When the lands were ruled by emperors, lords, and noblemen, these ancient wealthy leaders and royalty would entrust the management of their wealth (land, livestock, gold, etc) and family affairs to their highly competent and experienced representatives not too dissimilar to what family office professionals do today.
But the modern concept of a family office emerged in the 19th century and was born out of necessity. J.D. Rockefeller was one of the first to create a family office. With humble beginnings as an accounting clerk to becoming America’s first billionaire, it was said that J.D Rockefeller was faced with an insurmountable task of managing his assets and philanthropy and therefore engaged the services of Frederick Gates, a Baptist clergyman, and educator, to establish a family office to handle everything from wealth management to the needs of his family members.
Unlike a traditional wealth management advisory firm, a family office goes beyond managing financial and investment affairs of a family, rather they provide a more comprehensive service offering that can often be bespoke, including advising on commercial business affairs, tax compliance, governance, corporate services, legal matters, philanthropy and more.
A family office can be a team of staff employed directly or through a family office service provider. These family office service providers can either be in-house, outsourced, or both. Often a family office service provider may outsource some of the activities (eg legal and tax) and act as a coordinator and manager of that service.
Imagine you have an army of people looking after your life while you’re sipping on cocktails on the beach. Doesn’t that sound amazing? It also sounds super expensive and only for the mega-rich..
But does it need to be?
The cost of a family office can be tailored to your needs and what’s economically viable. Whether you want a platinum setup, or a gold class setup is up to you. The level of complexity of your affairs and the number of layers within your family that need to be included will also be a driver for cost. There are also family office providers who advise and represent multiple family offices (MFOs) to leverage economies of scale by sharing costs. Historically, the mooted scale required to even consider setting up a family office was more than $50m in liquid wealth.
In an era of digitisation, we believe there will be the next generation of family office offerings that will become more accessible to a wider tier of High Net Worth individuals. This new phase will be powered by the adoption of technology using cloud-based solutions and artificial intelligence to streamline and automate parts of the service offerings and operations while reserving human capital expenditure for complex services such as corporate transactions, investment, and philanthropy advice.
With increased efficiency through technology, you don’t need to be as wealthy as a Rockefeller to be treated like one.
Aura Group has been developing its family office service offering to be able to cater to the next generation of global wealth.
Best regards
Eric Chan
Managing Director
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