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Single Family Office Best Practices Report

Morgan Stanley Family Office Resources have published a new Single Family Office Best Practices report. In response to the ten-fold increase in the number of family offices since 2008, the report provides a broad discussion of best practices that address the key questions Morgan Stanley single family office clients raise most often.

The report was conducted by the Firm’s Single Family Office Advisory team in collaboration with Morgan Stanley Wealth Management professionals, including the Family Office Resources team, single family office executives, and the network of preferred providers in the Morgan Stanley Signature Access program.

Even in the best of times, the single family offices that Morgan Stanley serves are eager to discuss new ideas to enhance their performance and efficiency. The global pandemic has presented family offices with complex new challenges and their need for clear and actionable information is exceptionally high. Now more than ever, the firm is receiving questions about the best ways for ultra high net worth families and their family offices to drive mission and impact.

“There is no simple formula to follow when creating or maintaining a single family office. In fact, some family offices are formed explicitly because the existing service models don’t sufficiently address the family’s unique needs,” said Valerie Wong Fountain, Head of Signature Access and Single Family Office Advisory, Morgan Stanley Family Office Resources. “The single family offices we serve are always on the lookout for new ideas to enhance their efficiency and improve their performance, as well as their impact and philanthropic missions, and we are pleased to be able to provide them this report as a resource.”

The guide is divided into six sections, each in alignment with a common area of responsibility for single family offices. For each area, key considerations are raised and best practices are shared.

Mission and Purpose

The report starts with a discussion of the family’s mission statement because the meaningful discussions a family conducts to define its mission often help answer the most critical question: Should you even have a family office? Conversations about a family’s mission can reveal whether family members are best served by conducting their affairs through a shared entity. Once the family unites around its shared purpose, every policy, procedure and practice of the family office can, and should, be evaluated against the family’s mission.

Setup and Operations

Part two discusses the best practices for establishing and operating the family office, including the choice of legal entity, the hiring, compensation and organisation of the leadership team and the selection of third-party vendors. Given the realities of dependence on technology, the important topic of cyber security is also addressed.

Asset Management

In the third section on Asset Management, the process of creating the family’s investment policy statement is discussed, as a clear definition of goals is critical to long-term success. Other topics addressed are art as an asset class, inter-generational wealth transfer, philanthropic issues and reporting practices and resources.

Financial Administration

Part four of the study focuses on Financial Administration. This section explores issues related to maintaining a healthy accounting, reporting and cash management system that helps protect the family from the risk of mismanagement and even fraud. Other topics addressed include bookkeeping and bill pay services, and evaluating third-party bookkeeping services.

Wealth Advisory

In part five, many wealth management issues that families face beyond investment strategies are discussed. For example, a family’s decision about how to organise its wealth and share it across generations can have huge income, gift and estate tax consequences. Being adequately insured, selecting the most appropriate trustees, and structuring philanthropic endeavours in the most cost-efficient and tax-sensitive manner can dramatically influence the success of a family’s long-term legacy. In families of great wealth, the proper and timely education of next-generation family members can have the greatest long-term impact of all.

Lifestyle Advisory and Concierge

The final section of the report focuses on utilising Lifestyle Advisory and Concierge services. One of the most powerful benefits of having a single family office is the potential to help family members simplify their personal lives, secure the best health care, help ensure their personal safety and travel in the most convenient and comfortable fashion. A well-organised family office can optimise the many staffing decisions these service choices raise, and leave the family with the freedom to simply enjoy the benefits of their good fortune.

To view a copy of the full report, please click here:

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