The Rise of the Private Office

Why families need someone on their side of the table

With over 140 years of combined professional experiences in the world of investments and private wealth, we at Acorn have worked with a great number of families – from busy entrepreneurs launching their businesses, their heirs forging their own paths, to multi-generational families with diversified investments and vast philanthropic ambitions. We have built from scratch as well as transformed existing family offices, designed bespoke investment strategies, unravelled convoluted structures, sat on their investment committees, delivered their grant-making programmes and much more.

The one thing that these families have in common is that sooner rather than later they need someone independent by their side to help them deal with the many challenges that come with significant wealth. Maintaining focus on the long-term investment goals while capturing emerging opportunities, balancing the competing priorities and ever-growing demands on time, staying on top of ever-changing laws and making sense of the siloed advice. These are only some of the challenges we shoulder for our clients and their families.

In this blog we examine the different routes families could take to ensure there is someone sitting on their side of the table, and why for some families it’s working with a private office that provides the best chance of success in untangling complexity, building a strategy and dealing with the unpredictable.

The possible solutions and why one size doesn’t necessarily fit all

So what are the options?  

Setting up your own single family office may seem like an obvious answer – and it is for some.  However with its many benefits, come significant commitments both in terms of time and money required to run it professionally and in a way that protects both the family’s fortune and reputation.

“The reality is running your own family office is like managing another business. Not sure my family and I have a bandwidth for this.” Real Estate Entrepreneur

With rising inflation, the costs of running a family office have been on an upward trajectory and hiring the best talent in-house has been a growing challenge exacerbated by the pandemic.

Some families turn to multi-family offices for a solution. Despite some great players out there, full alignment to the family and a tailored approach are hard to find.

 “I like my Multi-Family Office, I have a good relationship manager but I am wary of being sold products that do not always make sense.” PE Managing Partner

A virtual family office has been widely discussed as an alternative. It is a hybrid model where specialist advice and other services are outsourced to third parties while a small number of key trusted advisers sit in the middle to coordinate and oversee. While it is a cost-efficient alternative, it is not a perfect solution as the family still needs to find, retain and manage trusted advisers that completely align with their ethos, armed with the right expertise and high-quality tech solutions, all of which may be out of the family’s reach for a variety of reasons.

“When our father passed away, we “inherited” several very good expert advisers. The problem was that they worked in silos, and we were constantly worried we would miss something important. We needed someone to take it off our hands.” Second generation entrepreneurial family

Is there a better option?

Absolutely! 

The private office, and why for many, it is the right choice

We believe that an outsourced private office could be a game changer for many families. As effective as one’s own single family office, working with an outsourced private office is often more cost efficient, less risky and less burdensome than running a single family office. The private office provides access to “hard to hire” skills and breadth of experience, a good technology platform for investment reporting and oversight, as well as a carefully selected network of third-party advisers and service providers – with all this under one roof, most private offices would be superior to any virtual solution.

What makes a good private office?

In our view there are three distinct characteristics:

• Complete alignment with the client – This means no conflicts of interest and no product push. The family should feel confident their private office’s only interest is in them and making sure they achieve their goals and their affairs run smoothly. This is an important differentiator of a good private office from most multi-family offices.

• Highly-tailored and personal approach to every client – the family should enjoy the same level of care and client intimacy as if it was their own dedicated family office.

• First-hand experience in investments, business management and leadership roles. An advisory background is not enough – when the stakes are high, mistakes can be costly. The private office team should be able to guide the family around potential pitfalls and help realise opportunities.

“I really struggled with being able to keep a good CIO.  We simply could not compete on the salary front with the multi–billion houses. We decided to outsource all the investment function.” Middle East second generation family

In terms of service provision, to be able to cater for the evolving needs of family wealth, the private office should offer:

• the whole suite of investment advisory services – from family capital diversification, strategic asset allocation, manager selection to performance review and oversight; 

• acting as the family’s Chief Operating Officer, planning and project managing transactions, coordinating advisers, projecting liquidity and safekeeping the family’s data;  

• advice and support with the family’s philanthropic endeavours as well as design and implementation of impact strategies;

• delivering the smooth transition of wealth between generations – from defining shared purpose and vision and creating a comprehensive roadmap to next gen development and family governance.

With our expertise and attentive, client-led approach, we have worked tirelessly to bring all these aspects together under one roof at Acorn. In response to the growing demand for this holistic service, we are excited to launch this September our enhanced Acorn Private Office service, offering complete alignment with you, wherever you are on your wealth journey.

Feel free to get in touch to learn more about how we can help you or your clients.