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BEYOND THE FAMILY OFFICE

The Evolution of the “Family Enterprise” Model

The concept of the family office as an entity to help manage the finances of high net worth families is not a new concept. Transplanted to the United States in the 19th century from some of the great European houses of wealth, this financial management approach first took hold here with the rise of the Rockefellers, the Carnegies and other families of significant wealth.

The central mission of any family office is to grow, preserve and transfer wealth among generations of a given family. Investment, tax, trust and estate, real estate and personal asset management and philanthropic activities for all members of the family are centrally managed by the family office, an entity that operates with its own Chief Executive and executive support staff.

Over time, in order to meet a perceived need, the financial services industry grew to establish and market the multi-family office (MFO), businesses that provide advice, guidance, and support activities to many high net worth families. Some MFOs sprang from family offices originally created to handle the wealth of a single family and then opened up to manage the activities of multiple families in order to share costs and leverage the advantages of an increased pool of investable assets. Others are departments within large financial institutions. And still others were founded as stand-alone MFOs specializing mostly in one aspect of family offices -- investment advice, trust services, law or accounting – and outsourcing other functions.

While each of these types of MFOs offers advantages, there are also drawbacks inherent in the entire family office concept itself. In many ways, this is a field that hasn't changed much since it was first established. The emphasis on the “office” in family office has a decidedly bricks-and-mortar sound to it, making it ill-suited to the highly fluid business world of the 21st century. In today’s global economy, money can cross borders with unprecedented speed – a fact that offers both opportunities and challenges for traditional family offices.

In response, the Beringer Group has developed, based upon 25 years of experience working closely with family business owners, a concept called the family enterprise, a more holistic approach to growing, preserving, and transferring wealth within families. While not dissimilar to the MFO model, the family enterprise breaks with the past particularly based on its view of family wealth and how it ought to be managed- a view which looks at managing, preserving, investing, growing, taxing and distributing all family assets as part of a family business – the family enterprise. Beringer’s family enterprise paradigm also relies on its own independence as an innovative means to serve families.

By taking this approach, of running a family’s wealth as a family business, we enable families to take a coordinated view of all their wealth and to take a business approach to how it should be allocated and managed.

The Family Enterprise approach is different from the Family Office in a significant way, and while the Family Office may be an integral part of the Family Enterprise, the Family Enterprise engulfs all of the aspects of family wealth management.

Freed from the conceptual limitations of the traditional Family Office – and from the restrictions encountered by MFOs that are merely departments within trust companies or other large financial institutions – the Beringer family enterprise model offers unique advantages:

• Treats all family assets in a more formal financial posture
• Encourages the management of liquid assets like you manage your business assets
• Objective solutions that are independent from professional bias
• Borderless services that are geographically independent and global in scope
• Distinguishes between money managers and investment advisors and their respective roles
• Facilitates asset allocation models that consider non-liquid assets as well as liquid assets
• Customized, high-touch approach to service delivery to the family
• Access to some of the industry’s most seasoned wealth-management professionals, without bias from the advisor
• Access to the world’s premier investment managers, private equity groups and hedge funds
• Allows for early detection of disputes and conflicts of interest among and between the family’s advisors and within the family
• Education and involvement of multiple generation’s of a family and transmission of the senior generations values

As the needs of high net worth families continue to evolve, the flexibility of the Beringer family enterprise approach is ideally positioned to shift as well – providing a range of financial advisory solutions to meet the unique requirements of a very select group.