Family Offices -- A Family Proposal -- May 8, 2023

For the archives.

Locator: 10001FAMARCH.

Family offices to keep investing. Link here. 

At a time when many investors are pulling back, family offices are moving into “risk on” mode, with plans to buy more stocks and alternative investments this year.

Nearly half (48%) of family offices plan to purchase stocks this year, according to the Goldman 2023 Family Office Investment Insight Report. The report, based on a survey of 166 family offices around the world with at least $500 million in assets, also found that family offices plan to put their large cash piles to work as inflation, rising rates and falling stocks create new opportunities.

“Family offices, for the most part, are really risk-on for the next 12 months,” said Meena Flynn, co-head of Global Private Wealth Management at Goldman. “They can ‘zig’ while others ‘zag.’ And they really try to prepare in terms of how they allocate their assets to be able to do that.”

I'll have to talk to my youngest sister about setting up our own "family office." I think we can do it for a lot less than wiki and Yahoo!Finance suggest. I'm thinking maybe $1,000 for the whole syndicate -- mostly to pay for arranging fishing trips.

Link here.

A family office is a privately held company that handles investment management and wealth management for a wealthy family, generally one with at least $50-$100 million in investable assets, with the goal being to effectively grow and transfer wealth across generations. The company's financial capital is the family's own wealth. Family offices also may handle tasks such as managing household staff, making travel arrangements, property management, day-to-day accounting and payroll activities, management of legal affairs, family management services, family governance, financial and investor education, coordination of philanthropy and private foundations, and succession planning. A family office can cost over $1 million a year to operate, so the family's net worth usually exceeds $50-$100 million in investable assets. Some family offices accept investments from people who are not members of the owning family.

Some firms that cater to multiple clients offer personality psychology services for family members to support better alignment and communications among members of the family. 

A family office either is, or operates just like, a corporation or limited liability company, with officers and a support staff. Officers are compensated per their arrangement with the family, usually with incentives based on the profits or capital gains generated by the office. Family offices are often built around core assets that are professionally managed. As profits are created, assets are deployed into investments. Family offices might invest in private equity, venture capital opportunities, hedge funds, and commercial real estate. Many family offices turn to hedge funds for alignment of interest based on risk and return assessment goals. Some family offices remain passive and just allocate funds to outside managers.

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