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Key questions when creating a family office

Rajah Abusrewil of Walkers (Guernsey) LLP goes through some of the key questions you should ask yourself and your family when creating a family office.
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Published 30 June
2 mins

Why create a family office?

Every family is different, so it naturally follows that each family’s reasons for establishing a family office are going to be different too. Not every family will need, or find it appropriate, to create a family office. As such, serious consideration as to why you want to create it is necessary. Will it be used to run a family business? Will it be used to focus on and manage family investments? Or will it be used to facilitate family co-operation and/or harmony? Looking at the family’s primary motivation is the usually best place to start.

What should be achieved by it set-up?

The answer to what a family office can achieve is usually prompted by the reason behind its set-up. Are you looking to expand the family business and take it to a new scale or in a new direction? Is the focus on management of investment assets post a liquidity event? Do you wish to club together with other families to maximise your investment strength using a multiple family office? Will intergenerational family succession be important? Can it help with bringing multiple strands of the family together, ensuring that the family has an understanding of the core family office activities.

When is best to create a family office?

Timing is highly personal and will depend entirely on the family’s individual circumstances. What is important is ensuring that the family leaves enough time to liaise with appropriate professional advisers. This will allow an efficient and successful establishment of your family office.

Where should you base the family office?

Location, location, location is of the utmost importance when deciding where best to locate your family office. Does it need to be near your actual business? Are a multitude of your advisers/employees already based in one place? Are the family members planning on being involved and does that mean they need to be near the location? Is there a likelihood of the family moving countries, or are they already international in nature? And in jurisdiction terms, is the place where you create your family office safe and politically stable for your family and your business? Does the jurisdiction have excellent regulatory, legal and financial service providers that can support the growing enterprise?

What support helps ensure success?

We believe having the right professional advisers, support services and family members in place is essential for a successful family office. Looking for the appropriate professional talent is key, for example, running a trading business will require significantly different skill sets to managing investments.

Mixed into that are the family’s expectations for the active day-to-day or decision-making role in the family office and establishing if they have the correct skillset. Is there a minimum experience level required before playing an active part in its management? Will this be an issue placed at the very heart of its governance? Is it intended for the family office to be permanently staffed completely or is professional support to be outsourced to obtain the greatest variety of support/experience? Will there be a mixture of the two approaches? It can be a very expensive and time-consuming mistake to rush this process.

Should you require any further information, please do not hesitate to contact your usual Nedgroup Trust relationship manager who will be happy to discuss the topic with you.

 

Or if you wanted to find out more about how Nedgroup Trust, or Nedbank Private Wealth, can help you plan and structure your wealth for your family and for future generations, please get in touch using the links to the forms towards the end of this page.

Find out more about Walkers LLP via their website https://www.walkersglobal.com.

The structures and wrappers used are provided for illustrative purposes only, and are not to be read as an invitation or inducement to buy a service. This content does not constitute advice or a personal recommendation. Individuals should seek professional advice, based on their jurisdiction and personal circumstances, before making any financial decision.

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