Today, many wealthy families are thinking about creating their own family office, which would competently and centrally deal with family affairs.
The focus of any family office is preserving capital from generation to generation, that is, the services of a family office are always a long distance run with the task of maintaining the standard of living of the family for generations to come. A fairly simple principle is that when you reach a certain standard of living, you want to fix it for many years to come (it applies to absolutely any income level), and ideally provide such a standard of living for your heirs.
Family Office Types and Functions
Family office does almost everything - from managing personal assets to solving everyday issues like keeping a yacht or entertaining friends at a party. If a client asks for horse insurance at his stable, the well trained family office employees will study the market to provide this special service. Classic example of an independent family office can provide its services to many wealthy families simultaneously. But there is another option - a personal office, acting in the interests of only one person and his family.
A typical family office consists of four people: a manager, a lawyer (also often conducts accounting), an investment manager and a lifestyle specialist. The functions of the latter include organizing the schedule and leisure of the host, as well as the education of children. In addition, the office may have a charity project manager and an art specialist. Office employees work in a special company where they get paid.
The first family offices appeared in the USA in the 19th century. The emergence of family offices was associated with the accumulation of the first serious capital, which required management, protection and subsequently optimal transfer to the heirs. Among the first capitalists to establish their family offices were Henry Phipps and John Rockefeller, whose family offices eventually transformed into so-called multi-family offices, that is, large financial organizations that serve the interests of several wealthy families at once. Now the heirs of Phipps and Rockefeller serve customers through the well-known structures of the Bessemer Trust and Rockefeller Capital Management.
Registering Family Office in Jersey
Nowadays, super high-income families often choose Jersey as their jurisdiction to host their family office. Why? There are several reasons. Firstly, although this region is neither part of the UK, nor the European Union, it has close ties with both, and secondly, it is famous for its reliable regulatory framework, and is conservative and stable.
Why register a Jersey Private Fund?
Using the structure of the investment fund for family office investments gives a number of advantages for wealthy families:
- better structuring family assets;
- identifying the rights and interests of family members in these assets;
- appointing independent managers with knowledge of the respective asset classes; higher standards of corporate governance.
In order to register a Jersey Private Fund, a Jersey-regulated service provider must be appointed to provide the JFSC with certain initial documentation, as well as to ensure compliance with Jersey law regarding AML / CFT compliance.
Direct Investment Preferences
It’s a common knowledge that wealthy people want to maintain operational control over their investments, and this is one of the key reasons why they choose the direct investment option. Family offices are staffed by high-class investment professionals who manage them internally, and it provides for a huge advantage over investing through traditional investment funds. The logic is simple: the more money, the more secrets you should keep with you.
Family Office Investment Requirements
People with fortunes of $ 50–500 million usually use the services of multi-family companies. And only owners of assets of more than $ 500 million create their own.
If a family can pool its capital with other similar families or when it allows for joint investment by family office employees, this is ideal for registering a Jersey Private Fund. Such structures are often managed by an external manager. In this case, establishing the Jersey Private Fund will be subject to a very simple procedure, which greatly eliminates the more onerous regulatory requirements applicable to Jersey collective investment funds and exempts from local licensing requirements.
If you are considering setting up a Jersey Private Fund and have questions regarding the legal process, please contact IQ Decision UK. Our upscale law professionals will provide legal advice on how to set up a private fund in Jersey, and how to properly manage your family assets and family office for your comfort and well-being.