How family offices extend beyond wealth management

When it comes to family offices, it can seem easier to define them by the services they don’t offer rather than try to pin down everything they do.

In a September report, the accounting giant Deloitte emphasizes goals rather than specific offerings family offices must provide to be deserving of the name: “While each family office is as unique as the families themselves, most of them strive to achieve common objectives, including wealth and risk management, coordination of services, enrichment of the family’s legacy, and privacy of the family’s affairs.”

That goal-oriented definition helps explain why the term “family office” remains so fluid, and why it’s increasingly used as a wealth management catchall. 

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One new entrant to the family office industry, Los Angeles-based LinePoint Partners, aims to help advisors leaving wirehouses and private banks build up an array of services needed to work with wealthy clients.

Andrew Sternlight, LinePoint’s president and chief investment officer, said what sets family offices apart from other wealth managers is the priority family offices place on preserving wealth for future generations, charitable causes or other recipients.

“That’s where we think, by extending that sort of family office infrastructure to advisors or to one or two executives of a family office without building out their teams entirely,” Sternlight said. “That’s where we can provide a bit of a solution that has the benefits with that multigenerational lens, but not the cost of designing from scratch in-house.”

Andrew Lom, U.S. head of financial services and global head of private wealth at the law firm Norton Rose Fulbright, agreed that the true differentiator for family offices is the emphasis they place on making sure clients can bequeath their wealth exactly how they want. 

“It’s one thing to do money management for an individual, and that might be a fabulously wealthy individual,” Lom said. “But once you start considering the separate investment needs of that individual and their kids, and the kids’ trusts and maybe the grandkids’ and all of these other buckets, that’s what changes the way you approach the advice to be more like a family office, because you’re considering longer-term impacts.”

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Ron LaVelle, a principal in the private wealth practice of the accounting and consulting firm Baker Tilly, said clients have the ultimate say on what their family office does. With the list of possible service offerings always growing, and the number of multifamily offices serving several wealthy families also rising, it’s becoming ever more rare for firms to be able to do it all. In fact, LaVelle said, he tends to be wary of firms that claim to be everything for everyone.

“I just don’t know how you can get the ‘A’ players for every functional area — estate planning and tax and legal and all of that — all under one roof,” he said. “I’ve yet to see it. I’ve seen some exceptional players for various components. But all components, no.” 

Here’s LaVelle’s lengthy — although not exhaustive — list of services sometimes expected from family offices.

• Investment management. It’s the primary strength of many wealth management firms that decide to start multifamily offices. But on its own, it’s seldom enough to justify the adoption of the family office label, LaVelle said.

• Legal services. With legal experts on staff, family office can help clients with services from trust and estate planning to obtaining general legal advice.
• Aircraft and yacht management. Not all wealthy families own a yacht or aircraft. But for those who do, help with maintaining them is essential.
• Real estate management. Many wealthy families own properties that require regular maintenance. Family offices can also help with tasks like collecting rent and paying taxes.
• Concierge services. This broad term can include everything from assisting clients with their travel plans to general “lifestyle management,” which can include tasks like setting up appointments with fitness instructors or beauty spas.
• Family governance. This includes help with family meetings, conflict resolution and succession planning.
• Private investment services. Many times, family offices will help with research on non-traditional or alternative investments.
• Physical security services. Wealthy families often need bodyguards and other types of physical protection.
• IT support. Family offices are often called on to help with technological systems and providing cybersecurity.
• Accounting and office services. These can include bill-paying systems, tax preparation, financial reporting, vendor management, cash management, payroll services, human resources and office administration.
• Insurance. Family offices help ensure thier wealthy clients are properly insured for their lives and their often pricey belongings.