Family offices: What are they are what role do we have to play in their success? Saffery Trust Cayman Director, and founding member of the Cayman Islands Family Office Association, Andrew Needham, shares his insights on this growing client service area.
What is a family office?
A family office is a private advisory group which manages the wealth and financial affairs of a single high-net-worth family. They usually comprise family members, specialist intermediaries – such as accountants, lawyers, and trustees – and trusted advisors. There are two main types of family office: single-family offices or multi-family offices which serve one or multiple families respectively.
One of the benefits of a family office is providing a centralised approach to managing the complexities of substantial wealth, ensuring privacy and a tailored service. Family offices can be used to support a myriad of objectives including, but not limited to, the operation of family-owned businesses, managing assets or facilitating succession planning. The goal of a family office is to preserve and grow family wealth across generations, providing coordinated financial management.
How are family offices changing?
Family offices are on the rise. There are many contributing factors to this, including a growing number of high- and ultra-high-net-worth families, coupled with a lack of trust in financial service providers. Families are increasingly looking to play a more active role in their wealth journey.
We are also starting to see the impact of an aging global population, with older generations staying involved in the management of family affairs – such as family businesses – for longer. The result of this is multiple generations of a family actively involved in the wealth journey simultaneously. This can present significant challenges when it comes to wealth management, with differing views within the family, for example about what should be prioritised.
We are also seeing an increased globalisation of high-net-worth (HNW) families, and their assets. Assets held within wealth structures are also becoming more diverse, for example increased opportunities with the digital asset and environmental, social and governance (ESG) sectors.
The need for an objective advisor – such as a trustee – in a family office is paramount, particularly to mitigate the risk of, or provide solutions to, contentious matters.
What is the role of a trustee in a family office?
A trustee can play a fundamental role as a trusted advisor within a family office. Trustees have a legal duty to act in the best interests of all current and future beneficiaries and act as an impartial voice.
Highly experienced in the establishment and administration of traditional and alternative wealth structures, our role is to think ahead and use our professional skills and international experience to add value, providing strategic input into decision making processes.
Another hugely important role for a trustee is to facilitate connections between the family office and a global network of professionals, while remaining a central point of contact. Trustees work closely with a broad spectrum of specialist advisors, for example investment managers, tax advisors, lawyers and even yacht captains/crew and fine art agents. Appointing a trustee to a family office bring access to a much wider pool of specialist intermediaries, who have already been vetted to the highest standards.
What do you think is the biggest challenge facing family offices?
The biggest challenge facing family offices is very much linked to my earlier point about the increasing involvement of the next generation. While family members working together towards a shared goal is a deeply rewarding endeavour, there is always the potential for conflicts. If not properly managed, these conflicts can strain relationships, disrupt progress, and even jeopardise the success of the collective effort.
To mitigate the risk of contentious matters arising, strong family governance is essential, and a trustee can play a valuable role in ensuring this is in place.
Other challenges include staying informed about and complying with complex, multi-jurisdictional regulations, keeping pace with rapidly evolving technological advancements, and attracting and retaining top talent. It is important for a family office to include specialist advisors who can provide solutions to these challenges, offering expert guidance, strategic oversight, and access to the necessary resources to navigate these complexities effectively
What do you think is the biggest opportunity for family offices?
The opportunities for family offices are always growing and are often closely tied to the challenges they encounter.
For instance, rapid technological advancements offer the chance to enhance efficiency through sophisticated consolidated reporting and improved data security. Additionally, the demand for robust family governance creates opportunities for family members and trusted advisors to engage more actively, contributing to the development of values and objectives that reflect both individual and collective aspirations.
Emerging markets, including digital assets and ESG sectors, also present increasing opportunities, providing avenues for financial returns while aligning with the goal of using wealth to make a positive impact.
What do you enjoy most about working with family offices?
It’s hard to pinpoint just one aspect that I enjoy about working with family offices, as the rewards are multifaceted and constantly evolving.
One of the most fulfilling aspects of being a trusted advisor within a family office is the opportunity to build long-term relationships with incredibly interesting, diverse, and dynamic families. These relationships allow for deep connections and the chance to provide meaningful guidances?ce that spans generations.
I also enjoy opportunities for cross-border collaboration with other Saffery Trust teams as families and their assets become increasingly globalised.
Ultimately, the one certainty when it comes to family offices is that no two are the same, and nothing is static. How we can best add value will be different in every case, and our approach must be tailored to the unique needs, goals, and dynamics of each family. This requires flexibility, creativity, and a deep understanding of the family’s evolving circumstances, ensuring that our support remains relevant and impactful over time, which is endlessly rewarding as a client service provider.
