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What Do Family Offices Do?
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Family offices are a unique and powerful solution for managing the complex financial, investment, and administrative needs of affluent families.
Unlike traditional wealth management firms, they provide a comprehensive, personalized approach tailored to the long-term needs of wealthy families.
This article explores what a dedicated family office does, how they differ from other wealth management structures, and why they are becoming an essential part of modern wealth preservation strategies.
“The mandate was to invest, get the house in order, and build a world-class, small, and nimble infrastructure. And the portfolio management system is the key to that.” – Daniel Forman, CIO
Key Takeaways
Family offices provide tailored wealth management for high-net-worth families.
Unlike traditional firms, they focus on long-term wealth preservation.
Key roles include CIOs, estate attorneys, and philanthropy advisors.
Masttro enhances family offices with AI-driven insights and secure data aggregation.
What is a Family Office?
A traditional family office is a private wealth management firm that serves a single wealthy family (Single Family Office - SFO) or multiple families (Multi-Family Offices - MFO) with the objective of preserving wealth across generations.
There are also now virtual family offices that perform similar comprehensive services for wealthy families but through an outsourced advisory team of investment advisors, tax advisors, and other specialists rather than a full-time team.
These offices manage a wide range of services, both financial and personal, including investment management, estate planning, philanthropy, and concierge services.
Key Functions of a Family Office
- Investment Management – Portfolio diversification and investment decisions, asset allocation, and risk assessment of financial assets
- Wealth Preservation – Estate planning, tax strategies, and legal structuring to preserve wealth for future generations
- Philanthropic planning – Managing charitable giving and setting up family foundations, along with other philanthropic activities the wealthy individuals of the family undertake
- Administration – Various financial affairs as well as accounting, tax filings, and legal advice
- Lifestyle Management – A holistic approach requires a broader range of concierge services for ultra-high-net-worth individual family members, including travel planning, events, handling private staff and related legal affairs
- Family Governance – Educating the next generation, defining family values, plus succession planning and developing family legacy processes
Key Roles Within a Family Office
To function efficiently, a modern family office employs a team of professionals who take a comprehensive approach to achieve the family vision. The structure can vary depending on the family’s financial capital as well as family dynamics and involvement, but typical roles include:
- Chief Investment Officer (CIO): A pivotal role that oversees the family's investment strategy, portfolio allocation, and alternative investments.
- Chief Financial Officer (CFO): Manages financial planning, tax strategy, and compliance.
- Estate & Trust Attorney: Ensures legal protection, wealth transfer, and succession planning.
- Philanthropy Advisor: Manages charitable giving strategies and foundations to achieve long-term goals related to philanthropy.
- Operations & Security Director: Ensures cybersecurity, risk management, and personal security for family members
- Lifestyle Manager/Concierge: Handles travel, private staffing, and other personalized services.
- Family Governance & Education Specialist: Prepares the next generation for wealth responsibility through financial education and governance training.
Family Office vs. Other Wealth Management Structures
Family offices differ significantly from hedge funds, private equity firms, and registered investment advisors (RIAs). Below is a comparison:
Key Interests for UHNW Individuals
Generational Wealth & Succession Planning
UHNW families prioritize long-term financial security to ensure wealth sustains multiple generations. Family offices facilitate:
- Intergenerational wealth transfer strategies
- Tax-efficient trust and estate planning
- Financial education for younger generations
- Retirement planning
Security & Privacy
UHNW individuals face significant security concerns, both digital and physical. Family offices implement:
- Cybersecurity protocols to protect sensitive financial information
- Personal security services for family members
- Confidential wealth structuring to maintain privacy from public record
Lifestyle & Legacy
Family offices extend beyond finance, helping maintain a family’s legacy and values through:
- Philanthropy & social impact investments
- Luxury asset management (real estate, yachts, art collections)
- Personalized concierge services
Hypothetical Case Study: The Legacy Builders Family
To illustrate the impact of a family office, consider the Legacy Builders Family, a fictional UHNW family with diversified global assets:
Scenario: The patriarch, an entrepreneur who built a multinational manufacturing empire, wants to ensure wealth sustainability for his heirs while minimizing estate tax burdens. He also prioritizes philanthropy and wishes to establish a family foundation.
How a Family Office Helps:
- The CFO & estate attorney establish an efficient trust structure for tax optimization to protect family wealth.
- The CIO creates a diversified investment portfolio that includes private equity, direct investments, digital assets, hedge funds, and impact investing, with effective risk management based on family vision.
- A Philanthropy Advisor structures their foundation, ensuring tax benefits and impact-driven giving.
- A Governance Specialist educates the next generation about financial responsibility and wealth management.
- The Security Director enhances cybersecurity and physical security to protect family members.
How Masttro Empowers Family Offices
Founded from a complex multigenerational family office, Masttro has incorporated more than a decade of global best practices.
It is the ultimate full-stack family office management platform, giving you 100% control across all assets, currencies, regions, and estate structures.
The Masttro platform is a purpose-built wealth management software designed to help family offices effectively manage multi-asset portfolios, streamline operations, and ensure secure data aggregation.
Platform features include:
- Automated Data Aggregation – Seamless integration of banking, investment, and alternative assets through AI-powered document management.
- Security & Privacy – Security isn’t just a feature; it’s a foundation, with military-grade encryption at all times and user-controlled data access. Even Masttro employees can’t see a wealth owner’s data.
- Customizable Reporting – Over 200 interactive dashboards providing analysis and insights.
- Next-Generation User Experience – Access real-time portfolio information anytime, anywhere, through an intuitive mobile app.
Final Thoughts
The family office landscape is evolving rapidly. A crucial component in the world of wealth management services, they provide unparalleled customization, privacy, and a broad range of strategic and financial planning services.
Whether these are financial services, estate planning, or building out a portfolio of alternative assets, family offices offer wealth creators a level of personalization and control that traditional institutions cannot match.
For family offices looking to enhance capabilities, reduce overhead, and get a better perspective on their wealth, Masttro provides the ultimate technology solution.
Interested in learning more? Speak to us to see how we can support your family office.
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