Virtual Family Office

A family office is an entity created by high net-worth individuals to manage their wealth through investment management, tax and estate planning, trusteeship, corporate structures, philanthropic strategy, lifestyle, and concierge services. Family office costs and compositions vary depending on the complexity of one's current finances and investments, as well as the future financial goals one wishes to achieve through a family office.

It has long been regarded as a tool for the ultra-rich, with net worths in the hundreds of crores. A group of professionals dedicated to managing just your finances and investments sounds quite enticing, but one should note that not every family has the net worth to reasonably bear the high costs of establishing and running a family office.

That is when multi-family offices can help with these challenges. As the name suggests, it is an entity that manages the entire wealth of multiple high-net-worth families who pool their resources, and the entity in return offers the clients economies of scale that allow for cost sharing. It is not only more economical but also offers the added benefit of a wider range of services.

However, there are shortcomings to this model as well.

Many multi-family offices offer a host of professionals within each segment, all of whom have a different way of working, creating disjointed teams. Also, since these professionals consult people within their field of expertise, they might not always see the bigger picture of the organization or the family.

Another problem arises when the professionals refer the clients to other consultants within their own or other teams and fail to collaborate successfully with them. This leads to conflicts and contradictory directives.

Technological advancements and some exceptionally talented professionals have given rise to virtual family offices as a superior alternative to traditional multi-family offices. This can be credited to the ability of the professionals involved to work collaboratively and the implementation of systematic processes. In an era where many people work remotely, the virtual family office has proven to be a reasonable option for administration, accounting, reporting, and analysis, as well as document management and communication, particularly for geographically diverse teams and families. Virtual family offices, like single-family offices, are built around the wealthy individual or family, providing a range of tailored, client-centered services based on tried-and-true methodology.

One of the primary advantages of this decentralised, technology-driven strategy is the potential for significant cost savings. In a virtual family office, independent advisors collaborate with specialists from all fields. The human element in both client and inter-professional connections guarantees that the client's needs and "larger picture" are included in all recommendations and services. This is also shared with the virtual office's professional network. Every consultant involved regards these as part of their job, no matter how remote they appear to be. Virtual family offices enable families to outsource all or part of their family office operations while providing wealth owners with real-time information, analysis, and support. Because the virtual family office may assume the positions of several family office staff while preserving control for family owners, this strategy can be incredibly cost-effective for families.

Each family office is as distinct as the family it serves. The family can assess if the integrated family office model can continue to provide support or if an alternate model would better serve both the family and the business by carefully analysing the family's needs as well as the business's goals and demands.

While VFOs are cost-effective, most of the time, only families with a net worth of at least 2 to 3 crore rupees have access to such services at a reasonable cost. But with ImproWise, we can help you get these services and associated benefits even if your net worth is around Rs 15 lakh.

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