The skills needed to manage family wealth are very different from the entrepreneurial skills needed to generate wealth in the first place. As a result, many families delegate the management of financial capital to accountants and wealth managers.
Setting up your own single-family office has unique advantages. It allows you to have an independent family wealth management and put strong parameters in place relating to your value-sets, governance and goals.
Here are five tips to consider before setting up a family office:
Understand your capital
Without a structured, independent approach to managing family capital, the only glue holding together a growing, dispersed family is the business. Without understanding your capital, you run the risk of passing up opportunities to expand, evolve or sell. Setting up a family office helps to solve this issue, as experts would analyze and protect your investments altogether.
Delegate responsibilities
In addition to the considerable fixed annual cost of setting up a family office, employing the right people to run it can be a challenge. Many family offices deal with administration and investment management effectively but fail to consider how a family office can assist in the development of the family’s human capital and help to engage the next generation.
Seek out services
One of the first things you should do is to find an expert that can establish the right model for you. While long-term trusted advisers are likely to be part of your solution, be careful not to allow conflicts to arise. They may crop up as a result of the family business advice being subsidiary to the adviser’s business, if they are accessing new funds under management, for example, or providing other financial advisory and administration services.
Have a vision for investment
Evaluate how your capital is split between long-term and short-term assets, ensuring there are systems in place to allow for easy transfer as and when your family requires it.
Measuring the exact performance of your investments can be tough. It’s a good idea to find existing benchmarks to use as a point of comparison. It will help family members and asset managers to clarify their return objectives.
Take a proactive approach to succession
Family offices can act as an intermediary and forum to help deal with shifting family dynamics and intergenerational issues. Many discuss business and economic topics in family office meetings, taking the opportunity to engage and empower younger members. There is often more freedom to do this than in standard family business meetings, away from the influence of day-to-day operations.
If you need family office services in Singapore, visit our website, and let our experts help you today.
