Family Office – The Traditional Model
Typically, financial planning services, asset aalocation, risk management, manager selection, and financial accounting and reporting services tend to be provided in-house. Global custody, alternative investments and private equity, and tax and legal services are often outsourced.
However, families should be aware that the greater the level of outsourcing, the less irect influence the family will have over the decision-making process within the family office, and the less exclusive the products and services will be. Below we provided an overview of selected family office services, which can be categorized as in-house or outsourced based on market analysis.
|Type of services||Service Category||In-house||Outsourced|
|Investment Management and Asset Allocation||Financial Planning||Basic financial planning and aaset allocation decision should be provided in-house||The more complex, specialized and diverse assets make outsourcing a practical option|
|Tax and Legal Advisory||Advisory||Selectively done in-house||Often outsourced to a trusted adviser to ensure state-of-the-art quality services|
|Reporting and Record Keeping||Governance||Record keeping and documentation demand confidentiality and so this should idealy bbe done in-house||Basic reporting tools and software may be provided externally|
|Philanthropic Management||Financial Planning||In-house expertise should serve to assist with philanthropic activities||Setting up a foundation and related activities is often outsourced to a consultancy|
|Compliance and Regulatory Assistance||Advisory||A large family office might require full-time legal and accountancy expeertise||In general, full-time legal staff will be an unnecessary and costly addition to family offices that are not large enough to require them. Such staff can be outsourced when needed.|
|Risk Management and Insurance Services||Advisory||Some risk management skills should be provided in-house, in order to ensure ultimate peace of mind.||Can be outsourced as external risk and insurance professionals can offer trusted expert advise|
|Life Management and Budgeting||Financial Planning||Should be done in-house if information confidentiality is a primary criterion.||Only specialized services would tend to be brought in-house; less specialized services can be outsourced.|
|Training and Education||Strategic Aspects||Can be done in-house, as identifying suitable options for education is by its nature an internal process||Can be outsourced if expert opinion on higher education is required for training and development|
|Business Advisory||Strategic Aspects||Often the general counsel or the finance director of the family busness is involved in the setup of the family office||The service of an external expert can offer a competitive edge|
|Estate and Wealth Transfer||Strategic Aspects||In-house expertise is required as data confidentiality is vital||The family can consult external legal advisers on procedural and legal issues|
|Administrative Services||Governance||Administrative services require daily monitoring and so can be done in-house. Here, outsourcing could lead to greater costs|
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