Broker Check
Setting Up a Family Office for Success

Setting Up a Family Office for Success

January 06, 2024

Key Takeaways

  • Some family offices are being set up with locations in multiple states or multiple countries.
  • Getting access to global expertise and opportunities is a key driver.
  • Virtual family offices are increasingly using technology to tap the expertise of professionals around the world.

Today’s wealthiest family offices are getting creative about where they set up shop and how they access the resources they need in order to build and protect serious wealth. Because it makes sense to pay attention to what the most successful families are doing, anyone considering a family office—including a virtual family office—should take note.

In the past, most single-family offices were established literally next door to an ultra-wealthy family or its family business. But increasingly, ultra-wealthy families are taking a more thoughtful and forward-thinking approach to locating their single-family offices (SFOs). While “close to home” SFOs can provide significant advantages, such as easy oversight and other conveniences, the ultra-wealthy have become increasingly attentive to a broad array of factors that lead them to locate their single-family offices (in whole or in part) in different parts of the country—or even multiple countries. 

Even better: The ability to access resources from all over the globe is becoming more commonly available to families who aren’t massively wealthy. 

Segmenting the family office

For the ultra-wealthy, the idea of having different aspects of their single-family offices in various locations is becoming more attractive. Often this helps with their main objective of maximizing opportunities to grow wealth. A wealthy family’s financial holdings and investments—or the holdings and investments they seek to attain—could play a part in the family’s decision to have a presence in multiple areas of the country or even the world.  

Example: A Florida family that wants to invest significantly in the latest technologies might set up their family office’s home base locally but also have a team of people located in Silicon Valley. This “boots on the ground” local presence can help them identify and capitalize on investment opportunities—the family can literally follow the money—while the overall coordination and oversight remain at the core family office location. 

Increasingly, family offices are coordinating with their peers and other financial and legal firms to garner the benefits of “acting locally” in different jurisdictions, but without having to formally establish their own satellite operations. This approach, implemented well, can achieve the intended result of proximity to investment possibilities (while also mitigating costs). 

A quick trip around the world

For purposes of privacy and safety, a family office that’s close to home can be very worthwhile. But as noted, more and more investment opportunities and capabilities are being distributed geographically. 

For example, a growing number of single-family offices in the U.S. are now identifying a jurisdiction for dealing with taxes and the operation of the SFO while having the family fortune managed through different entities (and possibly in various locations). 

Another big factor in deciding where to establish a family office is access to talent. The ability to source high-quality professionals to run a single-family office and make decisions about the family assets is a top priority among the ultra-wealthy. And it should be: Over the years, we have discovered that, without a doubt, talent is the factor most critical to the success of any family office. (Indeed, it’s why more and more single-family offices are adopting a participatory compensation arrangement that enables senior executives to earn millions of dollars annually if they exceed their benchmarks.) 

Because Europe and the United States, relative to other parts of the world, have a long history with SFOs, there tends to be a larger pool of highly experienced professionals in those two areas—along with other factors that make them attractive to wealthy families.

  • In the U.S., families tend to gravitate toward offices in the New York City area, on the West Coast and in Florida. That said, those SFOs usually make extensive use of states such as Delaware, South Dakota and Nevada because of their laws dealing with private trust companies and fiduciary management.
  • The United Kingdom is another large center of single-family offices. High-caliber talent—especially money management expertise—is plentiful, and locations such as London are deemed immensely attractive. (The complication: Britain’s split from the European Union. As long as the United Kingdom is able to maintain its connectivity to the rest of Europe, single-family offices will likely continue to congregate there.)
  • Switzerland is becoming a more and more significant center for single-family offices. This is being driven in large part by the country’s considerable political and economic stability (as well as excellent quality of life). Bonus: The regulatory environment in Switzerland is particularly appealing for single-family offices, as the country has tax treaties with many other countries. 

That said, as more private wealth is increasingly being generated around the globe, high-caliber talent is emerging in new areas—giving wealthy families more choices as to where to look for great professionals. 

Example: Singapore is drawing single-family offices thanks to operational capabilities such as the ability to work with the government over the Internet, coupled with low crime rates and a high quality of living. There is also the residence-by-investment program that allows the ultra-wealthy families of single-family offices to become permanent residents of the country. What’s more, the ultra-wealthy are exempt from Singapore taxes when it comes to foreign-sourced income. This permits them to bring in as much money as they desire without having to pay any taxes on these funds. 

There are other considerations when thinking about where to set up single family offices or outposts. For example, the family lifestyle: Where do family members live, work, travel, learn and congregate? If your family is scattered around the globe, or if they tend to spend large chunks of the year together in one location (either foreign or domestic), then it could make sense to have a family office presence in those areas and “be where they are.” 

The nuts-and-bolts administrative concerns can also be important drivers here. Most families with family offices want their offices to run as efficiently and effectively as possible. There may be financial reasons for this, or it may be they’re seeking the pride of having an extremely well-managed family office. Regardless, preferences and needs around structural aspects of the family office and the processes it employs to accomplish its work can play a role in where a family office is located.

The virtual family office—an option for more investors

Here’s why all this may be important to you: It’s possible for individuals and families that don’t yet possess massive amounts of wealth to access quasi-family-office-level expertise from professionals across the country or even in other nations. Increasingly, virtual family offices can pull together resources and experts from diverse locations and coordinate their actions on behalf of families that have significant assets (but that aren’t necessarily millionaires). 

For example, a virtual family office in Connecticut might have relationships with venture capital groups in Silicon Valley as well as attorneys in Europe. All those professionals’ efforts can be managed through the virtual family office without the clients ever having to travel across the country or to another continent. 

This trend is due in part to improvements in technology that enable connectivity from afar. Secure videoconferencing, online virtual private networks and the like make it easier, safer and more cost-effective for families to interact with top talent regardless of where those people are located at any given moment. In this environment, experts can market themselves more broadly to more wealthy families, and wealthy families don’t have to travel around the world or have a physical presence in a particular geographic region to get the advice they seek. 

Conclusion

When it comes to family offices of all stripes, the strict idea of “everything under one roof” is increasingly evolving toward “everything in its right place.” Decisions around location and access to expertise will depend on each family’s needs, of course—but the good news is that families have more options and choices to help them find the right fit. 


Securities offered through LPL Financial. Member FINRA / SIPC. Investment advisory services offered through NewEdge Advisors, LLC, a registered investment adviser. NewEdge Advisors, LLC and Congruent Wealth, LLC are separate entities from LPL Financial.

VFO Inner Circle Special Report By John J. Bowen Jr.

© Copyright 2022 by AES Nation, LLC. All rights reserved.

No part of this publication may be reproduced or retransmitted in any form or by any means, including but not limited to electronic, mechanical, photocopying, recording or any information storage retrieval system, without the prior written permission of the publisher. Unauthorized copying may subject violators to criminal penalties as well as liabilities for substantial monetary damages up to $100,000 per infringement, costs and attorneys’ fees. 

This publication should not be utilized as a substitute for professional advice in specific situations. If legal, medical, accounting, financial, consulting, coaching or other professional advice is required, the services of the appropriate professional should be sought. Neither the author nor the publisher may be held liable in any way for any interpretation or use of the information in this publication.

The author will make recommendations for solutions for you to explore that are not his own. Any recommendation is always based on the author’s research and experience.The information contained herein is accurate to the best of the publisher’s and author’s knowledge; however, the publisher and author can accept no responsibility for the accuracy or completeness of such information or for loss or damage caused by any use thereof.

Unless otherwise noted, the source for all data cited regarding financial advisors in this report is CEG Worldwide, LLC. The source for all data cited regarding business owners and other professionals is AES Nation, LLC.