Family offices are growing in popularity and as a result, in numbers. The Wall Street Journal reports that in the last five years, the number of family offices in the U.S. has increased by 33%. Why the sudden increase? Some point to the 2008 financial crisis, and others to the growing number of first-generation affluent individuals. Regardless of the cause of the proliferation, it’s clear that the centuries-old concept of the family office is gaining traction in the world of wealth preservation today.
Whether they be single-family offices or multi-family offices, their prime directive is the same – to manage wealth for the entire family entity, sustaining and growing the family office. Sounds great, right? It may be, if your individual values align with that of the family office and the rest of the members. What happens when they don’t?
Individuals can get lost in the growth process and the hyper-focus on wealth enhancement. Sometimes it can feel as if everyone on the team is still working for the wealth creator, who may have died 100 years ago. Family offices can provide a vast array of valuable services – everything from sibling mediation to help with immigration, to setting up a charitable foundation. More than just providing asset management, these entities can serve as one-stop-shopping for the needs of the family members (financial, educational, lifestyle, or whatever). And, they may be well suited to providing the very thing that most inheritors crave – privacy. While the struggle to remain “under the radar” is often an issue for inheritors, today’s social media and all-things-internet culture has left many feeling extremely vulnerable. Family offices often run point on keeping the family’s financial and personal information out of the public eye.
These are all beneficial and invaluable services, but if you are not receiving the individual services you need from the family office, or are simply not feeling heard, it may be time to put your needs first. That means gaining clarity on your individual personal finances and the amount and nature of distributions from trusts and/or the family operating business. At The Wealth Conservancy, Myra Salzer and her colleagues help individual inheritors find their voice, so that they can gain better control of their wealth and better understanding of their place within the family’s system and in the family office.
Myra was featured this month by Juliette Fairley in an article that explores how privacy, affluenza, and social media are fueling the growth of family offices. We invite you to read it here.