Initially set up by the ultra-wealthy families such as the Fricks, Vanderbilts and Rockefellers, the concept of family offices has moved on this side of the globe as well to associate itself with giant names such as the Bajajs, Munjals, Premji, Wadia, and Ambani, among others in India. After all, the need for family offices in India is growing at a rapid pace with the proliferating number of HNWIs or High-net-worth individuals. The modus operandi of a family office, however, depends largely on your level of wealth, types of assets, and goals. This categories their functioning into three templates.
Administrative Family Office
This model involves managing the advisory and investment management services through the help of external service providers hired as contracts, however, it provides some level of tax, bookkeeping and other administrative services through its direct employed staff, who, usually, work on a part time basis. An administrative family office is often used by wealthy families that have an asset base of Rs. 5 crore and above.
Hybrid Family Office
Under the hybrid family office model, strategic functions, more often than not, run parallel to the objectives of the family and consequently they are managed in-house. To meet the long-term investment goals of the family, therefore, certain families allocate family members to manage specific strategic activities. This is especially the case when the member has an expertise in wealth management and privacy is a big concern. Though, certain investment decisions under this wealth management model may be taken in-house, the office outsources experts for tax, asset allocation and legal matters.
Comprehensive Family Office
This model is best for families who need control, security and privacy of the highest degree when managing their wealth. Given this, all administrative services and legal, tax, risk and core management works are managed by the in-house members of such family offices, though, it may outsource specialized investment management activities such as venture capital, market investments, hedge fund, private equity, etc. The outsourcing of such services, however, depends on the family’s budget, objectives, and other elements.
Conclusion
The job of a family office is not limited to protection and passing on of the multiplying wealth of a family to its heirs. Beyond the strategic functions that entail managing investment portfolio, taxes, and insurance also lie the responsibility to showcase the philanthropic deeds of the clients. Family office services offered by professional companies, therefore, usually, cover everything from private wealth management, estate planning, administrative, tax and philanthropy services.
Administrative Family Office
This model involves managing the advisory and investment management services through the help of external service providers hired as contracts, however, it provides some level of tax, bookkeeping and other administrative services through its direct employed staff, who, usually, work on a part time basis. An administrative family office is often used by wealthy families that have an asset base of Rs. 5 crore and above.
Hybrid Family Office
Under the hybrid family office model, strategic functions, more often than not, run parallel to the objectives of the family and consequently they are managed in-house. To meet the long-term investment goals of the family, therefore, certain families allocate family members to manage specific strategic activities. This is especially the case when the member has an expertise in wealth management and privacy is a big concern. Though, certain investment decisions under this wealth management model may be taken in-house, the office outsources experts for tax, asset allocation and legal matters.
Comprehensive Family Office
This model is best for families who need control, security and privacy of the highest degree when managing their wealth. Given this, all administrative services and legal, tax, risk and core management works are managed by the in-house members of such family offices, though, it may outsource specialized investment management activities such as venture capital, market investments, hedge fund, private equity, etc. The outsourcing of such services, however, depends on the family’s budget, objectives, and other elements.
Conclusion
The job of a family office is not limited to protection and passing on of the multiplying wealth of a family to its heirs. Beyond the strategic functions that entail managing investment portfolio, taxes, and insurance also lie the responsibility to showcase the philanthropic deeds of the clients. Family office services offered by professional companies, therefore, usually, cover everything from private wealth management, estate planning, administrative, tax and philanthropy services.
