A fidelity family office is something all high net worth and ultra-high net worth families need, whether they realize it or not. That’s because wealthy families have a colossal amount of complexity to manage across several dimensions of their lives, including their assets, relationships, and activities. There seem to be endless things to organize, manage, and plan 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.
STRATEGIES FOR FAMILIES WORTH $5 MILLION TO $500 MILLION
The insights you’ll discover from our published book will help you integrate a variety of wealth management tools with financial planning, providing guidance for your future security alongside complex financial strategies, so your human and financial capital will both flourish.
Clients frequently share with us how the knowledge gained from this book helped provide them tremendous clarity, shattering industry-pitched ideologies, while offering insight and direction in making such important financial decisions.
Table of Contents
- Fidelity Family Office: Overview
- When to Consider A Fidelity Family Office?
- What Services Does A Family Office Provide?
- 1. Custom and Centralized Investment Management
- 2. Holistic Planning
- 3. Total Wealth Management
- 4. Tax and Legal Services
- 5. Administrative and Lifestyle Services
- How Much Should A Family Office Cost?
- It Is Reasonable To Work In A Family Office?
- Fidelity Family Office: PillarWM To The Rescue
Luckily, there are firms that downgrade this complexity and extend efficiencies across high net worth and ultra-high net worth families’ breadth of assets and activities. A fidelity family office is one such firm that effectively manages the 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 the complexities increase once your wealth surpasses $1 million.
If you have more than $5 million in liquid investable assets, we suggest that you 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 explain what you can expect from the top ultra-high net worth wealth management companies.
When it comes to wealth management, Pillar Wealth Management holds its own 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 the services of qualified wealth managers who have years of experience managing the high-profile portfolios of ultra-high net worth individuals/families. They’ll share key insights into 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 address in this post along with exploring whether is it reasonable to work in a family office.
A fidelity family office is 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.
It is wise to consider a fidelity family office when the holdings of a high net worth or ultra-high net worth family 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 generations 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.
While every high net worth and ultra-high net worth family can build a family office that best fulfills their particular enterprising needs, activities, and aspirations, it will mostly entail the following main services:
Custom and centralized professional management of a wealthy family’s assets becomes 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 portfolio strategies to manage your wealth, be sure to read our in-depth guide, Improving Portfolio Performance.
There are myriad ways a fidelity family office extends investment management services, such as:
- 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 the 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.
A fidelity family office can help you devise a tailored plan around your complete financial circumstances, covering areas such as estate planning, retirement, taxes, health care, and travel.
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 belies the interdependence of 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 PillarWM wealth managers when advising high net worth families. Integrating all aspects of wealth (e.g., assets and liabilities) into a client’s financial plan enables us to predict, manage, and monitor the trajectory of their total wealth.
Over time, families grow and evolve in size, geographic reach, diversity, and 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, members deciding to buy or reside 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 the family to create the right structures to manage their wealth and limit the risks that life events and investments can bring.
This function comprises concierge services to the family, like managing personnel (drivers, household staff, pilots) and travel arrangements and synchronizing the utilization of private residences and other lifestyle assets like a private aircraft. Moreover, it can also encompass the 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.
The general ballpark wisdom states that most family office costs should equal roughly 1 percent of the value 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 the cost of a family office is to divide the direct expenses by the assets that are prevalently under management. As shown below, the direct expenses comprise 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 would be $2 million annually.
Investment advisory fees + Internal operating costs
Active assets under management
In addition, active assets are simply a segment of the family’s net worth. When it comes to inactive assets, they’re overlooked in this calculation. These include family-owned operating businesses, large concentrated equity positions, residences, and fine-art collections. If these are reflected in the estimation, they’ll misleadingly inflate the costs needed to run a family office.
It is true that working in a family office is financially rewarding; however, you have to be extremely dedicated and flexible. Employees need to be ever-ready to provide a “tailor-made customer solution” and never take their position for granted. In addition, the family office’s 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 its benefits and shortcomings, like any other profession. The plus side is working in 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 offices is a special one, and due to this, families cherry-pick the best contenders for the job, ensuring the competition remains fierce.
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.
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 with the security and peace of mind that comes with knowing you’ve planned appropriately for the future of your family. Pillar Wealth Management’s 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 value of their wealth.
We offer professional, qualified wealth-planning services, such as wealth management, tax planning, estate planning, and business succession planning. 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. Set up a free consultation with one of our competent wealth managers to see how we can assist you!
To be 100% transparent, we published this page to help filter through the mass influx of prospects, who come to us through our website and referrals, to gain only a handful of the right types of new clients who wish to engage us.
We enjoy working with high net worth and ultra-high net worth investors and families who want what we call financial serenity – the feeling that comes when you know your finances and the lifestyle you desire have been secured for life, and that you don’t have to do any of the work to manage and maintain it because you hired a trusted advisor to take care of everything.
You see, our goal is to only accept 17 new clients this year. Clients who have from $5 million to $500 million in liquid investable assets to entrust us with on a 100% fee basis. No commissions and no products for sale.
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