• As the prosperous have prospered, family offices have mushroomed. Still, they differ greatly in the breadth and depth of their services.

• While some vendors concentrate almost exclusively on investment management, others resemble concierge and administrative service providers more than financial firms.

• Independent advice and a customer-first approach are often cited as a common denominator, but an outfit’s scale and maturity may in practice curtail the quality of its services.

• We believe in the efficient combination of regulated asset and wealth management and a dedicated "Private Office" specialized in making its clients’ lives easier
  

Golden roofs break men’s rest

Managing a large family fortune can easily turn into a life-consuming task. In addition to juggling investment decisions, principals have to grapple with complex governance and tax issues, while dealing with a multitude of service providers. This may be exciting at times, but can quickly become overwhelming, causing wealth to feel more like a burden than a source of freedom and joy. In this case, a Private Office can provide peace of mind and allow families to refocus on projects dear to their hearts.

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The Roman philosopher Seneca famously stated that "for many men, the acquisition of wealth does not end their troubles, it only changes them".
Asset and wealth management are often perceived as primarily investment-related tasks. Consequently, private banks and independent wealth managers compete on the breadth and depth of their product offerings and the quality of their investment advice and discretionary portfolio management across a multitude of asset classes from public equities to private markets.

However, in practice, investment decisions are only one aspect of estate planning, and especially in the case of large and complex family fortunes, it is strongly linked to the constraints dictated by personal preferences, contractual obligations, and tax considerations. \\
Furthermore, it may not even be a priority for already uberwealthy but time-constrained individuals. Beyond that, the stewardship over a sprawling family fortune implies a considerable responsibility towards all its members, a duty that a family may not want to entrust to individual members, not least to avoid bitter feuds.
In other words, client-oriented wealth management must address the “new troubles” associated with owning a large fortune.
This recognition has led to the rapid growth of the family office industry, which has traditionally differentiated itself from private banks and asset managers by offering a comprehensive and customizable range of services, typically with a strong focus on impartiality.
Beyond that, family offices can be attractive from a pricing perspective. We frequently find that clients hesitate to call their lawyers or other advisors, fearing to be charged for every minute they spend discussing a problem. Similarly, hiring dedicated professionals and setting up a Single-Family Office is costly and generally only makes sense for vast fortunes. It is often claimed that families with a net worth north of USD 100 million can afford a dedicated team. In practice, this hardly allows hiring more than one or two persons without cost becoming prohibitive. The question then becomes how far-reaching the network can be with such a minimal configuration, how dependable the relationships with service providers such as lawyers, notaries, and investment banks are, and how well task as diverse as asset allocation and inheritance planning can be carried out.

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Given the proliferation of vaguely defined market participants from mere concierge services and one-man shows to sophisticated boutique investment firms, it can be difficult to pigeonhole the family office industry.

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"No family resembles another or itself as it once was."

At Amadeus, we have, therefore, decided to draw a clear line between our investment-related activities and adjacent services, which we summarize under the term Private Office.
The former includes regulated asset and wealth management services such as investment advisory, discretionary portfolio management for customized mandates (SMAs), and developing and managing in-house funds and AMCs.
The Private Office, on the other hand, focuses on the following core services.

• ‍Audit of existing estate structure
  Particularly in the case of old money, structures involving holding companies, trusts, and funds may have been set up decades ago, sometimes by family members who are no longer alive. These structures might have become obsolete or inefficient due to the changing regulatory and tax landscape as well as the evolving makeup of the family itself. A comprehensive audit of the present structure usually marks the beginning of the client relationship. It enables a competent Private Office to detect and address governance and tax risks and cut unnecessary expenses.
  

• Estate restructuring and updated planning
  If required, the holistic audit of the prevailing structure is followed by its update, meaning the establishment of a structure and estate planning built around the family's current key members, their role within the family and their professional, personal and financial circumstances and ambitions. It may involve the transmission of important responsibilities to the next generation or their internalization or externalization from and to independent professionals. The optimal structure will always be one hundred per cent tailor-made. No family resembles another or itself as it once was.\\\
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• Global asset allocation
  People like to dwell on the performance of individual investments, but in the long run, it is the strategic asset allocation that determines a portfolio's drawdowns and returns. There is probably no other aspect of a Private Officer's work that is as much in the cross-hairs of managing the diverse and sometimes contradictory expectations of an organic institution like a family and the cold-blooded numeric world of the financial markets. It is also the task where the Private Office of an integrated boutique can most benefit from in-house investment management tools and know-how. Understanding a family's sometimes subconscious and unarticulated preferences requires empathy and experience. Translating this into an appropriate asset allocation falls within the remit of financial market experts with up-to-date knowledge of academic concepts and the product ecosystem. Finally, these recommendations must be explained to the client in a way that is commensurate with their educational background and experience, a process that benefits greatly from the use of visualizations such as risk and performance simulations, supported by sophisticated digital tools.
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• Wealth consolidation and cost reporting
  UHNWI families typically have assets at a wide range of banks, brokers, and other custodians, as well as participation in private partnerships and investments in other illiquid assets such as vacation homes. Following all these and monitoring valuations as well as associated liabilities can be challenging without adequate systems and support in place. The Private Office, therefore, retrieves data from a wide range of counterparties and complements it with manually maintained records to provide clients with an all-including and timely overview of their total wealth. This overview not only facilitates risk and performance management but also a tight control and complete reporting of all management and administrative costs.
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• Monitoring of third-party service providers
  Possessing a thorough understanding of the client’s financial and personal situation at large, the Private Office is in the position to assist its clients in selecting third-party asset- and wealth managers (beauty contest) as well as the continuous supervision of their services. This can include complex tasks such as analysing and benchmarking the performance of private assets or hedge funds. In this context, a Private Office embedded in a boutique setup with strong in-house investment management capabilities can benefit from these competencies. Examining and choosing third-party managers requires an extensive and up-to-date knowledge of various investment strategies. Analysing and judging results depends on experience and access to financial databases like Bloomberg and analytical tools. While a Private Office like ours needs to be conscious of any potential conflicts of interest and, therefore, regularly excludes in-house products entirely, it is of great utility to have personnel at hand who not only know the market theoretically or from past experience but have their hands in the dough.
  Finally, customers can benefit from lower fees for various services that the Private Office can negotiate thanks to its size. The knowledge of best practices gained from dealing with a wide range of business partners for many customers also helps the Private Office identify and recommend the most attractive offers.\\\
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• Real estate-related services
  Real estate, including primary residences, holiday homes and investment properties, often represents a significant part of Private Office clients' wealth. Naturally, it is an illiquid market with limited transparency and not always reliable actors. Our Private Office frequently gets involved when advisory and coordination are required during the purchase or sale of the property. This includes responsibilities like organizing financing from various banks and selecting competent intermediaries, lawyers and notaries.
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• Tax monitoring and advice (inheritance/setting up in Switzerland/tax returns, etc.)
  Tax consulting in the context of a private office does not merely involve support with supervising fiscal advisors and coordinating the filing of tax reporting. Wealthy families often have members in different jurisdictions, complicating issues such as estate planning. Furthermore, a principal's optimal country of residence may depend on current personal and financial circumstances, which can change suddenly, for example, if the family business is sold. Our private office is therefore routinely tasked with supporting relocations to fiscally attractive countries such as Switzerland, Luxembourg or Italy.\\\
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• HR-related and concierge services
  In many cases, a Private Office performs a role akin to that of the headquarters of an operating company. It includes chores such as finding suitable cooks or drivers, booking transportation and accommodation for family members, and ensuring that expenses are correctly documented, posted, and, if applicable, claimed for tax purposes.

Evidently, Private Office services can not be offered pro bono as a mere side product of investment management. Instead, the pricing is based on the mandate's scope, as well as the size and complexity of the estate. Contrary to popular belief, the fees for Private Offices are usually much lower than those charged for discretionary portfolio management.
Thanks to economies of scale and synergies with internal investment management activities, our Private Office is also available to modestly wealthy clients without compromising the independence of the advice.