What Are Multifamily Offices … And Why Are They Popular With Investors?

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What Are Multifamily Offices … And Why Are They Popular With Investors?

Grace Chiong - Chief Operating Officer of Golden Equator Wealth - talks about how multifamily offices (MFOs) offer a broad range of tailored services, combining the advantages of impartiality (with clients’ interests in mind) with the stability of a bank.

Written by Xiou Ann Lim on 19 June 2017

When entrusting someone to manage your wealth, you want to ensure that their interests are aligned with yours in handling a host of affairs close to your heart – because they’re managing more than just your money. This is one of the reasons why multifamily offices have become increasingly popular of late.

Grace Chiong of Golden Equator Wealth sheds some light on the benefits of engaging a multifamily office, the breadth of services it can offer as well as the fees associated with their services.

01.

Why engage an MFO over a private bank or independent
asset manager (IAM) or single family office?

MFOs and IAMs are similar in how they decouple from the traditional private banking model – they provide investment advisory on an open architecture platform and align themselves with clients’ interests.

They are able to select or create best-in-class financial instruments for their clients outside of the sales-driven environment of private banks, while having their clients’ assets safely custodised with reputable financial institutions.

Traditionally, family offices were single family offices – each of which had dedicated staff serving the broad needs of a single ultra-high-net-worth family. MFOs take advantage of economies of scale to serve a wider range of wealthy families. Similar to IAMs, MFOs are regulated by the MAS under the Securities and Futures Act – which provides clients with an added layer of assurance.

02.

What’s the breadth of services that an MFO can provide?

Clients see their family office as an extension as well as hybrid of traditional wealth management and other professional services – they think of it as one’s private investment office.

At the core of the family office is portfolio management – the management of all the family’s investments – articulating return and spending objectives, asset allocation, risk management, and consolidated reporting. The region has recently seen an increase in demand for private-label family funds as a means to manage family wealth.

MFOs also provide family governance – which involves consulting with the family to put processes in place to ensure proper governance of their business or personal affairs. They also help with succession planning – estate planning as well as coaching on leadership, decision-making, and managing change.

Other significant responsibilities of MFOs lie in the financial education of the next generation and planning for charitable as well as philanthropic causes. Many MFOs provide this whole suite of services as well as supplementary non-investment services such as business consulting, concierge facilities, and day-to-day administration of the families’ affairs.

03.

How much should I be worth before I engage an MFO?

To take full advantage of the comprehensive services that an MFO has to offer, clients usually require investable assets of at least US$10 million. In general, most IAMs accept clients with investable assets of US$1 million and above.

04.

How much would it cost?

Management fees vary across MFOs and IAMs, depending on the nature of each family’s assets and requirements. Typically, the average range is between 75 and 125 bps of total AUM. This will be discussed with full transparency at the commencement of the relationship, with all fees disclosed prior to engagement.

Learn more about the MFO model as well as what Golden Equator Wealth can do for you.

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