What is a Family Office and How Does it Work?

  • November 7, 2019

If you’ve ever been interested in managing your family’s wealth, you’ve likely heard of a family office. There are a variety of office types that handle investment and wealth management for affluent families. This begs the question to be answered, “What is a family office?”  As each family’s finance management has unique needs, each office works differently to meet those needs. To help you and your family manage your finances, assess the following information on what a family office provides. 

How a Family Office Works

What is a Family Office?

First and foremost, it’s important to understand what a family office is in general. A family office can be defined as a private company that handles investments and trusts for a single family.  Depending on the size or focus of an office, it can work with one family or numerous families.  For example, some basic functions that an organization provides clients involve wealth management services. Wealth management consultations can address client needs, such as giving financial and investment advice. 

Diversity of a Family Office’s Services

The comprehensive services that an office provides involve more expertise than one person can offer. Therefore, an office is typically comprised of various professionals with differing backgrounds. For example, a team can have experience in legal, real estate, and other industries. That team uses this experience when offering financial advice to their clients.  Let’s say you want to make a real estate investment. The practiced real estate investment consultants at your family office will guide you rather than a professional that specializes in legal affairs.

Legacy and Lifestyle Management

In some cases, clients may seek out these services to help manage wealth built up over one lifetime or several generations. Thus, a client may desire help with a wealth transfer plan.  A wealth transfer plan is a series of decisions made to prepare your family for their inheritance. This preparation involves empowering your family with the family values that matter most when it comes to financing.  A significant component of a wealth transfer plan is communicating your money values to your family members, so you’re on the same page. In addition, your plan can also include educating your heirs on certain family assets that will be passed on to them.  Overall, this wealth transfer plan can be crafted and implemented by the advisors. For instance, part of your plan can include introducing your advisors to your heirs if they aren’t already working together. 

Family Offices and Investing Benefits 

Understanding how a family office works are extraordinarily beneficial for family wealth management.  For example, companies like AVANA Capital have institutional investors, including pension funds, family offices, and individual investors. When looking for funding for certain projects, you may one day receive investment funding. Whether or not you work with a family office depends on the unique investment interests of the client.  By and large, though, knowing how an office works and what they provide can help make any future investment decisions simpler.  For more information on family offices and how they work, feel free to contact the team at AVANA Capital! One of their expert team members will be ready to assist you.