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Starting a Family Office – A Question of Size or Purpose



When I speak to people about family offices, one of the first topics of conversation is about the size. Specifically, the minimum amount of money you need to start the sometimes complex and expensive process of setting up and running a corporate structure to manage one family’s assets.  My answer is: "that’s not the metric I usually use."


It comes down to purpose. Personally, if I had significant wealth, I would most likely give it to one of the many fine advisers I have met over the years and settle into a beach chair for the foreseeable future.


I have seen small offices that would make Renaissance Technologies blush in terms of investment complexity. I have also seen offices with enough funds to be classed an institutional sized investor with simple implementation of ETFs. The large office could be run through an online broking account and a pivot table whilst the other needs a significant amount of reporting, compliance, and structure to manage the volume of capital calls, distribution, manager meeting etc. One needs the “Family Office” structure and the other doesn’t, despite the size of the assets.


But when do you need to set up a separate office to manage everything? Some of the reasons I have seen:


1)      It’s complicated – reporting across several counterparties, managing vendors for property, professional services, wealth management, banking etc that can’t be done by a single counterparty.


2)      When you want to do it yourself – just for the family, you don’t want to be grouped in with every other client of the adviser and you want to control all the details.


3)      We want to include the kids – one of the best arguments for a FO is that it brings all the kids, grandkids, and other family members under one banner. It can create a meeting spot, a mail room, a training venue, a place to just hang out, just for “us” and in any way you want.


4)      You want to keep it in the family – anonymity and creating a safe place to talk about the detail that only family needs to know.


If the idea appeals to you, and you believe it aligns with your family’s values and goals, then the size of your wealth shouldn’t be the determinant.


It’s your money, you can spend it (and your time) how you like.

 

For more insights into family offices and their investments, operations and technology, subscribe to the Sherpa newsletter at:  hallroad.com.au.

 

Cheers

 

Shaun.

 

“Hall Road Investments Pty Ltd is a Corporate Authorised Representative (CAR No. 001279456) of Non Correlated Capital Pty Ltd (AFSL No. 499882). Shaun Parkin is an Authorised Representative (AR No 001279458) of Hall Road Investments Pty Ltd (CAR No. 001279456) and is authorised to provide general advice to wholesale investors”

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