The various roles of the successful family office

As technological advances have eased international travel and communication, the homes, education, investments and business interests of high net worth families are no longer confined to the jurisdiction in which the family was born. In parallel, over the last decade or so, both single and multi-family offices, have continued to grow in numbers as the greater international mobility of the family has increased the demand for a center of family operations.

Single family offices are private offices that, not surprisingly, manage the affairs of a single family while a multi-family office deals with many different families who are not necessarily related to one another. Multi-family offices are normally commercial enterprises selling their services to the wealthy; single family offices may well have developed from a family run business or a fiduciary services provider.

Interestingly, the concept of a family office has been in existence for centuries. The first family office was apparently recorded in Florence, Italy. According to the website of The Uffizi, the palace was built at the behest of the Medici family in the sixteenth century first and foremost to house the record keeping for their vast financial operation. It only later came to house the Medici’s private art collection, the precursor to the public gallery of Renaissance art which now attracts many thousands of visitors every year. The Uffizi was used as the family office or center of Medici family operations for more than two hundred years.

Nowadays, family offices can be found in all of the major financial centers of the world, including the Cayman Islands, but despite that, there is no ‘one size fits all’ definition. As has often been said, “once you have seen one family office, you have seen one family office.” For some, the phrase conjures up a discreet presence located in Zurich or Boston for example; for others, a visit to the family office could easily mean a visit to a castle and estate in Scotland or a high-tech operation in Silicon Valley.

Given the diversity of likely locations, you might imagine it would be difficult to identify any fixed set of criteria which determine where a family establishes their family office. However, the short answer is that it is probably convenience and familiarity which dominate, and the final choice will depend on the particular objectives of the family and the nature of the services to be provided by the office. The availability of skilled and service-oriented external professional service providers, the willingness of the family office staff to live and work in a particular jurisdiction and the desire of the family to meet there regularly, or even maintain a home there, will all be factors in their choice. Personal security, political and economic stability, ease of immigration, access to good education and health services, a high standard of living, pleasant climate, transport links, a solid infrastructure and reliable court system will all have a part to play in the decision as well.

The services provided by family offices can also be diverse. They can be highly focused on a single service line, for example, asset management, while others can range from arranging personal security, running domestic staff for the family’s properties, to organizing childcare, concierge services, sourcing tutors and schools for the children, estate management, running yachts and private planes. They can handle a family’s charitable and philanthropic projects, provide tax and immigration advice, manage commercial real estate, art and antiquities collections, as well as providing professional wealth and asset management advice, including risk assessment and monitoring of the family portfolio.

The financial services offered are not limited to the family’s investments either. A family office can be involved in the financial and strategic decision making in relation to the family business. More often than not, this type of family office has grown organically over many years out of the core family business. Several years ago, different generations and members of a family might all have worked together in the family business and there may well have been a ‘trusted adviser’ within the company to whom the family delegated projects and tasks which related less to the running of the family business and more to the wider interests and investments of the family members involved in it. As the family business widened its ambit and scope of operations, so too did the role of the trusted adviser and his or her team who would have increased responsibility for those projects and tasks which the family no longer had time to attend to personally.

However, this sort of “hybrid” arrangement involving a family office within a family business can lead to problems if employees have two areas of responsibility and occasionally conflicting duties, owed on the one hand, to the family business and on the other, to the family. Those problems can be exacerbated by lines of communication and areas of responsibility becoming blurred and no one individual having overall supervision, not surprising in circumstances where the arrangement has grown in an ad hoc fashion as the family’s requirements become more complex. Consequently, there may eventually come a point at which the family office needs to be formalized as an entity operating separately outside the family business to offer a more flexible centralized and properly coordinated service to the family.

In contrast, some family offices are small operations run by and for one highly successful individual and his or her immediate family; decision-making therefore begins and ends with that individual who has ultimate oversight. Other family offices, particularly those which have developed over many years, can service the requirements of the wider family, including several members of different generations of the family and it is intended that the office will continue to do so long after the first generation has passed away.

The most suitable structure for the establishment of a family office depends entirely on the family’s aims, the nature of the business which the family office is to undertake and the statutory and regulatory regime in which they wish the family office to operate. Central in the running of a successful family office is not only the employment of highly professional service providers with the sole aim of working in the interests of the family, but also the availability of external counsel so that those employed can, with confidence, outsource instructions where required. The family office will be instrumental in the choice of external advisers and will provide oversight and coordination of the project in hand.

Another factor in the success of a family office is how effectively it aligns the interests of the family in one centralized operation. A great deal has been written and said about “Generation Y” or “the Millennials” and how distinct their attitudes and opinions are from those of “Generation X” and the “baby boomers” who came before them. For those of us working in the trusts industry, the occasionally stark differences in attitude between one generation of beneficiary and another and the disruptive effect those differences can sometimes have on the smooth transfer of wealth from one generation to another comes as no surprise. There is also, however, a potentially serious issue here for the smooth functioning of the family office across different generations.

How does a family office mitigate the risk of a new generation resisting the adoption of the previous generation’s aims, ethos and values? One way is to ensure sufficient access to the family office from an early stage so that the new generation can build their own relationships of trust and confidence in the professionals employed on their behalf. In turn, the family office has to adapt to the family’s changing needs and expectations, utilizing where necessary new technology, communication methods and transparency in their operations. As ever in the fiduciary business, the key is to build and maintain relationships of mutual trust and confidence which endure across the generations.

Previous articleBrexit and Trump – a reboot for global tax policy?
Next articleCaribbean IFCs: Where to now?
Morven McMillan

Morven is a partner based in Maples and Calder's Cayman Islands office, where she is head of the Cayman Islands Trusts group. Her expertise includes contentious and non-contentious international trusts and private client work.


Morven McMillan
Maples and Calder
Cayman Islands

T: +1 (345) 814 5356
E: morven.
    morven.     [email protected]


Maples and Calder

Maples and Calder was formed in the Cayman Islands almost 50 years ago and today is the largest law firm in the Cayman Islands. We are also acknowledged by clients and competitors alike as being the market leader in each of our principal practice areas, in particular funds, finance and corporate.  Our Cayman office also provides, through our regulated affiliate, incorporation and registered office services.

In response to client demand we opened offices in DubaiHong Kong and London. These offices give you the option to access our world-renowned Cayman Islands practice with the added convenience of local support in your own time zone and appropriate language. We also have offices in the British Virgin Islands and Dublin which offer British Virgin Islands and Irish legal advice respectively.

Our Cayman Islands office can also coordinate specialised management, administration and fiduciary services through our affiliate, MaplesFS.

PO Box 309, Ugland House
South Church Street
George Town
Grand Cayman
Cayman Islands
+1 345 949 8066
+1 345 949 8080
[email protected]