While the eldest child continued to work within the business, the two younger siblings grew their careers and families outside of it. All three children benefited modestly from the success of their parents’ business with the assistance of a first home purchase and new vehicles every few years. Fast forward to 2019 – the sale of both the family business and the associated real estate assets, created an estate valued at over $500 million dollars.
Not only were the children totally unprepared for the sudden arrival of wealth, but it was also very unexpected. At no point had they been made aware of the potential value of the family business. Much like having a pop-quiz that you can’t study for, the three heirs did not have the skills, experience, or to some degree, desire to manage the responsibility and expectations that are required of a high-net worth family. While I changed few details in this story to ensure anonymity, tales very much like this one are becoming more and more common and serve to underline the need for a structure like a Family Office (FO).
Family offices have long existed, but now driven by a huge transfer of wealth across generations, the tech revolution, and the rapid growth of certain economies, their numbers are growing like never before. This market expansion and change along with the increasingly powerful clout of these bespoke, diverse organizations for preserving and growing intergenerational wealth, means families are approaching the question of their team development and structure very differently.
It is often said – “once you have seen one family office, you’ve seen one family office.” Like snowflakes, there really are no two that are identical – each having its own unique set of needs, goals, dynamics, history, and stakeholders. Their diversity is also a consequence of the secrecy and privacy that surrounds a traditional family office.
That said, there is a common intention amongst all family offices, which is to create an infrastructure designed to support and protect families that belong to the high-net worth (HNW) or ultra-high-net worth (UHNW) category. Through their family office, HNW and UHNW families manage their financial and family affairs, including assets, taxes, and philanthropic activity.