A smarter way to manage your family’s wealth

FBM - Wealth Protection

As family business owners strive to grow their businesses and future proof them for generations to come, they often find it difficult to manage the competing demands of running a business and managing their private wealth. A Family Office offers the perfect solution to this dilemma.

Running a successful family operation is challenge enough, not to mention finding time to pay your family’s bills, attend to insurances, manage cash, monitor share portfolios, superannuation and other investments, plan for the future, and liaise with the numerous advisors that come with it.

It is therefore no surprise that a business model has evolved to service time poor families who require a broader skillset to meet such needs. Keystone Private was established in 2004 to service the wealth management needs of a single non-resident investor in Australia and has now grown to service 15 families.

Family Offices exist to cater to the complex and unique needs of wealthy families and successful family business owners. They are generally private organisations working exclusively for families to:

Manage day to day financial needs and investments of wealthy families;
Provide an independent and reliable advice platform and reporting framework;
Sustain and enhance wealth over time as the family grows; and
Guide families through generational transition while preserving family values and legacy

From Family Business to Family Office
The goal of a family business is to strengthen and grow an operating business which can lead to significant wealth creation. It is then the primary goal of the Family Office to preserve and safeguard that wealth for generations to come. A Family Office helps you with “the business of the family”, so you can concentrate on the family business.

When do you need a Family Office

Whilst there is no hard and fast rule, the drivers behind the decision to engage a Family Office often fall into one of the following categories:

The time management of private wealth is distracting or overwhelming;
There is a desire to separate the management and reporting of private wealth structures from the business;
You have non business assets that require professional management;
You experience a liquidity event such as the sale of your business or an inheritance;
You are a multi generational family requiring succession and estate planning

Services Provided by a Family Office
Each individual family office or multi-family office (servicing a number of families) differs. Typically they offer a range of services that can be customised to your unique situation and existing assets, aspirations and advisor relationships. At Keystone Private, our services cover four broad areas:

Financial Assets – management of financial assets, record keeping, portfolio administration and integrated reporting services.
Property Portfolio Services – acquisitions, disposals, in-house property management, structuring, financing
Accounting & Reporting – banking, bill paying, accounting, cash flow management, through to BAS, superfund accounting, monthly financial reporting and foundation administration.
Family Continuity Services – value and legacy preservation promoting family unity and continuity, development of governance programs, constitutions & education of family members

Advantages of a Family Office
There are several key advantages of Family Offices that set them apart from other advisory firms and financial institutions, chief amongst these are independence, integration and a focus on your best interests. Family Offices offer:

True independence, no product pushing. Opportunities are presented from a wide range of sources and free from bias
A trusted advisor, to “sit on your side of the table” and pursue your best interests, always
One integrated, central coordination point for all wealth management services, advisors and reporting
Greater buying power (more so in a multi-family office) and access to off market opportunities
An education platform for family members across the generations
Privacy, confidence and confidentiality.

A Case study: The Duncans

Mr and Mrs Duncan (not their real names) owned a successful family business, employing several of their children. They had built up a portfolio of shares, commercial property and superannuation outside of their business assets.

Mr Duncan was looking to enjoy time with his grandchildren while still keeping a keen eye on the business. Mrs Duncan was the financial controller at home, often spending hours a day attending to bill paying and liaising with stockbrokers, property managers, accountants and other advisors.

The day-to-day burden of managing their private wealth was overwhelming so they looked to a Family Office to initially help with their bill paying, managing their investments (in conjunction with existing advisors) and monthly accounting.

They value the increased focus on their non business assets, the monthly integrated reporting and the extra free time they now enjoy. They have since engaged their Family Office to establish a “Family Council” to talk about family matters and educate the children with regards to the private wealth structures and investments. The family now knows the big picture across all of their wealth.

Helping with Succession Planning
One of the top challenges facing family businesses today is how to transition a family-owned business to a subsequent generation. There are parallels when looking at your private wealth. Do you want to keep your wealth together in the family? Is this what the next generations want? How are decisions made when the first generation isn’t calling the shots? How do you raise responsible, engaged children to steward the family wealth rather than feel they are entitled to it? To what extent do you want to be philanthropic and give back to the community?

If any of these questions give you pause for thought or you are a successful family business owner considering your time, private assets or future, a Family Office may be able to help your family to preserve your wealth and values for generations to come.