Once you’ve determined that a family office is the right direction to manage all of your family’s finances, it’s time to get started building it. This can be a daunting task made much easier by enlisting a family office partner. This trusted person or investment firm acts as the family office liaison, not only starting your family office, but also running it aligned with your unique objectives.
How to Start a Family Office
A family office is essentially your own private wealth firm. The firm employs staff, such as an accountant, lawyer and financial advisor, who all work toward the family’s mission and goals.
Although the size and depth of a family office largely depends on the family, starting one is essentially the same across the board. First, you need a representative. This is the person you will communicate with directly and who will act as a liaison between you and your family office staff.
The easiest way to start a family office is with someone you already know and trust with your assets, such as your financial advisor. Stableford financial advisors can take care of everything, from creating the office (much like creating a company) to investing funds and managing wealth transfer across generations. And unlike starting your own family office from scratch, Stableford can partner with you to set up your ‘smart’ family office.
Your Family Office Partner = Your CFO
When you call on Stableford to be your family office partner, you have access to an established, experienced investment firm. This includes things that you may not think about, like infrastructure and technology or research and trade execution, that are already in place so that you don’t have to go out and build it from the ground up.
Think of Stableford as your family office CFO. By utilizing our network of personnel, investment strategies and capabilities, you then have the ability to simply focus on your family rather than the mechanics. Your CFO handles everything and reports to you, the CEO.
For instance, a typical family office includes the following:
• Financial planning
• Asset monitoring and management
• Tax services
• Legal services
• Risk management
• Philanthropic services
• Insurance coordination
• Concierge Services
Some offices may also need travel arrangements, property management and household payroll (landscapers, nannies, housekeepers, etc.). These are a lot of services to coordinate and many specialized individuals to employ. However, most of these services Stableford already offers.
We have a network of other family offices and trusted professionals that can extend capabilities and have complimentary services that can save you time and money. For example, if you want to turn your passion into a foundation, we have philanthropic directors we can bring in as needed. For wills, trusts and other legal documents, we have lawyers whom we work with often and trust explicitly – or, as your partner, we can work with your family attorney.
Creating Your Family’s Custom Investment Policy Statement
An investment policy statement (IPS) is an important written plan and an essential part of a family office. It serves as a strategic guide to the planning and implementation of a complete investment program. It also defines roles and responsibilities while laying out directives for keeping investments aligned with a stated purpose.
Although an IPS is simple enough, it is often overlooked. A family office partner like Stableford is well-versed in the IPS, customizing to each individual, family or institution.
First, a good IPS defines the family office’s long-term goals. The defined objective addresses questions about why the family is investing, which opportunities to seek out (or avoid), and gets everyone on the same page. This also forges agreement of all family members, which can be especially important for family offices supporting multiple family members across generations.
Another key component of the IPS identifies risk parameters. Figuring out how much risk you are willing to take on can be difficult for the individual investor, let alone a family. Determining how much downside to accept, or your family’s value at risk (VAR), is essential to helping your family thrive during both bullish and bearish market cycles.
An IPS holds the family accountable and provides guidance. It clearly defines goals and the metrics for judging performance. This not only benefits the family, but also the financial advisors tasked with managing the wealth and assets.
Harnessing Ever Changing Technology to Enhance Your Family Office
With so many components, family members and staff, you may be worried about security and compliance. But you don’t have to be. These are already in place when you use Stableford for your family office partner.
From a logistical standpoint, order entry has to be done through software. Do you know how to choose the right one? We’ve done it for you. To put the orders in and get the best execution is key.
“We have experience in putting the technological platform – using different investment platforms – from custodian to investing – that would be more challenging for someone to duplicate.” – Andy Brinkman, Founder, Stableford Capital
When researching investment opportunities that align with your IPS and buying/selling/trading, Stableford holds itself to the highest standards. Integrity and trust are essential in running a family office. As a family fiduciary, we are held to a higher standard of conduct when working on your behalf. We avoid conflicts of interest and make the best decisions for you and your family.
It all comes back to you – protecting you and your wealth are our top priorities.
Managing Change and Protecting Your Privacy
Another important factor in a family network is the exchange of ideas. If you think of your family office as a business, you’d attend industry conferences, read relevant research, and stay abreast of changes. Stableford is already on top of the HNW investing environment.
For example, your family office wants to have a long-term equity portfolio. To meet this objective, do you really want to rebalance that portfolio? Have you considered the subsequent changes to your tax planning?
Your position needs to be balanced with tax consequences. This is why having a family office – a team – to support you is beneficial.
Then there is the issue of privacy. What better way to address and manage privacy than by having one key contact to manage your team?
Not only is it easier for families to manage one relationship with their family office partner, but it is safer. One contact knowing your family’s intimate financial details to manage assets and plan for taxes is simply safer than outsourcing to multiple individuals.
Consistency and Confidence Lead to Control
Consistency with your one contact makes you confident in your decisions. It’s better to focus on true diversification of your portfolio than diversification of your family office staff.
Having five million dollars invested with five different firms is NOT diversification. Information is bound to be missed or misinterpreted. Then the firms, and your goals, may not be truly aligned because you’ve had to relay information to five sources. One small omission can have a significant impact on your portfolio and your family office’s wellbeing.
As your family office partner, Stableford is your partner and we will manage all the moving parts, and people in your family office, while keeping your unique needs as the top priority. By staying consistent and maintaining the infrastructure we provide you with a platform to grow and protect wealth. To learn more about multi-family office services through Stableford, contact us at 480.493.2300 or online.