Family Office

Outsourcing family’s financial management

Managing personal finance have become challenging due to lack of time,expertise and complexity of financial products. A family office is an exclusive outsourcing arrangement which deals with management of personal finance and wealth of high net worth individuals, business houses and their family. This relationship usually stretches beyond the lifetime of an individual, extending financial guidance to subsequent generation of the family. The family office is manned by trustworthy, competent and qualified professional(s). 

 

Types

Family office is of two types i.e. (i) Single family office: Created to support the financial needs of a specific family group (ii) Multi family office: A multi-family officeis an organization that provides family office services to more than one family group. They charge around 0.75% to 1% of the assets managed by them.

A family office also specializes in managing the wealth of generations within a family and advises on inter-generational wealth transfer and the financial security of the family members. A family office serves as a central source of information and advice on the family’s financial affairs. Family offices provide privacy and confidentiality to their clients and meet their needs due to their familiarity with client risk profile, investment behavior and assets. 

 

 

Range of advices

Family offices provide a range of advices to their clients that include Risk management (Insurance cover for Life, Health and Property risks), investment services & wealth advisory, Tax advisory, inheritance & wealth transfer services and philanthropy.

Risk Management – All the earning members should have adequate life insurance so that the family members continue to maintain the same standard of living in the event of any untimely death. Proper health insurance for all members of family is always advisable to face the increasing medical expenses. Personal accident insurance is a must for disabilities arising out of accidents. Property and assets should be protected from risk of Fire, Burglary etc.

Savings and Investments – Financial markets and products are gettingcomplicated day by day. Professional guidance is necessary to formulate investment strategies for achievement of financial goals i.e children’s higher education & their marriage, buying of homes for the expanding family, vacations planning and pilgrimage of family members, purchase of cars, jewelry etc. A family office provide their expert services on wealth planning & administration, portfolio performance monitoring taking into account the risk appetite and  need.

Retirement Planning – Retirement has emerged as a major challenge due to increasing longevity and high inflation. Planning for reverse mortgage post retirement to meet the shortfall of income is a service provided by family office.    

Tax Planning – Taxation laws are changing every year and hence tax planning needs regular review. Tax saving can be optimized through individual tax planning, HUF tax planning, management of capital gains and creation of trusts. Family office provides solutions to tax related issues with guidance from Tax experts.

Estate Planning – Smooth transition of wealth from one generation to another is a core requirement of family office clients. Most of the legal disputes arise due to lack of adequate clarity on division of family’s wealth. Nominations on investments and creation of will are the main tools of sound estate planning. Family members can keep documents online with secure passwords shared amongst the members of family.

The family office professionals should have relevant knowledge, experience and integrity to act on behalf of client’s interest. They should be independent of product sales and unbiased in their recommendations. In India, Family Office services by SEBI Registered Investment Advisers are preferable since they are supposed to maintain highest level of compliance while dealing with clients.   

Last modified on Wednesday, 10 February 2016 07:02

Prakash Praharaj

Shri Prakash Praharaj has a passion for excellence. He has been awarded two gold medals for securing top positions both in Graduation and Post Graduation in Commerce. He is an MBA with specialization in Finance and marketing. He has been awarded Diploma in Treasury, Investment and Risk Management besides CAIIB from the Indian Institute of Bankers. He is a Certified Financial Planner from the Financial Planning standards Board, India (FPSB), affiliated to FPSB, Denver, USA and Certified Personal Financial Adviser from NISM. He is also a SEBI registered Investment Adviser vide Reg. no. INA 000000045 dated 2nd August 2013.His book "Your Every day guide to Personal Finance and Insurance" has been published by CNBC TV 18 in August 2015.

6 comments

  • Reynaldo

    posted by Reynaldo

    Monday, 01 February 2016 20:11

    I got this web page from mmy friend who
    shaared with me regarding this website and at the moment this time I am browsing this web site and reading very informative articles here.

    Report
  • Sujata Aniruddha Sapkal

    posted by Sujata Aniruddha Sapkal

    Thursday, 30 July 2015 09:26

    Families with vast inherited wealth and with many members from different generations can avail the help of a lawfully competent person/organisation who can provide a professional,unbiased advice regarding preserving their wealth and managing day to day finances.

    Report
  • Kapil

    posted by Kapil

    Thursday, 27 March 2014 05:31

    Helpful insight!

    Report
  • Rahul

    posted by Rahul

    Monday, 24 March 2014 11:56

    really required in today's time.

    Report
  • Durga

    posted by Durga

    Thursday, 20 March 2014 08:47

    good article!

    Report
  • sangeeta

    posted by sangeeta

    Thursday, 20 March 2014 08:44

    Very Useful artcle

    Report

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