Beyond borders: Family offices for globally connected families
We explore some of the ways a family office can help meet the multiple and complex needs of international families.
Today's wealthy families – and their businesses and assets – are often spread around the world. Assets and investments are diversified across geographies, industries and financial instruments. Businesses serve regional and global customers. Children work or study abroad, and cross-national and cross-cultural marriages are common.
"A family office can assist multigenerational and internationally connected families by bringing greater focus, control and ownership around their business, wealth and life goals," says Aik-Ping Ng, Co-Head, Family Office Advisory Asia Pacific and Senior Family Governance Advisor, Wealth Planning and Advisory at HSBC Global Private Banking. "Key to achieving this is access to in-region expertise, multinational coordination, culturally specific advice and bespoke investment, family and wealth planning solutions."
Here are some common ways a well-structured family office can serve international families.
Wealth preservation, stewardship and continuity
For many families, a family office is a powerful way for them to organise and professionalise their financial and administrative affairs, particularly when their interests cross geographical boundaries.
Consider, for example, a young Asia-based family with diversified wealth, whose founder was deeply involved in the expansion of the family business and investments into Europe and the US. This family's team in Hong Kong struggled to administer the enterprise across multiple locations, and found it difficult to keep up with the founder's pace of expansion. In this case, the family realised a family office could offer day-to-day support for investment and business activities in all three key geographies, as well as trusted advisers to oversee their affairs in each location while maintaining clear communication with the central Hong Kong-based team.
Another family, originally from Brazil, had family members located around the world, including in the US and in Europe. After the family sold one of their businesses, it became clear that a solution was necessary for management of the family's wealth and to administer a complex system of trusts. The family office was created, based in Miami, and worked with our trustee services in the Channel Islands and Delaware, in addition to handling banking needs for family members across the world.
A central, coordinated family office with global connectivity also can facilitate smooth transitions across generations and changes in business management, as well as provide continuity of investment strategies even in times of crisis, serving as a hub for stability and consistency.
Control over financial and non-financial matters
Family offices provide consolidated, strategic control over a family's financial and non-financial assets – a closer degree of governance and a united, long-term vision for the management of the family's affairs.
In one case, an European-based family realised that they needed to establish a more formal approach to the oversight and management of their increasingly diverse family wealth, which comprised the core family business, new business ventures, real estate and financial investments. They set up a family office to replace the previous informal and ad hoc approach.
"The issue for this family was finding the right balance between control and coordination, while retaining sufficient flexibility. With all families, we start with what will work for them, rather than with a 'model' family office in mind," says Russell Prior, Regional Head of Family Governance, Family Enterprise Succession & Philanthropy, EMEA at HSBC Global Private Banking.
For families with children attending school abroad, and who own real estate and other assets in multiple countries, day-to-day oversight across multiple countries is critical. While the primary management of the family's wealth can occur in the central family office location, tuition payments, security detail, ensuring medical coverage and property management all require work on the ground. This demands multi-national coverage through a network of family office professionals and/or third-party advisers.
Family offices also can provide integrated information security and data protection. Keeping private, sensitive information safe is a top priority for most family offices, and this is particularly important for families with large geographic footprints.
"A well-run family office can facilitate cyber best practices from the outset during the family office design and structure phase, and the family should take pains to implement robust internal policies around security, handling of sensitive documents and appropriate uses of technology," says Carly Doshi, Regional Head of Wealth Planning and Advisory, Americas at HSBC Global Private Banking.
Connection and coordination among family members
When family members reside in different countries, the ability to connect can prove challenging.
A family office often serves as a family 'nerve centre' – a platform to share information, organise family meetings, plan for leadership succession and transitions, and provide concierge and security services.
Returning to the example of the Hong Kong-based founder who was expanding the family business into Europe and the US, a family office can assist with the on-the-ground logistics as they travel the world, as well as any protection needs, such as medical coverage or security detail.
In the past, families tended to set up their family offices close to home. Today's geographically dispersed family networks have led to a more global outlook when it comes to location, and a family will often take into consideration not only geographic proximity to the family, but also the location of key staff, jurisdictional differences, such as beneficial regulatory environments, and access to sophisticated financial markets.
A well-run family office can unite an international family around common values, provide effective wealth structuring and continuity, centralise the administration of non-financial assets and enhance connectivity among family members.
HSBC Global Private Banking works with families and family offices across all locations, and at all stages of development and sophistication. Our international network and in-region expertise mean that we can work in partnership across geographies to deliver bespoke solutions for you and your family. To learn more, contact us or your Relationship Manager.