22 April 2024

This article was first published in eprivateclient.

Industry questions:

1. Why are family office services so important to the industry?

The very existence of a family office generally indicates a certain level of sophistication, wealth and complexity within the relevant family. In this context, the family office plays a pivotal role coordinating investment, tax and legal advice and presenting this in a manner that the family can digest.

Wealth and individuals will often be spread across several countries and so the family’s wealth ownership structures need to function effectively in all relevant jurisdictions and the services provided to family members must be adapted as necessary from location to location. To use a simple example, if the primary holding vehicle for a family’s wealth is a trust, the emigration of a key family member to France might necessitate significant changes to avoid being caught out by the tax and compliance regimes applicable to trusts in France.

Family offices act as a central hub for issues like this and are important as a link between high-net-worth families and the broader private wealth industry. They can also have a significant role to play on a societal level due to the sheer volume of wealth under their control and the impact that this can have. A classic single family office will usually have at least $50 - $100 million of assets under management and in many cases the figures will dwarf even that.

To ensure that their families are looked after, and that those funds are made to work in the best way possible, good family offices rely on experienced third-party advisers to supplement their in-house expertise. Firms such as ours, who are used to handling highly complex cross-border matters and navigating family dynamics, have a key role to play here.

2. What are the key trends shaping family office services at the moment?

One trend has been termed The Great Wealth Transfer in the media. As the baby boomer generation (born between the mid-1940s and the mid-1960s) looks to pass on its wealth some have estimated that almost $85 trillion is set to be inherited in the US alone over the next decade or so[1].

Whilst every family will be slightly different in how they handle this, many of the key considerations will be familiar. Grappling with fairness between different family branches, particularly where different life choices have led to very different financial positions, is a common issue. The older generation also need to decide how to pass on their wealth. Some will simply transfer it outright, which is often the simplest option (and the least controversial within the family) but may not be overly tax efficient and can easily lead to fragmentation of ownership of assets and dissipation after just a couple of generations. Others will put in place longer term structures which can preserve assets and provide more targeted support for many generations. These can be very tax efficient but often need to be handled with care if they are to win the support of those who might otherwise have expected straightforward gifts. Such structures also come with additional administrative and compliance considerations. Family offices will need to help guide their families through these decisions whilst also managing the often significant impact that wealth transfers can have on internal family dynamics and the office’s relationships with different family members.

Other important, and to some extent related, trends are the ever-increasing application of technology and moves towards more sustainable operations and investments. Younger generations in particular expect easier access to advice and information, together with more awareness of the societal impact that significant wealth can have.

The advance of automation is very much a double-edged sword here. On the one hand it can help clients deal with an ever more complex compliance and tax landscape, and often for less than a traditional model. For instance, we developed the ResiCheck tool[2] to help clients test their tax-residence status. They can input their circumstances and play around with different future plans to see how that will impact their position, all without having to type an email or pay any additional fees. On the other hand, technology poses a myriad of challenges, including how best to preserve confidentiality and privacy. Family offices represent a cross-over point between commercial operations and personal matters and our data protection team can help them navigate those particular minefields.

On the investment side, the response we have seen to our Net Zero initiatives[3] has demonstrated the growing appetite for ESG amongst clients, including family offices. Not only do family offices need to factor this into their investment practices, they also need to pilot a careful course through a private wealth industry that features plenty of advisers with genuine ESG credentials but also a fair amount of what might be seen as the sustainability equivalent of greenwashing, where actions don’t quite live up to words.

3. How might the landscape for family office services change in the next 12 months?

For any family offices with UK or US connections we expect elections, and the prospect of elections, to play a very significant role over the next year or so.

One would hardly describe the last decade as un-eventful but both the UK and the US could potentially see more major policy changes in the near future depending on how the next general and presidential elections pan out.

In the UK, a lot has been said about the opposition party’s commitment to ending non-dom status if they win, but there is still very little clarity as to what this would mean in practice (not least because non-dom status is a much broader topic than the specific tax benefits that Labour appears to be targeting). Senior Labour figures have been going out of their way recently to try and reassure businesses and successful individuals that Labour will be on their side but until manifestos are published there will continue to be considerable uncertainty as to what might be coming down the road. Engaging with advisers early so as to have a trusted team in place that knows the family and its structures well is going to be key in helping family offices adapt quickly and effectively to any new legal environment. It may also be possible to take steps now to help guard against some risks. For example, many families with children at private schools in the UK are currently exploring pre-payment options for fees in case VAT is added to those in the future.

In the US we are seeing an already struggling Congress venturing into yet more unprecedented territory in terms of operational dysfunction with the recent removal of the Speaker by his own party for the first time in history. In addition, the advance polling in the presidential election remains tight and the vote could have enormous repercussions both in the States and the rest of the World. Positive economic results in America in recent years have allowed many family offices to achieve success in their core mission of stewarding the family’s wealth but there could well be a very bumpy track ahead. Again, having a core team of established advisers in place will be important.

Fun questions:

1. What are your favourite ways to relax/switch off from work?

On the Venn diagram of hobbies I may be one of the very few people who sits in the cross-over section between rugby and board games. I’ve yet to find many others who can take equal levels of enjoyment from getting knocked around on a muddy field on the one hand and sitting at a table with a few friends, a beer and some creatively designed cardboard on the other.

More recently I have taken up badminton which in all honesty I had previously assumed to be a rather placid game most suited to village fetes. Only after being introduced to it at a local sports hall by some other dads at my daughter’s school did I realise that it comes in a much faster and more energetic variety as well. I would strongly recommend it to anyone looking for a new sport with low barriers to entry, a fantastic doubles experience and what is clearly a very high skill ceiling.

2. What’s your go-to karaoke song?

As someone who really cannot sing (in a primary school production of The Muppet Christmas Carol I was the only participant asked to mime in the final performance) I have to be quite careful as to what I attempt in a karaoke booth.

A current favourite is Poison by Alice Cooper, primarily because there is very little in the way of melody to worry about and the slightly growly nature of his voice makes it very easy to cover.

3. What’s one book you think everyone should read?

Children of Time by Adrian Tchaikovsky. My brother is a lepidopterist (he studies butterflies) and has always been enamoured by biology. One Christmas he gifted me Children of Time telling me that it was an award-winning science fiction novel which imagines what might happen if a world was almost entirely devoid of mammals and instead a species of spider became the dominant life-form and ultimately achieved a level of civilisation equivalent to that of humanity. When summarised like that it sounds rather ridiculous but the author studied zoology at university and the subject is explored with a level of detail, imagination and energy which makes it absolutely compelling. A fantastic read for anyone with even the vaguest interests in science fiction or evolution.

[1]Press Release: Cerulli Anticipates $84 Trillion in Wealth… | Cerulli

[2]Burges Salmon launches innovative new tax App ResiCheck (burges-salmon.com)


This article was first published in EPrivateClient magazine.

Key contact

Headshot of Edward Hayes

Edward Hayes Director

  • Private Client Services
  • Private Wealth
  • Tax

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