As the number of family offices continues to increase in the Cayman Islands. Client Director at Ocorian and family office specialist, Conrad Proud takes a quick look at some of the main reasons these offices are being established.
In the past, high-net-worth families have tended to set up their family offices in their home jurisdiction, but those habits are changing. Geographically dispersed family networks and differing priorities across generations are leading to a more global outlook when it comes to locating their family.
Families are increasingly establishing their family offices in a select number of international financial centres. In recent years, Cayman Islands has emerged as a key location for family offices.
They are attracted to Cayman for a number of reasons including its robust operational infrastructure; availability of skilled and experienced investment and finance professionals; tax neutrality; efficient regulatory framework; climate; lifestyle; schools; proximity to the United States of America; and its political and legal stability.
But with a reported $24.7tn of wealth controlled by family offices that have over $100m under management, and with over 7,300 family offices located around the world, what are the key factors driving their decision to manage wealth this way?
- Confidentiality & discretion
High-net-worth-individuals (HNWIs) are highly sensitive to maintaining confidentiality for a variety of legitimate reasons. Setting up their own single-family office (SFO) or hand-picked multi-family office (MFO) gives them the confidence and peace of mind that their information and data is being kept confidential.
Often HNWIs will employ professional advisers who they have worked with for some time and who they have grown to trust with their affairs. By engaging those advisers directly in their own family office, they can maintain that trusted relationship.
By employing their own staff or engaging with an independently owned MFO, HNWIs can ensure that their family office’s interests are closely aligned to their own with no conflicts of interest.
4. Time saving
Most wealthy families quickly realise that with great wealth comes the burden of managing that wealth. In this sense, time is truly precious and a family office may be used to manage personal homes, luxury assets, take care of travel arrangements and deal with what can sometimes be sensitive tasks.
5. Dedicated staff
Staff in an SFO are entirely dedicated to one client family and can therefore easily prioritise their workloads. Increasingly, we are seeing MFOs employing staff who are wholly dedicated to a single client.
6. Cost saving
Not only can the family office therefore provide a more holistic solution, it can also be more cost effective than utilising a range of external advisers.
HNWIs want the staff reporting to them to be directly accountable for their actions. Consistency of personnel and a ‘long life’ employer-employee relationship means that family office staff understand the long-term effect of their role and actions.
As the staff are reporting directly to the HNWI in an SFO or based on a bespoke service agreement in an MFO, their roles and responsibilities can be as flexible and varied as the HNWI requires.
HNWIs can directly instruct staff within the family office. This means that the family office recruits and mentors staff who are highly skilled and focussed on their client family’s needs.
10. Tailored service based on full historical knowledge
The staff of the family office can know the whole picture –the tax and legal structure, the likes and dislikes of the HNWI and their family, together with a very deep, personal and historic knowledge of the family’s affairs which means that the service offered can be extremely personalised.
Access the expert support you need
With each family office set up to meet the demands of a specific client family, there is no blueprint for how an effective family office should operate. Therefore, wealth professionals often need to access specialist family office expertise in order to fully understand the bespoke operational aspects their client’s family office requires.
At Ocorian, our dedicated family office team can provide a seamless and holistic approach to the challenges and opportunities families face. We take care of the detail, so you can enjoy the big picture. Get in touch with me at www.ocorian.com/contact-us for more information about how we can support your needs.
T +1 345 640 0575 / ext 6575