Three Family Office Myths

Video transcript

Hello and welcome to the family office association since 2007 we've supported the single family office community by delivering world-class educational content unique networking opportunities and exceptional thought leadership today we'd like to discuss three common myths about family offices myth 1 everyone can have a family office the modern concept of the family office was developed in the 19th century in 1838 the family of jp morgan founded the house of morgan and in 1882 the rockefellers founded their family office which is still in operation today over time as the ranks of the super-rich have swelled more and more family offices have been established while the term family office is used broadly to describe the independent management of a range of services for families of significant wealth from the sec's perspective a family office must meet three requirements first provide investment advice only to family clients second be wholly owned by family clients and exclusively controlled by family members or entities and third not hold itself out to the public as an investment advisor so a single family office is a private company that manages the assets of a single family often for multiple generations therefore the success or failure of a family is often aligned with the success or failure of the family office myth two family offices are wealth management companies while financial management is important if you talk to any family office principal or executive you'll find what typically keeps families up at night is not quarterly portfolio performance but rather questions of generational succession how to best prepare children and grandchildren for the challenges of tomorrow or questions of impact and community how to create resilient governance framework that pursues the family's mission and values or entrepreneurial questions how to keep families operating businesses growing and competitive in a dynamic economic landscape and that finally brings us to myth three family office capital is dumb money in our experience nothing could be further from the truth most family offices have impressive and experienced teams often connected to profitable family owned operating companies in many cases direct investments are one of the largest areas of family office investment work and the family office team will have broad knowledge in many areas given their unique vantage point with respect to deal flow in addition one of the benefits of patient family office capital is the ability to be patient and therefore seize on opportunities that others can't while the market may perceive family offices as fickle the truth is they have the luxury to make decisions only when it lines up with their internal objectives whether those are purely financial or shaped by other mandates around impact or mission related investment programs and so in conclusion family offices play a vibrant and important role in today's financial and business landscape it is often said that quote if you know one family office you know one family office unquote the truth is actually more complicated and more interesting but that's a story for another day thank you for listening to learn more about tfoa please visit our website at tfoa.info or subscribe to our newsletter at tfoa.info