Vistra Insights

Emerging Wealth: When is the right time to set up a Family Office and what are my options?

The number of family offices has grown exponentially during the past decade as UHNW families look to take back control and professionalise the oversight of their family wealth management whilst ensuring the desired purpose for their wealth is fulfilled.

With an unprecedented intergenerational transfer of wealth due to take place in the next decade, coupled with the internationalisation and increased complexity of the family enterprise, many UHNW families with emerging wealth are now considering the question, ‘is now the right time?’.

Internationally minded, highly educated members of the next generation are also challenging their parents as to how best protect and grow their family’s wealth whilst considering issues important to them, such as sustainable investing.  Looking to capitalise on this trend, proactive regulators all around the world are looking at ways of attracting business from UHNW families for their jurisdiction.  

Years of reliance on the most loyal of lieutenants – the trusted 40 plus year veteran of the C-suite and board room within the family business, who are within the inner sanctum of the family enterprise – are, without doubt, in their twilight. It takes significant skill and diplomacy to be able to take into account the best interests of a complex family. Juggling this alongside their main role as a corporate executive of a high growth, thriving family business, can be tricky.  

Single Family Office

It clearly takes significant capital and investment to create a Single Family Office (SFO).  The consensus of advisors is that the net worth of the family needs to be well in excess of USD250 million to make this a viable option.  Even then, the SFO will undoubtedly only have access to a handful (and sometimes just one) key executive. The involvement of selective family members within the SFO can also create a degree of underlying conflict for the family which the matriarch and patriarch will be keen to avoid.  As families become laser focused on net returns, the cost of running the SFO excluding investment, custody and structuring fees can add up to 80bps.  

Multi-family offices 

Multi-family Offices (MFOs) are also an option, with two distinct types:  

MFO 1 MFO 2

MFO’s originally created from a SFO where the SFO has looked to attract additional investment to share their best practice, further professionalise and share costs.

The family will typically have successfully navigated the transition of wealth across a number of intergeneration transfers. 

This second type of MFO has been formed through a group of like-minded professionals, often with an investment background, with complementary skills and a base of capital.

This can also be an attractive model through accessing highly qualified professionals who can often access interesting private market opportunities.

 
So what does this all mean for UHNW families within the emerging markets?  

There are clearly a number of avenues that can be pursued.  Fundamentally, families will need to decide, in the context of the purpose of their wealth and associated costs and complexities, which is the best approach. 

Without doubt, one of the most effective approaches Vistra has seen implemented by many astute families, is the Virtual Family Office (VFO). The VFO approach leverages the strength of an independent provider to be able to access the services required as the needs of the family evolve over time. This requires an active family member to drive the execution of this approach, however there is a clear benefit of being able have a single, reliable and dedicated point of contact at a professional services provider, especially when the net worth of the family does not reach the levels where the economics can justify a SFO or MFO approach. Providing the necessary knowledge, independence, flexibility and access to specialists when needed, is a highly cost effective way of ensuring that the best interests of the family are protected and the future generations of the family can prosper.  

Vistra Private Office

We provide a holistic proposition to support both your private and business affairs seamlessly. At the core of our Private Wealth services, Vistra Private Office gives you a single point of access to services you would expect from your own family office. These can range, for example, from setting up a trust to next generation support, from administering your property portfolio to buying a new yacht. Our dedicated professionals have diverse backgrounds and skills and understand that wealth and business are usually inextricably linked. They are as comfortable seeking out business partners for a new venture as they are in advising on the most appropriate structure for it.  

If you would like to discuss how Vistra can help you create, preserve or transfer your wealth, please contact one of your local experts:

Location Name and title Phone number
UK Chris Marquis
Global Head of Private Wealth
+44 203 872 7325
China     Sherrie Dai
Managing Director, North Asia
+86 21 6085 6188
Hong Kong SAR Yumei Zhang
Executive Director, Head of Private Wealth, Greater China
+852 2848 7580
India     Navita Yadav
Managing Director, India & Mauritius
+91 22 2659 3882
India     Neeraj Aggarwal
Director, Private Wealth, India
+91 22 2659 3659
United Arab Emirates Heba Al Emara
Managing Director, Middle East
+971 4 278 3600
Singapore Chris Burton
Managing Director, South East Asia
+65 6854 8010
Singapore Christine Tan
Managing Director, South East Asia
+65 6854 8061
Jersey     Clive Wright
Managing Director, Jersey
+44 1534 504560
Malta Dr. Anthony Galea
Managing Director, Marine & Aviation
+356 2258 6400
Switzerland     Sascha Züger
Managing Director, Switzerland
+41 44 296 68 70
UK David Rudge
Managing Director, Corporate & Private Wealth UK
+44 203 872 7334
UK Julius Bozzino
Director, Private Wealth, International
+44 203 872 7384
Cyprus Nick Terry
Managing Director, Cyprus
+357 25 817 411
Luxembourg Joost Knabben
Commercial Director, Luxembourg
+352 422 229 530
Luxembourg Farabi Zakaria
Commercial Director, Luxembourg
+352 422 229 398
USA Raúl Markos
Director, Private Wealth
+1 305 978 1742

 

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