How we helped a family office manage assets for a multi-generational, international family

Background

Our client is a family with a significant stake in a privately-held property company. The family members’ shareholding in the company and their additional personal wealth are managed through a family office. The office is staffed by an experienced investment professional, an accountant and two administrators. The current arrangement came into being when the office recommended that the family outsource the management of their publicly listed investments and Cazenove Capital was appointed. More recently, the family office has asked us to take on a number of reporting and administration services for over 50 family members, a significant burden for the in-house staff. The office is also expecting a significant cash inflow following the sale of a property and has asked us to advise them on whether this could be directed to the family charitable trust.

Key need

The family office has a range of needs requiring an investment house with a broad and flexible investment offering, a proven track record, significant infrastructure and wealth planning expertise. While the family has UK roots, many members now live in different jurisdictions. Our expertise in advising several generations of multi-jurisdictional families allows us to integrate our financial planning and investment management advice.

Our solution

To meet the family’s bespoke investment needs, our approach has been to invest through a combination of direct equities and collective funds. This provides the family with a high degree of investment flexibility. Based on advice from their tax advisers, the family also requires us to avoid assets based in certain jurisdictions and certain types of instruments (e.g. investments that would be deemed Passive Foreign Investment Companies under US regulations). We are experienced at working within these restrictions and have them hard-coded into our trading system to prevent accidental breaches.

The family also values the ability to partner with a firm with the necessary resource and flexibility to meet their customised reporting and administration requirements, which we developed for the family office. This involves aggregating data from all the managers the family office works with and producing bespoke performance analysis on a quarterly basis. We also work with data from the family office itself to produce valuation reports for each of the family members.

Lastly, we investigated the various options regarding the charitable trust, working with the family office, its tax adviser and a number of individual family members. As a result, a donation was made by the family holding company, and a larger amount donated by individual family members following a distribution from the family office.

 

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This strategy was based on our understanding of prevailing tax legislation at the time and should be reviewed on a regular basis in light of changes in legislation and personal circumstances.

This article is issued by Cazenove Capital which is part of the Schroders Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. 

Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested.

This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements.

All data contained within this document is sourced from Cazenove Capital unless otherwise stated.

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