250 million in assets is typically needed to justify the cost of a single-family office, but different numbers are quoted across the industry. Single-family offices can vary in size—from three to 300 employees—depending on the character of the family’s assets, the number of in-house services provided and the amount of overall coordination involved. Although the structures vary, the bottom line is that the benefits of having personal financial oversight with a single-family office should outweigh the costs to maintain it.

Highly functioning families that have sufficient assets and have their values aligned are often the most successful at maintaining a single-family office. They frequently have a formal family governance structure that requires family engagement and strong leadership. But there are still difficulties that can arise when you mix family and business in an SFO: Frequently, these stem from a lack of communication and leadership skills among the family members. For example, if a family member working for the office is disengaged or unqualified for a leadership role, or if conflict abounds within the family, the disagreements and misaligned goals can hinder the success of the office.

The more complex a family’s wealth, the more coordination and big-picture oversight are required to maintain it efficiently. The best estate, tax and philanthropic plans are created when the family’s goals are aligned and understood and the financial picture is clear. If the single-family office isn’t structured for full service, families can consider strategic outsourcing. This is especially true in the case of smaller offices in which services like strategic philanthropy and family governance are less likely to become part of the holistic vision and it’s unlikely there are any dedicated staff to support or plan in these areas.

Without strategic oversight or a role dedicated to comprehensive planning, these offices may unintentionally develop blind spots. With a large volume of transactions or a range of complicated issues, the time for pre-transaction planning or coordination may be limited. The smallest accounting error or failure to make an estate plan update can mean expensive consequences.

Even if an office outsources certain services, it’s burdensome for members to coordinate multiple advisors, attorneys, accountants and assistants. It may even be inefficient to segregate functions if there’s no strong oversight at the office or no one with a complete understanding of the overall financial picture. Wealthy families are continually targeted by litigators, creditors, revenue officers and fraudsters, among other people, and family office executives have to manage the risk and understand the regulatory environment—a tall order for any organization.

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