Wealth Management: The Multi-Family Office Approach for Physicians

Navigating Family Office Development

Managing wealth can be as intricate as managing a busy medical practice. For physicians, especially those with a significant net worth, understanding family offices and their multi-family variants can unlock opportunities for financial optimization, legacy building, and stress reduction. Whether you're considering creating a family office or joining a multi-family office (MFO), this guide will provide clarity, practical insights, and actionable next steps tailored to your needs.

What Is a Family Office?

A family office is a private organization dedicated to managing the financial and personal affairs of affluent families. Unlike traditional wealth management firms, family offices offer a highly personalized approach, tailoring every detail to align with your family’s goals and values. From investment management and estate planning to tax strategies and philanthropic ventures, a family office serves as your comprehensive financial headquarters.

The saying, “If you’ve seen one family office, you’ve seen one family office,” reflects their individuality. Each office is uniquely designed to meet the specific needs of the family it serves.

Evolution of Family Offices

Historically, wealthy families sought ways to preserve their wealth for future generations. Modern family offices, however, are far more sophisticated. They address challenges such as navigating global financial markets, managing multi-jurisdictional tax liabilities, and ensuring intergenerational harmony. With tools like advanced legal structures, cutting-edge investment strategies, and governance frameworks, family offices have become indispensable for families seeking to institutionalize their wealth.

Key Functions of a Family Office

Family offices go beyond wealth management. Here’s what they typically offer:

1. Investment Management: Crafting and managing diversified portfolios aligned with your risk tolerance and goals.

2. Estate Planning: Ensuring your wealth is distributed according to your wishes.

3. Tax Optimization: Minimizing liabilities through strategic planning.

4. Risk Management: Protecting your assets from unforeseen events.

5. Philanthropy: Structuring charitable activities that reflect your family’s values.

6. Lifestyle Management: Handling personal needs, from travel to property management.

One unique function is governance. Family offices help establish clear roles, responsibilities, and decision-making processes to maintain harmony and ensure everyone—from the founders to future generations—is aligned.

Do You Need a Family Office?

Here’s how to determine if a family office is right for you:

1. Net Worth: Typically, a net worth exceeding $100 million warrants a dedicated family office. However, physicians with $10-15 million can benefit from joining a multi-family office.

2. Complex Financial Needs: Managing generational wealth, business interests, and diverse investments may necessitate professional oversight.

3. Privacy and Control: If you value confidentiality and prefer direct oversight of your affairs, a family office might be the ideal solution.

Introducing Multi-Family Offices (MFOs) For Physicians

If you possess a net worth ranging between $10 million and $15 million, engaging the services of a multi-family office (MFO) can be an advantageous strategy. MFOs are designed to deliver many of the same benefits as single-family offices but at a substantially reduced cost. By pooling resources from multiple affluent families, these organizations create economies of scale that make high-end financial management accessible and cost-effective for individuals who may not have the resources to justify establishing their own family office. By leveraging collective buying power and shared expertise, they can negotiate better terms with service providers or investment opportunities that might otherwise be out of reach for individual families alone. Thus, joining an MFO not only helps preserve wealth but also enhances its growth potential through well-informed decisions supported by industry professionals.

• Comprehensive Services: Investment management, estate planning, tax services, and more.

• Cost Efficiency: Shared expenses make high-level financial services more affordable.

• Collaborative Community: Connect with like-minded professionals, share knowledge, and gain access to exclusive opportunities.

As a doctor you encounter distinct financial challenges, including substantial student debt and the need for asset protection against malpractice claims. Multifamily offices (MFOs) are well-versed in these complexities and offer tailored solutions such as:

• Customized investment strategies to grow wealth.

• Early retirement planning tailored to your medical career timeline.

• Strategies to minimize risk and safeguard assets.

Companies That Provide MFO Services

Multi-Family Offices (MFOs) are wealth management firms that serve multiple high-net-worth families by providing tailored financial and estate planning services. Since I am not currently associated with any of these companies, I am not endorsing any particular option. But here are a few examples of prominent MFOs and their competitive advantages:

1. Bessemer Trust

• Overview: Bessemer Trust is a leading MFO that provides a comprehensive range of wealth management services, including investment management, estate planning, tax services, and philanthropic advisory. They focus on ultra-high-net-worth families and individuals.

• Competitive Advantages:

  • Tailored Services: Bessemer Trust offers highly customized wealth strategies for each family, considering their unique financial goals and legacy desires.

  • Client Focused: The firm prides itself on its independence, as it does not sell products or services unrelated to client wealth management, ensuring unbiased advice.

  • Experienced Team: They have a deep bench of specialists in areas such as tax, legal matters, and estate planning, helping clients navigate complex financial landscapes.

2. Glenmede

• Overview: Glenmede is a privately held MFO providing investment management, trust, and wealth advisory services. It has a strong focus on family dynamics and long-term wealth stewardship.

• Competitive Advantages:

  • Integrated Wealth Services: Glenmede offers both investment management and wealth planning services, ensuring seamless coordination between financial management and family goals.

  • Long-Term Focus: They have a philosophy centered around long-term wealth preservation, which resonates with families looking to ensure generational wealth.

  • Philanthropic Expertise: Glenmede is well-known for its robust philanthropic advisory services, helping families navigate charitable giving strategies.

3. Citi Private Bank (Family Office Group)

• Overview: Citi Private Bank offers a comprehensive suite of wealth management services, including investment management, estate planning, and access to global resources. Their Family Office Group focuses on providing multi-generational wealth strategies to ultra-high-net-worth families.

• Competitive Advantages:

  • Global Reach: With Citi’s global presence, families gain access to a wide array of international investment opportunities and resources.

  • Holistic Approach: Citi integrates all aspects of wealth management, from investments to legal and tax planning, with a focus on optimizing family wealth and legacy.

  • Sophisticated Investment Strategies: Citi provides access to alternative investments and exclusive market opportunities that can enhance portfolio diversification.

4. Rockefeller Capital Management

• Overview: Rockefeller offers personalized wealth management and family office services to high-net-worth individuals and families. They combine financial expertise with a deep understanding of family governance and succession planning.

• Competitive Advantages:

  • Legacy and Governance: Rockefeller has a long history of providing multi-generational wealth management and has deep expertise in family governance and succession planning.

  • Comprehensive Services: The firm offers a wide range of services, including investment management, tax and estate planning, family education, and philanthropy.

  • Tailored Family Solutions: Rockefeller creates personalized wealth management solutions that reflect each family's values, mission, and goals.

5. Northern Trust (Family Office Services)

• Overview: Northern Trust is a major player in the wealth management space, offering comprehensive family office services such as financial planning, asset management, tax services, and trust administration.

• Competitive Advantages:

  • Integrated Platform: Northern Trust provides a fully integrated platform for managing investments, trusts, estate planning, and tax matters, allowing families to streamline their financial management.

  • Customized Family Governance: They offer expertise in establishing family governance structures and strategies that help manage family dynamics and legacy.

  • Global Resources and Reach: With a strong global presence, Northern Trust provides access to international investment opportunities, estate planning, and tax strategies.

How to Choose the Right Family Office or MFO

When selecting a family office or multi-family office (MFO), it is important to consider several key factors to ensure that you make an informed decision that aligns with your financial goals and personal values. A critical aspect is understanding the fee structure. Family offices typically charge either a flat fee or a percentage of assets under management (AUM). This structure can have significant implications for cost-effectiveness depending on the size of your assets. Furthermore, assess the technology infrastructure used by the family office. Robust systems for reporting and communication are vital for transparency and efficient service delivery. This will enable you to receive timely updates on portfolio performance and strategic shifts. Lastly, consider how well their culture matches with yours; shared values can be crucial in forming a trusting relationship over time. Personal rapport with key personnel can enhance cooperation and ensure that they understand your family's unique vision for wealth preservation across generations. Other considerations in your decision:

1. Experience with Physicians: Choose one familiar with the financial complexities of medical professionals.

2. Service Range: Ensure they offer a comprehensive suite of services relevant to your needs.

3. Investment Philosophy: Align with a firm whose strategies match your risk tolerance and goals.

4. Customization: Look for a high degree of personalization and dedicated attention.

Ready to Take Control of Your Wealth?

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Final Thoughts

Whether you’re managing a $10 million estate or considering the leap to an MFO, understanding the world of family offices is crucial for long-term success. Let SimpliMD be your partner in this journey, providing you with the tools, knowledge, and support you need to thrive