Service strategies for the modern family office

Knowing what services to provide and what to outsource is critical for success

Family offices are responsible for a wide range of advice and services. While there are numerous ways to classify them, for the purposes of this discussion, we have organized them into seven primary areas (see figure 2.1). While every family office will provide different types of services, and potentially additional specializations, figure 2.2 shows a good checklist to review broad areas of need for wealthy families. There are traditional needs, approaches, and prioritizations that apply broadly to family offices. However, what services to provide, how, and by whom will vary by family because of the differences in the types and evolution of challenges that families of substantial wealth face.

Determining the right advice and services to deliver to a wealthy family should be based on an assessment in four critical areas—namely, why, what, how, and who. The answers to these questions will form the foundation for important determinations regarding details of the delivery.

Family offices often grow initially by hiring professionals to conduct most services in house. At this stage, many do not take the time to strategically think about what they need, want, or should do themselves versus outsourcing to a third party. The reasons for this behavior stem from the way in which family offices are typically created and evolve.

Most family offices are created to address a growing level of complexity in living, managing assets, paying bills, and providing financial reporting. This growth in complexity usually is incremental, and families often meet these initial needs simply by hiring professionals to work in the family office. It should be noted, however, that decision-making around the formation and initial staffing is heavily influenced by the experience and interests of both the principals and the senior professionals in the family office.

Regardless of how the service requirements arise and solutions are provided, it is a best practice for families to evaluate what they should, and should not, be doing internally before making significant investments in people, processes, technology, and other resources.

Table 2.1 summarizes each of the key service areas and lists important considerations as to whether the family should outsource them. The table also provides some important insights into the priority with which particular services should be provided.

Table 2.1 the seven service verticals of family offices

Table 2.2 Determining the right advice and services to deliver to a wealthy family

This is an excerpt from The Family Office, A Comprehensive Guide for Advisers, Practitioners, and Students. Now available where books are sold.

Adapted from The Family Office by William I. Woodson and Edward V. Marshall. Copyright (c) 2021 Rybat Advisors, LLC. Used by arrangement with the Publisher. All rights reserved.

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Bill Woodson

Bill Woodson is the head of Strategic Wealth Advisory and Family Enterprise Services at Silicon Valley Bank.

The views expressed in the article are those of the author and/or person interviewed and do not necessarily reflect the views of SVB Private or other members of Silicon Valley Bank and SVB Financial Group. The materials on this website are for informational purposes only, are subject to change and do not take into account your particular investment objective, financial situation or need. Since each client’s situation is unique, you should consult your financial advisor and/or tax planning professional before acting on any information provided herein