Family Offices have their roots in the sixth century, when a king’s steward was responsible for managing royal wealth. Later on, the aristocracy also called on this service from the steward, creating the concept of stewardship that still exists today. In the United States, early Family Offices were first established by business-owning families that made their wealth during the Industrial Revolution.

Traditionally, the family wealth industry has marketed Family Office services exclusively to ultra-high net-worth families – families worth above $50 million. We believe Family Offices have become relevant to families in all tiers of wealth. This is primarily because the number of family members newly assuming administrative responsibilities for the family unit has been on the rise – and expected to continue rising over the next 20-30 years. In the United States alone, some $12 trillion of wealth is being transferred to the Baby Boomers from those born in the 1920s and 30s. And the Baby Boomers – the wealthiest and second largest generation in U.S history – have begun transferring the ownership and management of their estimated $30 trillion of wealth. As a result, we are witnessing both the first and the second largest intergenerational wealth transfers in human history.

In addition, the increase in services in our expanding Service Economy, the surplus of information in the Information Age, and sharp increases in government regulations have also contributed to the more widespread need for Family Offices. The ever-increasing service options in our Service Economy compels the consumption of more and more services. The information surplus of the new Information Age makes the consumption of services increasingly more complex. And the unyielding growth of government regulations exacerbates compliance efforts. All of these factors continue to increasingly impose profound organizational demands on families in all socioeconomic levels.

Aside from a very small number of boutique law firms, the traditional service providers of Family Office services have been asset management firms, and more recently, private banks. These are companies dependent on fee structures tied to a percentage of the value of assets under management and to commissions on investment returns. Families eligible for their Family Office services must generally be worth above the $50 million dollar range. This suggests that it is simply not economically viable for these companies to offer their Family Office services to families in lower tiers of wealth. As a result, the family wealth industry has essentially ignored the Family Office needs for families with estates below the $50 million range. This is evident by the fact that most families – and the wealth industry professionals that serve them – are unaware of the “Family Office” concept. Unfortunately, the Family Office services industry significantly caters to only about 0.2% of families.

As a reactive measure to their organizational needs, families unfamiliar with the “Family Office” concept who face new wealth transfer responsibilities unknowingly form Virtual Family Offices. Certainly, Virtual Family Offices formed inadvertently may effectively accomplish some wealth management functions. However, Virtual Family Offices formed “accidently” are usually poorly structured and seldom develop to their full potential.

A sound Family Office structure is indispensable to any family wishing efficient and effective intergenerational wealth management, communication and cooperation. It is therefore necessary for service providers in the family wealth industry to begin providing services that enhance the development and the use of Family Office structures. The Ventura Legacy Group, APC is leading these efforts by serving clients using an innovative and unique service model where integrated legal and non-legal services are delivered within a Family Office organizational structure. This new service model more effectively helps our clients overcome both the new and the old challenges in building, transferring and preserving wealth.