Many family offices do not deliver adequate lifestyle and governance support, despite these areas becoming increasingly important to the families they serve, an industry professional says.
Catherine Grum, head of a new private office division at merchant bank and operational risk business Salamanca Group, says instead many family offices are focussed almost exclusively on investment management.
Grum says addressing the holistic needs of wealthy families living in an increasingly complex environment was one of the biggest challenges facing the family office sector.
Regulatory developments, cross border tax and legislative changes were driving this complexity, according to Grum.
She says attracting the right staff was also a challenge for family offices. “Aside from the high cost of establishing a single family office, there is the common challenge of finding and retaining good people who act independently and can be trusted by the family or the family office.”
Salamanca's new division provides services to assist with corporate and family governance, risk management and asset protection, as well as lifestyle services such as education advisory, property management and marine and security services. It operates predominantly out of London, Jersey, Geneva and Mauritius.
A recent global office study from Campden Wealth and UBS found that investment strategy had the most demonstrable impact on operating costs.
Family offices with a growth strategy spend more overall on operating costs, than family offices that are more focused on wealth preservation, The Global Family Office Report 2014 said (see graph).
Families that were more focused on wealth preservation were more likely to allocate more of their budgets to non-investment related services.