Just because a family office is managed by an individual, it doesn’t mean that it can be run easily. The complexity of managing wealth management and investment ventures has grown so much in recent years that many families have turned to specialized external managers to help them handle the responsibilities they’re facing.
Timothy Enneking will now talk about family offices in detail.
Timothy Enneking‘s Guide to Managing Family Offices
Types of Family Offices
According to Timothy Enneking, the first step in learning how to manage a family office is recognizing that there are different types of these structures. The simplest and most commonly known is the single-family office or SFO. This type of structure provides all the services that a single wealthy family can require to run its business and finances effectively.
It will typically have at least three tiers: one for investment management, another for day-to-day functioning, and yet another for staff who handle administrative needs such as payroll. An extensive infrastructure remains essential in order to coordinate communication between the various departments in an efficient manner.
Unlike an SFO structure, multi-family offices or MFOs take on wealth management responsibilities from more than one individual or family simultaneously. This can be a very specialized structure, but it is by no means easy to do. MFOs need access to up-to-date information at all times and must ensure that the investment strategies of each family are aligned with one another at all times.
In some cases, an MFO may act as an alternative for those who cannot afford a full SFO. Regardless of whether the MFO is run by one or multiple families, its main goal remains the same: to provide quality wealth management and investment services to clients on a personalized level.
How to Manage Family Offices
In order to manage a family office effectively, one must be able to deal with the many complexities that lie underneath its surface. These complexities are only increasing as wealth continues to grow in size.
Timothy Enneking believes that the first and most important responsibility lies in managing the group’s investment portfolio effectively. This will include ensuring that all investments remain diversified across multiple asset classes while also making sure that they adhere to each client’s specific risk tolerance levels at all times.
As a rule of thumb, investing more heavily in equities is considered an aggressive approach. At the same time, bonds may be seen as conservative or moderate depending on the degree of their risk exposure.
A second major responsibility rests in providing dependable financial advice for clients so that they can make informed decisions regarding their financial futures. This may include helping to manage taxes, pre-retirement planning services, and college funding options, among other things.
Finally, a family office needs to be able to handle the administrative tasks that arise from running a business effectively. These might include payroll for employees, ensuring proper bookkeeping methods are used so that important information is documented in an organized manner, or producing annual reports for clients who wish to review their performance over time. Each of these areas must continue to improve over time as demands increase from clients.
Concluding Thoughts by Timothy Enneking
Managing a family office is a complex task that requires careful coordination and attention to detail. Timothy Enneking believes that in order to succeed, it is important to stay up-to-date with the latest investment strategies and financial trends, as well as maintain an efficient organizational structure that can handle the various administrative needs of clients.