Global Wealth Insights: Credit Suisse Study on Family Offices

January 26, 2014

Why a family office? Increasing wealth among the ultra-wealthy and rising globalization has led to rising numbers of family offices in recent years. Because of this increasing popularity, the term has become commonplace and a key component in wealth management marketing. There is also an air of mystery surrounding this exclusive form of wealth management because there is no concrete data around what exactly constitutes a family office.

Credit Suisse, in partnership with EY and the University of St. Gallen, has recently released a study on family offices – defining characteristics, the reasons why they make sense (and the reasons why they don’t) and the intricacies of set up and operation.

The report seeks to answer a few key questions, and brings to light many upsides and downsides to forming a family office:

• Why should a family set up a family office, and what are the different types of family offices?
• Are there disadvantages as well as benefits in setting up a family office?
• What services are generally best performed in-house, and which outsourced?
• Is there an ideal minimum amount of assets under management, and what costs are involved?
• How are family office professionals most effectively recruited and managed?
• What needs to be included in a family office business plan and what are the different stages involved in setting up a family office?
• Which are the most important considerations when selecting a jurisdiction for the family office?
• What are the major risk areas and how can these be managed?

One critical take-away from the report is the decision family offices have to make around which services to perform in-house, and which services to out-source. In today’s global wealth management landscape, there are undoubtedly innumerable options for family offices to outsource key functions – but how to choose and manage those outsourced firms can become a challenge. Case studies in the report seek to clarify.

This piece is an insightful and informative overview on a form of wealth management that, while in existence for hundreds of years, is only recently becoming well known in the financial industry, and among a very select portion of the population. Click here to view the entire report.