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The Evolution of the Family Office

Say the words family office or family office services, and for many in the industry, images of bill payment, tax preparation, comprehensive reporting, and other detailed administrative financial tasks come to mind. While these services are still an integral part of what a family office does for its clients, the modern family office is evolving to meet the needs of contemporary life.  

Family office 1.0
The origins of family offices in some form go back centuries but were “popularized” in the U.S. by families such as the Rockefellers and the Morgans. They were predicated on providing investment management, governance, and administrative services. In addition, some family offices provide concierge services including facilitating travel plans, property management, and other “luxury” activities. Typically, these “behind the scenes” duties are designed to make a family’s life easier.

The modern family office
The complexity of managing and maintaining multi-generational wealth has grown, and family offices are adapting to meet the new reality. On the investment side, family offices are honing their expertise and access to private investment opportunities, “increasingly investing in both young and established private companies,” according to a December 2020 article in Forbes. Family offices can make decisions relatively quickly and deploy significant amounts of capital, putting them on the same level as some institutional investors. Family offices founded by first-generation sophisticated entrepreneurs are accustomed to deal-making and are more aggressive in investing, with the goal of significant wealth generation. 

Going beyond investments
Firms are going far beyond both investments and traditional family office services. Another article in Forbes details how family offices are trying to be a single source for UHNW families. Martin Graham, Chairman of Oracle Capital Group in the U.K., provides, among other things, “help with immigration, finding a property to live in, getting children into school, setting up charitable foundations, or project finance.” Other firms are adding services that apply to today’s world. Firms such as Rockefeller Capital Management, for example, stress their expertise in working with families on family legacy, governance, and next-gen education, helping families focus on strategies that span multiple generations. Many family offices also offer concierge services designed to enhance their clients’ lifestyle, such as exclusive access to experiences, curated products and services, and recommendations to vetted partners. Other services include cybersecurity protection and VIP healthcare services, particularly relevant in the current environment. 

Most family offices have realized that basic family administrative services are table stakes commodities that can be obtained from many sources. In order to truly stand out and add value to their clients’ lives, they are elevating the family office offer to a differentiated and exclusive level.