Family Office Research Review

Abstract

The family office is one of the fastest-growing structures designed to help individuals and families manage their wealth. Whether a single-family office serving one family or a multi-family office serving several families, the family office serves as an alternative to private banks, registered investment managers, or any other specialized wealth management and investment platforms. A number of academic papers and survey-based white papers have been published in recent years aiming to establish the status of family offices as well as examine trends in their development and use. This study found a considerable degree of overlap in the topics covered but also noted some inconsistencies in the results between the different papers. In this article, based on an in-depth review of recent publications, the authors seek to offer a balanced perspective and insightful synthesis of this research.

Full text

T J  W M 1Spring 2020
*All articles are now
categorized by topics
and subtopics. View at
PM-Research.com.
Denise
Kenyon-Rou vinez
is the former Wild
Group Professor of
Family Business, Family
Off ice and Governance
and former director
of the Globa l Family
Business Center at
IMD (Inter national
Institute for Management
Development) in
Lausanne, Switzerland.
kenyon@gen10sa.com
Jung eung PaRK
is a research fellow at
IMD (Inter national
Institute for Management
Development) in
Lausanne, Switzerland.
jung.park@imd.org
Family Office Research Review
Denise Kenyon-Rouvinez anD Jung eung PaRK
A B ST R AC T: The family office is one of the
fastest-growing structures designed to help individ-
uals and families manage their wealth. Whether
a single-family office (SFO) serving one family
or a multi-family office (MFO) serving several
families, the family office serves as an alternative
to private banks, registered investment managers,
or any other specialized wealth management and
investment platforms. A number of academic papers
and survey-based white papers have been published
in recent years aiming to establish the status of
family offices as well as examine trends in their
development and use. This study found a consider-
able degree of overlap in the topics covered but also
noted some inconsistencies in the results between
the different papers. In this article, based on an
in-depth review of recent publications, the authors
seek to offer a balanced perspective and insightful
synthesis of this research.
TOPIC: Wealth management*
We set out to review the cur-
rent state of publications on
the subject of the family
office, wanting to under-
stand the scope of research on the topic.
While we found a considerable degree of
similarities and overlap in the research pub-
lished in the past few years, we also observed
some inconsistencies in the results. In this
article, we seek to offer a balanced perspec-
tive and insightful synthesis of the contents
based on our review of recent publications.
DISCREPANCIES IN DEFINITION
The number of family off ices in exis-
tence is often queried, and answers vary
significantly. Even estimates by the same
institution differ dramatically. In the 2013
and 2015 editions of its Family Office Guide,
Ernst & Young (EY) estimated that there
were 3,000 single family off ices (SFOs) glob-
ally, but in its 2016 report, it suggested a new
• This is in-depth review and analysis of books, articles and reports on family offices.
• A family off ice differentiates itself from other types of investment or service f irms by the
level of their holistic approach and the personal attention given to families.
• There is a need to define a proper governance structure that takes into account the
requirements of all family members as well as educating the next generation.
• A family office adjusts its structure to meet the evolving complexity of demands and
challenges including multi-juridical needs, low interest rate, and digital advancement.
KEY FINDINGS
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figure of 10,000 SFOs, indicating that half of them had
been set up in the past 15 years. In general, industry
experts agree that the family office industr y is growing.
Thus, the number of family offices is changing every
month. However, estimates show signif icant variance
regardless of the year of publication, as shown in Exhibit
1.
There are many reasons for these discrepancies.
First, the number of family off ices cannot be obtained
from a general survey. A family off ice is often not reg-
istered or is registered in a distinct legal form, such as an
investment f irm, a holding company, a trust, and so on.
Therefore, no reliable official data are available. Second,
the definition of a family office is vague. Lastly, the
nature of the family office is private. Thus, information
is difficult to access, and we have to rely on estimates
by institutions with a vast network in the industry, such
as the Family Wealth Alliance or the Family Office
Exchange (FOX), which are often cited or are cited
indirectly from another publication.
The FOX website posted an article (Pollack 2014)
describing how the number of family offices was esti-
mated. The author first collected the number of wealthy
families in the United States. Then he assumed that 50%
of families with wealth of more than US$100 million
and 75% of families with wealth more than US$250
million would use some form of family off ice, and he
ended up with a total of 6,000. Often the number is said
to emanate from an off icial database, but in fact, it is
only a reasonable guess based on specific assumptions.
Nonetheless, according to this estimating procedure, the
number of family off ices seems to be increasing as the
number of wealthy families has grown rapidly in the
last decade. The conservative estimate appears to be for
3,000 formalized family offices globally.
Definition of a Family Office
The definition of a family office is not consis-
tent among researchers, and thus the boundary of the
family categories becomes controversial. For example,
when Bloomberg published a list of the top 50 largest
family offices (Bloomberg 2014), based on their assets
under management (AUM), Zeuner, Lagomasino, and
Ulloa. (2014) critiqued the data by noting that most of
the top listed firms were not family offices but tradi-
tional financial service firms positioning themselves as
family offices.
Exhibit 2 presents some of the definitions used in
the literature. Regarding the structure, FOX’s definition
is the narrowest because it excludes organizations estab-
lished by non-family professionals, while that of Wilson
(2014) is the broadest. FOX’s definition does not explic-
itly specify that the family office serves non-financial
goals. All other definitions indicate that families expect
more than f inancial gain.
Family offices place importance on a holistic
approach, considering total assets of the family in diverse
forms as well as non-f inancial goals. They also emphasize
the unique needs of the family. Therefore, the inf luence
ex h i b i t 1
Different Estimates of the Number of Family Offices
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of family is inherently high. In particular, a founder’s
involvement would be to indicate investment prefer-
ence, risk tolerance, and interest in f inancial matters; all
such considerations would be factors rather than just the
AUM or the number of families served by the off ice.
We observe that the concept of family offices is still
evolving, especially in Asia, so the definition remains
controversial. But we emphasize that an appropriate
definition should be narrow enough to exclude organi-
zations, such as traditional financial service f irms, that
do not serve and represent the non-f inancial interests of
the family, as well as being suff iciently broad to include
all types of family offices currently emerging.
Types of Family Office
In the family office industry, it is often said, “If you
have seen one family office, you have seen one family
off ice” (Steinberg and Greene 2013). This comment
should not be used to negate the effort to identify the
industry’s best practice and commonalities. However,
there are many variations on the structure, objectives,
and characteristics in the category of a family office.
There are two distinct types of family off ices,
single-family offices (SFOs) and multi-family off ices
(MFOs), although some researchers have identif ied
other categories. Exhibit 3 shows a conceptual diagram
locating the different types of family off ices along the
axes of two characteristics: personal attention to families
and holistic approach to providing services. The dotted
lines representing that the boundaries can overlap across
the different types. MFOs are those family offices that
serve at least two families, while SFOs work exclusively
for a single family. MFOs may differ significantly from
SFOs in terms of their characteristics as a result of losing
a central focus on a single family. A single family clearly
gets more personal attention in an SFO.
A professional family office (PFO) is an institution-
ally backed entity, an ex-subsidiary of a financial services
company or bank, and is dedicated to offering family
office services to their family clients. Compared with
traditional investment f irms, PFOs take a more holistic
approach, providing the whole package of investment-
and non-investment-related services including tax and
legal services. However, as a PFO is not owned by a
client family, its role in relation to the family’s assets is
often limited to financial services, mainly due to privacy
and conf identiality issues. A PFO is also known as an
ex h i b i t 2
Selected Definitions of a Family Office
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ex h i b i t 3
Locating the Family Office in the Axes of
Characteristics
Notes: SFO = single-family office; MFO = multi-family off ice; EFO =
embedded family office; VFO = virtual family off ice; PFO = professional
family office.
High
Holistic Approach
Low
High
MFO
Personal Attention to Families
Low
PFO
Financial
Service Firms
SFO
VFO
The
Office
(EFO)
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institutional family office (IFO) or a commercial family
office (CFO).
An embedded family office (EFO), or simply
“The Office,” is a dedicated space—an office, a f loor, a
building—within the family-owned business, that has
one or two staff who handle all financial, legal, and tax
matters related to the family owners and their wealth.
In an EFO, the family has direct control of its assets.
Because an EFO belongs to the operating business, how-
ever, it usually does not manage family assets outside
the firm, such as real estate unrelated to the business.
Therefore, entrepreneurial families with EFOs often
consider taking the family office functions outside the
family business to improve efficiency, protect privacy,
and for tax compliance.
If families do not wish to set up a legal entity to
secure family off ice services, they can start with a virtual
family office (VFO), or a coordinator family off ice, by
outsourcing most of the services to external providers of
services and consultants. A VFO is essentially a form of
SFO, which is often used to be f lexible and keep opera-
tions costs as low as possible. The inherent downsides
are low speed and confidentiality risk.
In a narrow sense of the def inition, only traditional
SFOs and MFOs with dedicated employees and spaces
and with holistic asset management would be consid-
ered as family off ices. Considering the recent evolution
of family offices adapting to diversif ied family needs,
however, EFOs, VFOs, and PFOs should be classified as
belonging to the category of the broadly def ined family
off ice.
In most cases, the relationship between an owner
family and the family’s off ice manager depends on the
type of office. In a PFO, the relationship becomes that
of a client and a service provider. In an SFO, the owner
family is the employer, and the family’s off ice manager
is an employee. In the case of an MFO, the relationship
can be either, depending on the origin and evolution
of the off ice. Moreover, some family members often
join in the management of the family office, which can
make the relationship more complicated in terms of the
agency perspective.
Another issue to be considered from the agency
perspective is the relationship between new-generation
owners and long-serving non-family managers. Descen-
dants of company founders who have inherited the
family wealth may have strong reservations about an
office manager who served the previous generation for a
long time. In the absence of trust, significant monitoring
or oversight-related expenses may occur, and conf licts
of interest can arise. Therefore, agency and monitoring
costs have to be revised after every succession.
SELECTION CRITERIA
The Motivation for Setting
Up a Family Office
Wealth management is undeniably the key func-
tion expected of a family office. We identified a growing
trend in the literature whereby family off ices increas-
ingly aim to achieve non-financial goals, although not
all families subscribe to this and most continue to limit
the off ice’s responsibilities exclusively to wealth man-
agement. Notably, there is an increased focus on edu-
cation programs for next-generation family members,
involving outside educational institutions as well as
internships in the family business.
Economies of scale constitute one of the practical
reasons to set up a family office, involving both financial
and non-financial objectives. By combining the buying
power, the family can gain access to the best strategic
advisors while keeping costs low. Dunn (1980) published
one of the first studies explaining the history and evolu-
tion of family offices and introduced the concept of a
“kinecon” group, which represents kinship bonds and
shared economic interests. Based on the case of one of
the wealthiest families in the United States, he found
that families who formed a kinecon group utilized a
family office to maintain a cohesive family unit through
successive generations, to control their business, and to
exercise political, cultural, and religious influence as a
united force.
In practice, a number of triggering factors can
inf luence a family’s decision to establish a family office.
Exhibit 4 summarizes such triggering events, catego-
rized by source of wealth. One triggering event, or a
combination of the four sources identified, works as
the catalyst to create such an office. The first factor,
the death or retirement of the founder of the family
business, necessitates an intergenerational wealth
transfer. The second is the sale of at least a portion of
the family business, which increases overall liquidity.
The third is a strategic decision to separate the family
wealth from the operating family business while keeping
the business. These three triggers concern sudden or
expected liquidized wealth that has to be handled
carefully so as not to harm family cohesion. Thus, a
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related driver for establishing a family off ice is to avoid
conf lict by creating a governance structure to handle the
family wealth. Lastly, a tax-related opportunity is also
a trigger; certain families want to optimize the family’s
tax status. For example, George Soros, founder of Soros
Fund Management, changed the legal structure of his
hedge fund into a family off ice in 2011 to avoid tough
regulations on hedge funds introduced by the Securities
and Exchange Commission (SEC) in the United States
(McDermott 2011).
Criteria for Selecting the Type
As shown in Exhibit 3, the SFO has the advantage
of its central focus on the family and a holistic approach.
However, not all families can afford the operating
expense of an SFO. Exhibit 5 identifies the amount of
assets under management suggested by the literature as
a threshold for requiring an SFO. As with the definition
of the family office, the minimum required AUM differs
among researchers. A rule of thumb can be a threshold
of $100 million; however, other researchers suggest
that with a lean structure, an SFO can be viable with
lower AUM. By contrast, Rosplock (2014) claims that
the required minimum to build out a fully functioning
family office has increased to as much as $500 million
in the past decade, because of economic uncertainty
coupled with periods of low returns and the elevated
overhead costs of new regulatory compliance.
Scherer (2018) proposes a new trade-off model,
comparing the fixed and variable costs of setting up
an SFO versus the financial gains. Eventually, families
will estimate the benefits and costs of setting up their
own off ice or choosing another solution. Although non-
financial objectives are signif icantly pursued once a family
office has been established, it is mostly the f inancial gain
that is considered in the initial decision to set one up.
Family offices often develop organically out of
an operating business or investment as family affairs
become increasingly complicated. In this case, struc-
turing a family off ice is an ongoing process driven by a
family’s evolving needs and objectives. As families grow
throughout the generations and the number of house-
holds served increases, the needs of all the family mem-
bers become more complicated. According to EY (2016),
a family office is often started by hiring a trusted advisor
that the founders know well and with whom they have
been working for several years. When choosing between
an SFO and an MFO, the loss of privacy and confiden-
tiality is also considered part of the cost, which may
vary depending on the family’s unique situation and
preference. Regarding the operating costs of the SFO,
we estimate it at 1.5%–2% of AUM as a rule of thumb,
or $1 million for a fully functioning SFO. In addition,
the financial gain of using a family off ice should be
more than the initial and operating costs, which strongly
depend on the regional economy. Families with fewer
assets to manage can choose an MFO or PFO. Most
multi-family offices require $20 million to $30 million
in investable assets to join their platform. However, due
to economic conditions and hunger for business growth,
some multi-family offices allow clients in with as little
as $5 to $10 million.
UNDERSTANDING THE VARIETY
OF THE SERVICES
Categories of Services
The literature identifies a broad range of services
provided by family off ices. Ernst & Young (2016) catego-
rizes family office services into four core themes: financial
planning, strategy, governance, and advisory. Financial
planning includes investment management services,
philanthropic management, life management, and bud-
geting. Strategy comprises training and education, estate
and wealth transfer, and business and f inancial advice.
Governance includes administrative services, succession
planning, and reporting and record keeping. Finally, the
advisory category covers risk management and insurance
services, compliance and regulatory assistance, and tax
and legal advice. Campden (2018) also lists a similar range
of services but puts them into four different categories:
investment-related activities, family professional services,
administrative activities, and general advisory services.
ex h i b i t 4
Sources of Liquidized Wealth That Trigger Setting
up a Family Office
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6 F O  R R S  2020
Most research takes into account a similarly broad range
of services. The main reason for diversifying the tasks
of a family office is that many families are recognizing
the importance of non-f inancial goals and are willing
to invest resources to access them. As a family off ice is a
flexible unit under their control, families can leverage it
for multiple and versatile purposes.
While most publications use the nature of activities
to categorize services, we also find it useful to categorize
them in terms of motivation and time orientation, as
shown in Exhibit 6.
Preserving financial wealth is an explicit motiva-
tion for using a family office. The World Economic
Forum (WEF 2016) found that more than 90% of the
SFOs taking part in their survey identified wealth man-
agement as their top objective. Families need services to
preserve their wealth in both the short and long term.
Socio-emotional wealth (SEW) is defined as the
pool of non-financial aspects that capture the “affective
endowment” of family owners including the family’s
desire to exercise family inf luence to meet its social and
affective needs and perpetuate the family dynasty. In
family-controlled f irms, family members attach socio-
emotional value to firm ownership and make major
strategic decisions based on a trade-off between finan-
cial wealth and SEW. Some families also place great
importance on SEW with responsibility to their local
community. Public relations and political involvement
inf luence the public image of business families. Philan-
thropy and art collection are used as a way to maintain
SEW for the long term. Impact investment covers both
the motivation for preserving wealth and SEW for the
long term. Art collection development fits well with
a family office as it is aligned with the expectation of
wealthy families in terms of social impact and transgen-
erational wealth transfer, as well as for personal pleasure.
Families also want to preserve family cohesion
during the transfer of wealth. Some family offices help
families with such minor issues as booking travel and
small administrative affairs, which can be considered as
meeting the needs of family cohesion or, ultimately, for
family happiness. Members of a family can have different
financial and non-financial interests and goals. When
wealth is transferred to the next generation, the diversi-
fied interests of multiple family members evolve and may
clash. Decisions by the family off ice may cause disputes
between family members, which require resolution. Con-
sequently, there is a need to def ine a proper governance
structure that takes into account the requirements of all
family members as well as educating the next generation.
Characteristic Distinctions
A family office sometimes makes decisions that
would be considered unusual by external investment
professionals, owing to the inf luence of the owner
family. For example, a family that has developed the
business through a close relationship with the local
community over the generations may inf luence the
family office to make a f inancially suboptimal invest-
ment in order to maintain its contribution to the
co m mun it y.
ex h i b i t 5
Required Amount of Assets Under Management to Set up a Single-Family Office
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T J  W M 7Spring 2020
We have identified four broad features in family
office operations that differentiate it from other finan-
cial organizations (Exhibit 7). The first is the holistic
approach to managing family wealth. While the part
of a family’s assets involved in the operation of busi-
nesses has to be managed separately, the family office is
actually central to managing the family’s wealth. Thus,
family office managers have to share a holistic view to
oversee all of the family’s assets and to consider various
risks, including those surrounding real estate, tax, and
cash f low. As there will be irregular cash requests from
family members for business-related, philanthropic, or
ongoing expenses, a family office should consider their
overall liquidity needs carefully during the portfolio
creation process.
The second feature is the emphasis on personal
attention. This has to be considered carefully when
making the decision to transform an SFO into an
MFO. The advantages of establishing an SFO, including
personal attention and long-term stability, can be lost
during the transition. Of course, an MFO has some
advantages over an SFO, as the f irm can spread the cost
of investments over a larger asset base and achieve higher
cost eff iciencies. However, an MFO cannot provide the
same degree of personalized service as an SFO. None-
theless, MFOs need to understand the unique needs of
families and focus on what their ultimate wealth objec-
tives are, as opposed to a narrow focus on what returns
are expected.
The third feature is family involvement. Family
dynamics play an integral role in every facet of the family
office—from its set up, functions, and governance to
its resulting success in the effective management of the
family wealth. Family offices at a nascent stage are char-
acterized by intense levels of family control combined
with a low level of governance structure. In some cases,
even family members without appropriate expertise
want to participate in the investment process, either as an
informal contributor or as a member of the investment
committee. Thus, a high level of family involvement
does not always lead to optimal performance. However,
it is undeniably a priority for most owner families to
be involved in the investing and operating decisions of
the family office, to ensure it fulfils the family’s unique
needs over the long term.
The last feature is adjustable structure. A family
that has made its wealth through f inancial investment
has different expectations of the family off ice than a
family that has sold out a manufacturing business and
has no expertise in investment. In some cases, a new
family office might only require a few new func-
tions to complement the family’s existing structure.
ex h i b i t 6
Family Office Services Categorized by Motivation and Time Orientation
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ex h i b i t 7
Characteristic Distinctions of Family Offices versus Other Service Firms
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8 F O  R R S  2020
If a well-established family foundation manages all the
philanthropy and impact investment, for example, there
is no need to transfer those functions to the family office.
Furthermore, due to local regulations, the legal struc-
ture of the family office might be different from one
country to another. Despite the diverse range of possible
structures, the ultimate purpose of a family office is to
preserve and possibly grow the family’s financial and
socio-emotional wealth and family cohesion.
UPCOMING TRENDS
There exists a number of different observations and
ideas on the near future of the family office industry.
Exhibit 8 shows the key trends and predictions.
Industry Trends
Overall, there are growing needs for family off ices
globally. However, the structure of the future family
office may be different from traditional family offices,
and it will evolve in different formats to cover the diverse
objectives of the owner families.
Industr y trends suggest that the number of family
offices will grow globally due to the rapid growth of
the ultra-high-net-worth individuals (UHNWI) pop-
ulation (INSEAD 2014). In Singapore and the Middle
East, in particular, the tax-friendly environment and
robust capability provided in regional f inancial hubs
suggest a further expansion of the industry in the
coming years. However, family offices in Asia have
not been growing as quickly as previously seen in Hong
Kong and Singapore, which are SFO hubs in Asia.
The slow growth of family offices in Asia seems to
be attributed to the region’s economic culture as, for
example, Asian UHNWIs are reluctant to allow MFOs
to manage their fortunes. Tycoons in Asia reportedly
fear that the managers of MFOs could divulge conf i-
dential information.
Moreover, the family office concept is still rela-
tively new in Asia. Thus, the future family office may
evolve with a different structure than the conventional
SFO or MFO. One example is the virtual family office
type, which teams up with different players in a hybrid
family office network model (VP Bank and USG 2015).
Consequently, different service providers like private
banks, independent advisors and lawyers, and external
asset managers, could enter the family office market
drawing on their core competencies with their existing
network in their core business.
Conversely, as families become more multi-
jurisdictional and require tax and investment advice
from a different jurisdiction than where they live, MFOs
will also become multi-jurisdictional. Some could join
forces to offer increased global ser vices to their family
clients by creating associations of family off ices.
As wealthy family clients are economically attrac-
tive, some traditional financial institutions have tried to
position themselves as providers of family office services,
making it increasingly diff icult to distinguish family
offices from other financial institutions such as banking,
investment services, and professional service f irms.
ex h i b i t 8
Trends and Predictions
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T J  W M 9Spring 2020
A positive consequence may be that talent can now
migrate from those industries to the family office sector.
Operation: Digital Technology
and Cyber Security
With regard to the operation of a family office,
the use of digital technology is a necessity, as in other
industries. In particular, advanced technical infrastruc-
ture and useful applications are required for family
offices. However, advances in mobile and cloud tech-
nologies have had an adverse impact on data security.
Family office IT staff and principals should, therefore,
be careful when designing policies regarding the use of
these new technologies to reduce the risk of an unau-
thorized person gaining access to sensitive information
or creating an opportunity for fraud.
Investment Trends
Family offices have increased the proportion
of their total allocation to direct private equity.
The proportion of direct private equity and real estate
has become the greatest among all investment models
including outsourcing, management of managers, and
direct active trading.
Investment was once the main purpose of family
offices, but this has now become commoditized. Invest-
ment functions will be mostly outsourced in coming
years. Thus, non-investment activities will be the major
differentiating aspect of successful family offices. MFOs
tend to outsource the chief investment officer (CIO)
function as investment becomes commoditized. The
active growth of online portfolio providers, so-called
robo-advisers, further encourages such an outsourcing
trend.
Another constant emphasis has been impact invest-
ment. The motivation is to accomplish two goals: to have
a positive social and environmental impact, in addition
to financial return. This effort, as well as philanthropy,
can create meaning and cohesion within families as it
can bring families together around a common purpose.
SUMMARY
Because the current vague def initions of a family
office make it difficult to separate a family off ice from
other institutions, the estimated number of family
offices shows significant variance among researchers.
In addition, identifying the common characteristics
of a family office is problematic. There exist various
forms: embedded, virtual, single-, multi-, and profes-
sional family off ices. Within the same form, family
offices can differ signif icantly in the range of services
offered and primary objectives, depending on other
factors, such as the number of family members served
and their generational difference. We suggest gaining
an understanding of the characteristics of a family office
by looking into the level of their holistic approach and
the personal attention given to families. Moreover, the
features of adaptive structures and respective family
involvement distinguishes a family office from other
financial institutions.
Often, families decide to set up a family off ice
when they receive or expect a liquidation of wealth from
different sources related to family, ownership, business,
or environment. Not all business families need an inde-
pendent family office, and deciding whether to have one
deserves careful consideration. The f inancial resources
available to a family can determine whether it is wiser
to hire experts to handle their wealth management,
or to receive the relevant services from a professional
family office. Experts used to suggest that more than
$100 million is required as assets under management to
run a fully integrated SFO. However, because of the low
expected return on investment as well as the elevated
overhead costs for meeting new regulatory compliance,
a higher AUM seems to be required for profitable opera-
tion. MFOs are opening the doors to clients with lower
AUM, as they can scale up the operation and spread
the shared costs among a large number of customers.
In many cases, building or joining a family office will
be decided by comparing the benefits and expenses in
financial and non-financial terms. Factors influencing
this decision also include the owner’s preference for
pr iv ac y.
A family office is expected to provide a broad
range of services from investment to educating the next
generation. Families require relevant services to pre-
serve their financial wealth, socio-emotional wealth,
and family cohesion both in the short and long terms.
All the services can be understood by categorizing them
in terms of the core motivations. Some services can be
beneficial for more than one motivation. For example,
philanthropy is beneficial for building up the family’s
socio-emotional wealth in the long term as well as
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10 F O  R  R S  2020
keeping the family cohesion stronger by building up
shared goals and values.
While the family office industry was expected
to grow due to the increased population of wealthy
individuals worldwide, the estimated number of family
offices seems not to have grown as fast as expected, par-
ticularly in Asia. While the needs are undeniable, a dif-
ferent style of embedded or virtual format appears to be
employed, with an adaptation to the regional business
culture instead of the popular single and multi-family
offices. The trend of adopting digital technologies
cannot be avoided, but cyber security risks mean that
careful handling is recommended. The investment
choice can be different depending on the family’s
preference and the regional economy. Experts agree
that investment has become commoditized. Impact
investment, in particular, has been highlighted recently
as being beneficial for preserving three fundamentals:
financial wealth, socio-emotional wealth, and family
cohesion.
This research provides a balanced review and new
insights into the family office by synthesizing the find-
ings of recent publications. We anticipate that more
family offices will develop their inherent features further.
That means taking an adaptive structure to complement
the existing ones, and allowing family involvement to
meet their multiple and versatile purposes through a
holistic approach and careful personal attention.
aP P e n D i x a
LIST OF PEER-REVIEWED ARTICLES
AND THEIR RELEVANCE TO OUR TOPICS
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To order reprints of this article, please contact David Rowe at
d.rowe@pageantmedia.com or 646-891-2157.
ADDITIONAL READING
The Institutionalization of Family Off ices in Brazil
Caroline de oliveira orth, Clea Beatriz MaCagnan,
and João zani
The Journal of Wealth Management
https://jwm.pm-research.com/content/17/1/9
A BS T R AC T: This study identifies identify the organizational char-
acteristics of family offices (FOs) in Brazil. This article was developed
through a content analysis of 22 interviews conducted with persons
involved in 13 different FOs, two family enterprise executives, and
one private banker. The study’s relevance relates to changes in Brazil’s
economic structure, which have principally been caused by an increase
in companies going public and in merger and acquisition transactions.
These changes have contributed to increasing the volume of resources
available for investment by families that retain control of the affected
organizations. These families have begun to search for mechanisms to
preserve their private property within the structure of FOs. This study
also revealed that MFOs seek to provide multiple business families
with differentiated services within their areas of activity. However,
one must question the extent to which these organizations simply
take advantage of the FO concept for marketing purposes. In contrast,
SFOs are primarily established by Brazilian business families to
separate company affairs from family matters, thereby increasing the
professionalization of the family business. Moreover, because of the
complexity of tax-related issues in Brazil, certain families create SFOs
because they wish to optimize their tax statuses. The desires to resolve
questions of succession and to implement financial resource manage-
ment also motivate the creation of FOs in Brazil.
Managing Art Wealth: Creating a Single Family Office
that Preserves and Protects the Family Art Collection
alessi a zorloniandrandall Willet te
The Journal of Wealth Management
https://jwm.pm-research.com/content/16/4/9
A B ST R AC T: Investing in art, once the preserve of a wealthy elite
in Europe and North America, is now global. This expansion of the
art market, made possible by the broader dissemination of concentrated
wealth and by the globalization of art, has fuelled the tendency to view
art as an asset class comparable to stocks or real estate. Only recently,
however, has art been viewed through the lens of modern portfolio theory
and considered a potential alternative investment as part of a portfolio
of assets. Based on this evidence, this study examines the role of art in
the overall wealth-management strategy of a single family office and the
issues faced by wealthy families in managing a private art collection.
Finally the paper offers general recommendations on what constitutes
sound art governance in order to preserve and protect a family collection.
Constructing a Passive Global Stock Market Port-
folio from a Multigenerational Family Off ice
Perspective
danie l ziggelandChristian ar MBrueste r
The Journal of Wealth Management
https://jwm.pm-research.com/content/19/2/89
A BS T R AC T: This article describes the journey of a family office to
create and invest into a global stock market portfolio and get exposure
to the world’s growth through equity ownership. We explored many
products in the marketplace and considered many prevailing theories
on portfolio allocation and optimization. However, we decided to
follow our own advice, and set out to build a global equity portfolio
that provides balanced exposure to ongoing economic, cultural, and
investment growth. We explain here the logical sequence of events,
our methodology, and our thinking as we organically arrived at an
allocation and rebalancing algorithm from a multigenerational view-
point. Very importantly, we also provide a description of the practical
application to replicate the allocation in a cost-efficient manner by
means of ETFs.
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