Family Office – Benefits In-House vs. Outsourcing
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.
Benefits of In-House
- Highest level of confidentiality and privacy.
- Independent and trusted advice to family is ensured.
- Total and consolidated management of family wealth.
- Family office can develop distinct skills, specifically tailored to the family´s needs.
- Greater and more direct family control over its wealth.
- Keeps investment knowledge within the family.
- Ensures optimal goal agreement and avoids any conflict of interest with external providers.
Benefits of Outsourcing
- Helps a family office reduce costs and overheads, helps with staff productivity.
- Helps deliever economies of scale, particularly when it comes to high-value professional services, thus enabling lower prices for related services.
- Offers the benefit of objective advice from experienced professionals who possess specialized skills.
- Outsourcing investment management may help a family office defend its regulatory independence by allowing investment decisions to be made by external providers.
- Suggests less direct control, which implies due diligence and continuous monitoring can be carried out by the directors of the family office to ensure performance and security against risk.
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