Jan van Bueren and Thomas Ming outline the key elements to look out for when choosing a family office for your wealth management requirements.
An increasing amount of high earning business owners and families who have sold their businesses are turning to family wealth management offices to support them, instead of standard wealth management services.
When families weigh up the question of whether to set up their own single-family office (SFO) or use the services of an existing multi-family office (MFO), they often overlook the matter of the jurisdiction in which that family office should be. This is actually an essential element that deserves serious thought.
There are quite a few questions that need answering before deciding on the jurisdiction for a family office:
In which jurisdiction does the family need support? What are the family's goals? What should the legal form be? Which of the family's (corporate) entities need to be managed, and by whom? Which assets need to be preserved and protected? All these considerations apply when establishing an SFO or choosing an MFO. You also need to select a country that is politically, economically and financially stable, provides easy access to financial service providers, and offers a sound infrastructure, and where staff is highly qualified and experienced.
A common mistake families make is to choose or create a family office in the same jurisdiction as where they live. Although this can be very practical, for example from a communication point of view, this is often not the best choice when examined from a wealth-preservation perspective. Because one of the primary roles of a family office is to safeguard assets, and to be able to assist the family under all kinds of circumstances.
A family office for wealth preservation
This means that the family office needs to be able to protect the family's assets and interests against geographical, political, religious, personal and economic risks, while remaining fully operational under any circumstances. Therefore, it is only logical that the family office should be located in a secure jurisdiction. Because unstable and unsafe jurisdictions outnumber the stable and safe ones by far, the majority of family offices will need to be located outside the home jurisdiction of the families they serve. This does not necessarily mean that the entire staff or all services must be located in a foreign jurisdiction; roles such as local secretarial support...