The words family office and multi family office investments have long been shrouded in mystique secrecy and a certain feeling that there is a way that the wealthy invest that is somehow different from the working or even middle class. And that is, of course, true.

So true it is, in fact, that this is possibly one of the reasons why the world's richest families are becoming wealthier whilst the middle class are subject to the fiscal policies of bankrupt governments, pension plans, and recessions. 

There is one major reason that stands out above all others why family offices succeed in making, growing, maintaining, and indeed breeding wealth whilst governments, the middle class, and even listed corporations often lose everything in several generations. What is this single reason?

Well, the answer is quite simple, it is the stated formula of success of Dale Carnegie, Henry Ford, and Baron Rothschild: it is to pick the smartest and most talented financial advisers that money can buy and make them an integral part of the family office intergenerationally. Indeed, great family offices survive for generations, indeed forever, because they keep and retain family office wealth advisers of the highest caliber. Family office advisors, like families, often pass on their knowledge intergenerationally.

You may consider that, for example, picking a great Harvard trained financial adviser with the right degrees and credentials would guarantee you or your newly established family office a brilliant future. Well, picking a university-trained financial advisor who has spent his time working in the desks of banks and financial institutions and considering he will get you to the same place as the talent pool of a multi-family or family office adviser, is the same as believing a local taxi driver will have the same chance of winning the Grand Prix as Schumacher. 

The point is that a talented financial adviser requires experience, vision, and the talent of an artist. He must have been involved in numerous deals and understand the dynamics of projects. The problem is that most financial advisors are trained to resell standard products made by banks for the public. Family offices usually develop their own products or invest in unusual products, which are not generally known to or available to the general public.

The difference between a family office advisor and an ordinary advisor

We can summarize the main points of difference as follows :

• The Family Office adviser is a fiduciary. That means the terms of his license and his contract obligate him to act in the best interests of the Family office (his client) rather than re-sell cookie-cutter products made for the banks. This is why Family office advisors wouldn’t usually buy products that other advisers term as “safe,” such as the products that created the US financial crisis, US Government bonds, etc. The Family office adviser gets paid on performance, i.e., the more money he makes for the family the more he makes himself. Non-fiduciary advisors get paid when you lose money and they don’t really have any duties towards their clients.

• Family office advisors specialize in complex products that are considered by government regulators to be high risk. In reality, however, these deals such as private equity, IPO, reverse mergers, Vulture funds, blockchain, and crypto funds, if properly structured are far less risky than what you would obtain if you were to invest through an ordinary adviser. This is why the public is not allowed to invest in high-return projects and generally, family offices will only work with qualified wealth investors, like themselves, who understand the risk. 

• Family offices work with networks of like-minded professional investors in a manner called “co-investing.” This allows them to share knowledge and skills and inside information. As they are working in non-public spaces there is no prohibition on using inside knowledge and information to create double-digit returns. Using superior or inside information in the public field, however, is prohibited so the difference between investing or co-investing with a family office and simply investing through the ordinary route is vast.

• Family offices usually use offshore investment and holding vehicles for growth and optimization in a way that domestic advisers cannot. In subsequent Money Machine articles, we will explain some of the ways this is done.

A multi family office advisory

The first step in developing wealth management and financial strategy for your Family Office is to choose a professional advisory team. One cost-effective option is to locate a team of advisers that work with multiple family offices. This is called a multi family office advisory team.

Your wealth management strategy will have access to multiple investment options and products if you use this approach. 

The general steps in engaging a Family Office advisory team are:

Step 1: Your advisory team will prepare a wealth strategy based on your interests, risk profile, and requirements. The strategy will be tailored to the development and growth of your family office. 

Step 2: Your multi family office advisory team will help you open accounts in brokerages, reputable private investment banks, and other institutions to implement your strategy. This will usually be done through your very own family office trust via a properly chosen trustee company.

Step 3: Your multi family office advisor will help you diversify your investments over multiple asset classes, multiple products, and multiple wealth managers. Your family office will therefore have diversification and growth. This usually includes traditional and non-traditional plan B investment strategies such as gold, crypto, distressed assets, and private equity, pre IPO, etc., across multiple jurisdictions.

Step 4: Your advisor will create family office Funds or special investment vehicles to co-invest with multiple family offices through their networks in special projects. 

How are multi family offices formed

A multi family office expert team is comprised of merchant bankers, high-level wealth advisors and multi family advisory firms.

As a special New Year’s present to our club members and readers Mundo has released a series of articles which will demonstrate some of the interesting strategies and investments available to family offices.

Disclaimer: The information contained in this article is for informational purposes only and does not constitute financial advice or recommendations. Investing in financial products or cryptocurrencies involves risks, and you should be aware of the potential risks involved before investing. The content on this website is not intended to be a solicitation or offer to buy or sell any financial products or services. The information provided does not take into account your specific investment objectives, financial situation, or needs, and should not be relied upon as a substitute for professional financial advice. You should seek independent advice from a financial advisor or other professionals before making any investment decisions. Please be aware that the legal status of cryptocurrencies and other financial products may vary in different jurisdictions and may be subject to regulation. It is your responsibility to ensure compliance with any relevant laws and regulations governing the sale and marketing of financial products and services in your jurisdiction.