It is not only the world's leading business and financial families that require the use of a family office; one of America's most successful entertainment stars has this week announced that she is creating her own single family office, writes Katie Baker.
According to the Wall Street Journal, television star Oprah Winfrey, who is worth an estimated $2.4 billion, has hired Peter Adamson as her chief financial officer. However, Winfrey, who made her fortune in television, films and magazines, is unmarried and has no children. Could the term family office be a misnomer?
Not according to Eric Spaas of the European Network of Family Offices: "I don't think it has anything to do with whether you have children or not, it is more to do with managing your wealth. If you don't have any children you can use your wealth to help someone else. The family office can organise that transfer to other purposes," he explains.
Juliette Johnson, Head of Family Business at Coutts Private Bank, agrees: "The functional side of the family office will be similar if it serves an individual or a family. An individual will still have to deal with estate planning and deciding how they want their wealth managed when they are gone. This almost equates to the same thing as transferring wealth to the next generation – the individual still needs to decide what will happen to their wealth in the future, so the family office services are appropriate."
Further, Johnson stresses Oprah must first decide who she wants to benefit from her wealth: "If she has no direct family, who does she consider to be her family? Who does she want to support? From the answers to these questions she can decide what is the best structure to use."
Often touted as one of the richest African-American's of the 20th Century, Oprah, a self-made billionaire from Mississippi, is also a renowned philanthropist. Through her private charity, The Oprah Winfrey Foundation, she has awarded hundreds of grants to organisations that support the education and empowerment of women, children and families around the world.
Chris Phillips of US-based multifamily office Threshold believes philanthropy is the real reason why Oprah is so suitable for the family office model. "Family office services are applicable to anyone involved in high level philanthropy, as Oprah certainly is. She directs dollars towards programmes that extend far into the future, which will probably take the place of planning for her own future generation," he says.
So why has Oprah chosen the family office model as opposed to a private bank or other wealth management structure? Has she come to the same conclusion as many families that such institutions cannot currently best serve her needs?
"If private banks are not willing to adapt they will see more people adopting the family office model," says Spaas. However, both Johnson and Phillips believe the family office and private banking models can co-exist. "I think they are two separate service models with their own deliverables," Phillips says.
What is certain is that Oprah has huge clout. She is recognised as being one of the most powerful people in the world and is the only person to have appeared on every one of Time magazine's "Most Influential People" lists. Could she single-handedly propel wealthy individuals to engage with the family office model in greater numbers?
It is likely that as her biggest sphere of influence is the US, many of her wealthy followers will already be well aware of the advantages that family offices can bring, although clearly elsewhere in the world there may be more interest. However, the time of the family office as the "must-have" accessory surely bit the dust with the onset of financial crisis.
Instead, Threshold's Phillips prefers to highlight Oprah's overall unique approach that he says she will undoubtedly bring to the family office model: "Oprah has always been innovative and finds a way to make things work and I don't think it will be any different as she sets up her family office. She is not necessary following the mould but I don't think she ever has, she's always self defined things."