Private wealth management advice businesses that cater to ultra-high net worth investors, known as family offices, provide full services to manage an individual’s or family’s entire wealth.
In contrast to traditional wealth management organizations, family offices provide a complete outsourced solution for all of their client’s financial and investing concerns.
Below we have discussed the difference between family office services and wealth management.
What Is A Family Office?
The term “family office” refers to private advisory services that are tied to Wealth Management and serve UHNW (Ultra High Net Worth) investors. Family offices differ from traditional wealth management businesses in that they provide a complete outsource solution for handling the investment and financial aspects of single wealthy families or society.
Most family offices, for example, provide services such as insurance, budgeting, family-owned enterprises, taxation, charity giving, and wealth transfer.
Understanding Family Office
Some high-net-worth individuals or organizations may be interested in establishing a new family office. A family office is known for offering a wide range of services that are tailored to fulfill the unique needs of HNWIs.
Family offices are known for providing a comprehensive financial solution to HNWIs, ranging from charity giving guidance to investment management recommendations.
Non-financial aspects like making travel arrangements, private education, and a variety of other domestic arrangements can also be handled by the family office. Single-family or multi-family offices are the most common types of family offices.
What Is Wealth Management?
In Wealth Management, the client receives all of the services they require from a single wealth manager. The wealth manager has a variety of titles based on the firm, such as a financial consultant or financial counselor.
The firm employs a Flexible Investment Approach with a Risk Management policy when delivering wealth management services.
The goal of a wealth management advisory is to assist their clients in understanding! Exactly what is going on in their accounts and the reasons for it?
6 Key Differences Between Family Office Vs Wealth Management
Do not tear between the two options, family office vs wealth management when you are going to select between family offices and private wealth management services providers. You have to know first what types of pros and cons you will get with the services.
Here are six key differences between family offices and wealth management.
1. Private Health Management Facility
Family offices can manage wealth. As a result, they act as a wealth manager for the family they serve.
A wealth management salary is pretty high. On the other hand, it serves several customers, whereas a family office serves a single-family.
2. Responsibility Distribution
Wealth managers provide very limited investment and guidance. They just manage investments, whereas a family office can handle a wide range of responsibilities.
Not only the wide ranges of responsibility, the customers are getting the customizable responsibility distributions.
3. Customizable Investment Plan
A family office, on the other hand, is completely customized, whereas wealth managers sell an investment product that they already have.
Private wealth management is not offering customizable investment plans as their customer numbers are huge. And for the customers, they offer a very fixed investment plan.
4. Service Cost
Finally, family offices are often designated for those with higher net worth. This is due to the high costs of maintaining them. Everyone can have a wealth manager as their fees are not too high.
Hiring a wealth managers is always more costly than availing the services from the family offices.
5. Personal Attention
The level of attention is also making a difference. Usually, personal wealth management companies have multiple types of investors. And these professional approaches are developing a stronger bond between clients and the service provider firms.
Family offices are only dealing with minimal numbers of customers. And they give their personal attention to developing a stronger bond with the clients.So customizable plans are available here for better impressions.
6. Multiple Scope Of Investment
The scope of the investment functions is limited compared to the other family offices. The wealth managers are offering minimal numbers of investment opportunities to their customers. But family offices are always offering more diversified portfolios of investments.
As for the expense management, the family offices are better. Hence they are offering a versatile scope of investments for their customers.
The traditional wealth management systems have more customizable plans. But you have to select the service on the basis of your requirements as every customer has different requirements. So my opinion is both types of financial management systems are having additional facilities. So which one are you going to select? Let us know through the comment section.