The prime role of the family office is to protect your assets and then to grow them. Thus, working with the family office is important in order to have a reasonable return on your investments and assets.
One of the reasons why family offices emerged was dissatisfaction among affluent clients with the consulting services of banks and financial service providers and their inherent conflict of interest. Based on clients’ experience it can be said that they too often pushed too hard their financial or investment products in situations where for their clients could be better some other product. It often resulted in a loss for the clients. Therefore, wealthy families started to re-evaluate their options looking for alternatives for better, more effective management of their wealth. A good solution turned out to be setting out own family office. The family office is free from conflict of interest because promotes neither someone else’s nor its own interest, but only the interest of the family. The family offices are attractive because the professionals who run them are paid by the families themselves, so there is no incentive for them to push products and hence no conflict of interest.
Furthermore, besides providing business and investment side advice and services, family offices can provide a benefit that is almost impossible to quantify such as fostering family harmony by creating better communication among relatives. The communication is critical with the wealthy families because their wealth is interconnected. Studies of numerous family wealth transfers show that family wealth often peters out by the third generation, hence the communication between generations, family education, family office governance including conflict resolution can help to preserve the family wealth and ensure its smooth transfer to the next generation. The above in place can prevent, for example, a situation when the second generation daughter took €200,000 out of the family business, without permission and without anyone knowing for more than a year. Good family governance steps such as an annual audit, checks on monthly expenditures, or dual approval for check writing and wire transfers could have caught this early on.