Family offices are arguably the least well defined part of wealth management. The extent of their services can vary considerably. As the name suggests, the intention of the family office is to cater for all the financial, and in some cases the non-financial, requirements of very wealthy families in an integrated way. Many family offices have grown out of other wealth managers, notably private banks and trust companies.

As this part of the market has developed so some private banks and wealth managers have developed multi-family offices. These are family offices that serve a few very wealthy families. The advantage for families is the lower cost because the office spreads the cost of resources across a number of families.

There are five main models of family offices. In practice, a family office may comprise part or all of these models. In essence, a family office is an administrative centre that aims to co-ordinate the activities of professional advisers and wealth managers.

• Long established family offices that recognise the best way of attracting the most qualified professional staff was to increase the assets managed by offering their services to additional investors
• Long established family offices that have chartered private trust companies to handle their family trust needs and those of other families
• Family groups that developed a global investment expertise to serve their needs and those of other investors
• Family groups that turned ownership of the family office over to the management team but remained clients of the office
• Non-family owned financial services groups specialising in family office-type services

One of the advantages of family offices is that they provide families with more control over their financial affairs and it can provide confidentiality. If done properly, it can ensure the management of their finances for generations of the same family, education about the responsibilities of wealth and share purchasing power across the family, as well as customised solutions and the better assessment of financial goals. Some wealth managers may call themselves family offices but do not provide the wide range of services to truly qualify.

Some family offices expand the range of services they provide as the wealth of families grow. Among the services family offices should offer are:

• Integrated tax and estate planning
• Investment management
• Trusteeship
• Risk management
• Lifestyle management
• Recordkeeping and reporting
• Succession planning
• Family philanthropy

Many family offices try to differentiate themselves by going beyond financial services. Examples of non-financial services are yacht management and aircraft leasing.

The family office may not have experts in all areas of wealth management so they will refer issues to third-party advisers, notably lawyers and accountants. When considering whether to use a family office, you should check whether they provide the following:

• Objective financial advice. They should seek to choose from all the providers in the market and therefore be truly independent
• The family office must be knowledgeable in different areas of wealth management so they can advise on the best solution for clients. If not, the family office must have a network of wealth managers they can access
• The practitioners at the family office must work together to solve complex problems, have a back office system to keep track of financial details and the ability to deliver high quality services on a consistent basis
• The ability to offer relationship management for all family members and take a long-term view to planning

Among the questions you should ask when choosing a family office are:

• What are the assets the family wants to enhance or preserve?
• What are the family values you want to preserve?
• Which family members are interested in working in a leadership capacity?
• What roles can individual family members play in the development of the family office?
• How will decisions be made on investments?
• What governance structure will be implemented?
• How will the family office be owned?
• How will the mission of the family office be defined?
• What scope of services will be offered to family members?
• How will the office be organised and managed?
• What are the technology requirements for the office?
• How will the family offices be paid for?