A fidelity family office is something all high net worth or ultra-high net worth families need, whether they realize it or not. That’s because wealthy families have colossal amount of complexity to manage across several dimensions of their lives, including their assets, relationships, activities, etc. There are just seemingly endless things to organize, manage, and plan ahead for. This is especially true for high earning folks and families that aim to build a meaningful and vibrant family enterprise that – if all goes well – perpetuates for their generations to come. If you have more than $5 million in liquid investable assets, we suggest you to request a copy of our informative guide, 7 Secrets to High Net Worth Investment Management, Estate, Tax, and Financial Planning, authored particularly for individuals and families who hold worth $5 million to $500 million in investable wealth. The guide will introduce you to the essentials of financial planning and wealth management and explains what you can expect from the top ultra-high net worth wealth management companies.
Luckily, there’s are certain firms that downgrades this complexity, and extends efficiencies across a high net worth and ultra-high net worth families’ breadth of assets and activities. A fidelity family office is one such firm that effectively manage assets of wealthy families and also provides mutual fund services for the benefit of its clients’. We have said it many times before and we’ll say it again: wealth management is vital for everyone, but more so for high net worth and ultra-high net worth individuals and families. Since once complexities increase once your wealth crosses $1 million.
When it comes to wealth management, Pillar Wealth Management holds its grounds as one of the most competent wealth management companies. We’re a fiduciary advisory firm with a collective experience of over 64 years in wealth management, tax planning, estate planning, business succession planning, and more. You can get in touch with our team and speak to them in a one-on-one consultation. We provide services of qualified wealth managers who have years of experience in managing high-profile portfolios of ultra-high net worth individuals/families. They’ll share key insights to help you understand what wealth management entails and how you can benefit most from it.
“What services does a family office provide?”, “How much should a family office cost?” These are some of the questions that we’ll be addressing in this post along with exploring whether is it reasonable to work in a family office.
Fidelity Family Office: Overview
A fidelity family office is basically a private office that centrally extends services to wealthy families to help them manage the complexity of their lives. Specifically, to grow their financial wealth, manage family needs of all kinds, support long-term goals and seamlessly coordinate all their endeavors in a unified manner.
Fidelity family office services are typically a combination of tax, investment, legal, governance, and concierge-related activities, along with others that can be tailored to fulfill the needs of high net worth and ultra-high net worth families. A family office replaces the web of independent wealth advisors, processes, and teams that wealthy families form when managing their assets and activities themselves. Remember, when it comes to family offices, there’s no one-size-fits-all; every family office is customized with the team, services, and scale that the client requires for their needs.
When to Consider A Fidelity Family Office?
It is wise to consider a fidelity family office when the holdings of high net worth and ultra-high net worth families become:
- Too complex to coordinate or oversee
- Too substantial to manage alone
- Or when a family becomes serious about building a valuable family enterprise that perpetuates for
thegenerations to come
In a nutshell, a fidelity family office can bring wealthy families greater financial returns, better coordination across various initiatives, higher oversight and efficiency, and centralized support for multigenerational continuity. As you contemplate whether a fidelity family office is right for you, it’s useful to explore the services and benefits of a family office.
What Services Does A Family Office Provide?
While every high net worth and ultra-high net worth family builds a family office that best fulfills their particular enterprising needs, activities, and aspirations, they mostly entail the following main services:
1. Custom & Centralized Investment Management
Custom and centralized professional management of a wealthy family’s assets become crucial as they strive for wealth regeneration and value creation, especially in a risk-controlled framework. Professional experts can manage your investment portfolio to build and safeguard wealth. This includes factoring in your preferences and feelings regarding risk, with continuous evaluation and rebalancing. If you wish to learn some lucrative strategies to manage your wealth, be sure to check our in-depth guide, 7 Secrets to High Net Worth Investment Management, Estate, Tax, and Financial Planning.
There are myriad of ways a fidelity family office extends investment management services like:
- Investment Committee – an important investment governance forum that enables wealthy families to fully step into their role as strategic owners and remain seated in the front throughout the process. The investment committee is made of family representatives and non-family advisors who meet regularly to discuss important activities to devise best possible strategies and ensure each stakeholder is on the same page.
- Institutional-Quality Investment Process – encompasses tailored asset allocation and portfolio design, risk management, consolidated performance reporting, asset manager selection customized to particular asset classes, and investment oversight/control.
2. Holistic Planning
A fidelity family office can help you devise a tailored plan around your complete financial footing, covering areas such as estate planning, retirement, taxes, health care, travel, etc.
3. Total Wealth Management
People tend to think of their wealth in discrete buckets and dedicate resources or focus to operating businesses, separate from lifestyle assets, liquid investment portfolios, philanthropy, and so on. This disorganized outlook snubs the interdependence that exists between various assets, subduing vital coordination among them. For instance, the coordination of capital, governance, strategies, talent, and succession planning. Hardly anyone steps back to view the Total Wealth perspective – a primary practice used by all Pillar Wealth Management wealth managers when advising high net worth families. Integrating all aspects of wealth (e.g. assets and liabilities) into a client’s financial planning enables us to predict, manage, and monitor the trajectory of their total wealth. Feel free to contact our wealth planning specialist at your convenience to learn what you can expect from a good wealth planner.
4. Tax & Legal Services
Over time, families grow and evolve in size, geographic reach, diversity, and in other ways. And as they do, so does the intricacy of their needs for appropriate tax and legal planning. For instance, young family members getting married and requiring pre-nuptial agreements, or members deciding to buy and reside assets in several jurisdictions, or the inheritance plans needed in case of the sudden demise of the CEO/key owner of the family business. For these kinds of life events and investment horizons, wealthy families should plan ahead and have the right inheritance and estate plans, wealth structures, legal protection, insurance strategies, and tax plans in place.
Having tax and legal expertise within the family office enables families to place the right structures to manage their wealth and limit the risks that life events and investments can bring.
5. Administrative & Lifestyle Services
This function comprises concierge services to the family like managing personnel (drivers, household staff, pilots), travel arrangements, and synchronizing the utilization of private residences and other lifestyle assets like a private aircraft. Moreover, it can also encompass management of collectibles and art collections, tracking personal credit cards and bank accounts, personal accounting and budgeting, and overseeing the rising number of legal entities that need to be accounted for and administered.
How Much Should A Family Office Cost?
The general ballpark wisdom states that most family office costs should equal roughly 1 percent of the family’s active assets. These costs generally fall into the following four groups:
- Internal Costs – Salaries, overhead, incentives, technology
- Professional Services – Attorneys, insurance, security, consultants
- Advisor Fees – Research, management, reporting, custody
- Family Expenses – Taxes, property, collectibles, art, consumption
A useful benchmark to calculate cost of a family office is to divide direct expenses by assets that are prevalently under management. As shown below, the direct expenses comprise of investment advisory fees and internal operating costs. Family office expenditures usually amount to about 1% of the family’s total active assets, including liquid assets, trust assets, and investment portfolios. So, the estimated cost for a small family office with active assets of $200 million will be $2 million annually.
Investment advisory fees + Internal operating costs
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Active assets under management
In addition, active assets are simply a fragment of the family’s net worth. When it comes to inactive assets, they’re overlooked in this calculation. These comprise family-owned operating businesses, large concentrated equity positions, residence, fine art collections, and numerous other assets. If these are reflected in the estimation, they’ll misleadingly inflate the costs needed to run a family office.
It Is Reasonable To Work In A Family Office?
It is true that working in a family office is financially rewarding, however, you have to be super dedicated and flexible. Employees need to be ever-ready to provide a “tailor made customer” and never take their position for granted. In addition to this, the family office institutionalization capacity is also something well regarded, particularly when the office intends to grow to the next stage.
All in all, it is imperative to note that working in a family office has got its benefits and shortcomings like any other profession. The plus side is to work for a cash rich environment that has flat decision making and a direct reporting structure, minus the extensive bureaucratic procedures. In conclusion, a career in the world of fidelity family office is a special one and due to this family’s cherry pick the best contenders for the job, ensuring the competition is still fierce.
Pillar Wealth Management To The Rescue…
Identifying and choosing the best fidelity office and wealth management firm is a task that demands a great deal of effort and time. It certainly is not something you can do without performing sufficient research, but we can help. Set up a free consultation with one of our competent wealth managers to see how we can assist you!
At Pillar Wealth Management, we provide fiduciary wealth management services to prioritize your needs and ensure you achieve your wealth and financial goals. Our wealth management experts can provide you the security and peace that comes with knowing you’ve planned appropriately for the future of your family. Pillar Wealth Management high net worth and ultra-high net worth financial planners will protect your long- and short-term financial interests. Under the guidance of our co-founders, Hutch Ashoo and Chris Snyder, who collectively have 64+ years of experience, dating back to 1988, we’ve assisted countless high net worth individuals and their families to maximize the overall value of their wealth.We offer professional, qualified wealth planning services, such as wealth management, tax planning, estate planning, business succession planning, and more. However, we specialize in services for investors from $5 million to $500 million. The priority of our wealth managers is to deliver a reliable, personal, and reassuring experience to leave clients safe in the knowledge that their hard-earned wealth is in the right hands.