Family office takes full ownership
The family office will always focus on managing the family’s or individual’s wealth as best as possible. Depending on the size of the family office, a CEO or CIO will develop and implement the investment strategy in proportion to the founders’ or family’s wishes, opportunities and interests. In most cases, part of the management will be outsourced to external partners, but it is the family office’s role to ensure that the strategy and goals regarding returns, investment areas, asset classes, dividend needs etc. are met. It is a core competence of the family office.
Where a family office starts to differ from an investment company is – in particular – regarding two things:
- Attitudes to asset classes and returns
- Activities/services relating to the family and its communities
Family office has a holistic view of investments and asset classes
A general investment firm will primarily focus on asset classes such as shares, bonds, funds, real estate, etc. and will be measured on how much return they can create for owners/investors. In a family office, the success parameters are multifaceted.
For example, the family office will also often manage the following types of investments, where returns do not always play the most important role:
- Investments in real estate; summer houses, venues, forests, hunting areas, etc.
- The investments in things the family is passionate about – e.g. sports clubs, vineyards, art projects, stud farms or similar ventures.
- The family’s own entrepreneurship, where the opportunity to live out their own passion and crafts in some cases outweighs financial success
- The family’s investments with friends, extended family, etc.
The family office coordinates family forums and communities
The family office is also responsible for the family’s other needs and communities. They will typically take care of everything from insurance, banking, external advisors and tax matters to planning family meetings, joint learning, celebrations, legacy preservation/ storytelling, etc.
In most cases, the family office is also home to philanthropic efforts or foundations that create engagement and pride in ownership.
Another important element of the long-term development of family community and ownership is the development of the next generation. Here, the family office will play a role in creating security and belongings for the next generation. Both as a physical place/office where you do internship, get help for tasks and have a friendly, advisory connection, but also as an initiator for external education and development of siblings or cousins, who need to be educated in the family ownership and bonded together in a trustful and motivating joint ownership.
