What is a family office? How Integrated Financial Services for Affluent Families Work

UMB Bank recently announced the official launch of its Family Wealth offering – a multi-family registered investment advisor focused on providing entrepreneurial investment strategies, sophisticated tax planning and generational wealth coaching for families. with a significant heritage.

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What is a family office?

For very wealthy families, it may come as a surprise to learn that with more wealth comes more complexity in managing those finances. When accounts and finances require full-time maintenance and management, wealthy families can turn to a family office to manage their financial needs, goals, and plans. In particular, a family office helps family members manage everything from financial reporting to tax structuring, and regulatory compliance to integrated investing, with an unbiased relationship.

For families who do not have a current family office, they may need to partner with one because they experience an increased need for legacy infrastructure, such as financial reporting or liquidity strategies, or they have grown and want that a team of professionals provide them with holistic advice. Often families may have recently experienced a liquidity event, such as the sale of a business, that causes them to seek asset diversification with their new financial situation, or additional team members to further support their plans. Other families may need family office service if the wealth has been spread across multiple generations, families, or stakeholders. In this case, a family office can help the family establish common financial goals that can help maintain, grow, or protect wealth over time.

Different family office provider options

Family office service providers can operate either as a single-family office or as a multi-family office. A single-family office is an entity specially created to meet the financial needs of a (usually multi-generational) family. They typically have a staff that includes investment professionals as well as tax and legal professionals. Due to the cost of maintaining a single-family office, a family typically needs at least $500 million to $1 billion or more in assets to operate effectively.

A multi-family office is an organization that supports the financial needs of several unrelated families. By sharing personnel and technology costs among multiple families, a multi-family office is more cost-effective for an access family and can provide most, if not all, of the same benefits as a single-family office.

Roles in a family office

Very wealthy families have complex and varied financial support needs, which require niche experience, such as law, tax, investing, trust and estate, and financial planning. Family offices provide this integrated support and staffing, reducing the time the family spends managing multiple relationships or accounts. The family office consolidates reports and advice from these areas to provide a complete financial view – giving families more time to pursue more fulfilling or profitable businesses.

As the family’s financial needs change, the family office provider works with all service providers to adapt and adjust plans and goals as needed. This level of coordination, financial management and support has a substantial impact on the efficiency, cohesion and success of a wealthy family.

How UMB Family Wealth serves families

UMB Family Wealth is poised to work with entrepreneurial families who still own their business and are currently generating and growing their wealth. We can also support families who are in the process of selling their business. This transition phase can be tricky as the family plans to phase out one generation from the next and change voting power and leadership roles.

UMB Family Wealth also supports financial families, i.e. families who have sold their business and are now focused on preserving and growing wealth for the next generation. This is still generally a first-generation transfer of wealth and does not take into account inherited wealth. Finally, UMB Family Wealth can support families who have inherited wealth, which means they need to be supported by trusts and to maintain wealth across generations.

Dan Weeks is Managing Director of UMB Family Wealth.

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