Increasing numbers of very wealthy people have a dilemma when it comes to the management of their fortunes. Arnaud Decrulle, CEO of Belair House, Matteo Novelli, Managing Director of Borletti Group and Paul Westall, a Director of Agreus discuss the choices of a using a single or multi-family office to manage such wealth.
As Diverse as Families
Common in the United States for decades, family offices are rapidly expanding to Europe, Asia and elsewhere. Arnaud Decrulle, CEO of Belair House, says that the lack of any formal regulation for family offices and the fact that they deliver tailor-made services to their owners, results in an incredible diversity of structures: single-family offices with a couple of employees, multifamily offices with tens of employees managing the affairs of several families and some single-family offices outsourcing specialist functions to multifamily offices. According to Matteo Novelli, Managing Director, Borletti Group: “If you try to compare ten family offices you will realize that they are all very different in terms of structure, in terms of mission and in terms of services they provide.”
"If you try to compare ten family offices you will realize that they are all very different in terms of structure, in terms of mission and in terms of services they provide.” Matteo Novelli, Managing Director, Borletti Group.
Whether or not to set up a family office is often cost driven. The cost is determined by the size of a family’s fortune. Arnaud Decrulle says it is cost effective setting up a family office if a family’s worth starts in the €30 million to €50 million range that coincides with the definition of “ultra-high net worth.” But the choice is often determined by the complexity of a family’s affairs. The source of wealth and a family’s global position, as well as the respective functions of wealth planning, tax minimization, risk management, services, philanthropy and concierge services required, varies hugely from family to family and has a bearing on the costs.
Keeping it in the Family
With 60% of family office running costs arising from staff compensation, selecting employees and ensuring loyalty and low staff turnover is a key task. Paul Westall, a director of Agreus, a specialist recruitment agency says there is an increasing trend for professionals to run family offices. However, family members still play a large role in the Middle East, where 65% of leadership positions and the US where 50% of family office CEOs are still family members. By contrast, Europe and Asia had the highest number of non-family members as their CEOs at around 71% to 80%.