October 9, 2018
The increasingly complex personal, family and business-related issues being faced by high net-worth and ultra-high net-worth individuals and families require equally sophisticated solutions. A family office, as discussed in our previous series, is well positioned to attend to issues and needs of wealthy individuals and families. A family office is an organization consisting of a group of professionals who are responsible for the management and administration of a wealthy individual or wealthy family’s investments/ businesses. A family office affords its users access to bouquet of specialized services from various professionals in different fields under a “single roof.”
The rise in the number of wealthy individuals and families across the globe has provided a landscape filled with opportunities for various types of family offices to thrive. In the United States of America only, the number of family offices has grown to at least 3,000 single family offices, with assets under management between $1 trillion and $1.2 trillion, while there are also about 150 multi-family offices having assets under management between $400 billion to $450 billion. In Africa, it is believed that there are about 150,000 high net-worth individuals with a combined wealth of about $800 billion.
There are very few family offices in Africa, in contrast to the rest of the world. Only a handful of high net-worth and ultra-high net-worth individuals and families in Africa employ the services of a family office, many still relying heavily on the traditional asset management outfits. Family offices are a major improvement on the conventional wealth management firms as family offices’ service offerings are more robust and all-encompassing, ranging from daily administrative needs of the family to management of family investments.
In this series, we will be evaluating both single and multi-family offices, growth of family offices globally and why wealthy individuals in Nigeria and the rest of Africa should start considering engaging family offices, like their global counterparts.
An SFO is a private company or organization that manages investments and trusts for a single ultra-affluent family. The company’s assets are the family’s own wealth, often accumulated over many family generations. In many jurisdictions across the world, given its setup and running costs, the threshold of investable asset in an SFO is typically around $100 million. It therefore appeals to only ultra-high net-worth individuals. The SFO channels all of its attention and resources towards the exclusive benefits of a single wealthy family with the provision of tailored services to such family.