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How to Outsource Family Office Services for Greatest Efficiency

Posted by Goldin Peiser & Peiser on Apr 30, 2019 11:40:17 AM

There are myriad challenges for a family office - from increasing complexity in the business and tax environments, to rising costs, and relationship management.  Outsourcing provides a way to manage costs and achieve greater operational efficiencies while staying focused on your main objectives.

Successful family offices efficiently draw on their internal greatest strengths and rely on third-party experts to complement these strengths. This model isn’t much different from the professional services firm that forms an alliance with an external resource to provide a more comprehensive service offering to its clients. When done well, the relationship is seamless.

Outsourced services can include lawyers, tax advisors, risk managers, philanthropy advisors, IT consultants and general business advisors. What makes sense for your family office comes down to the strengths you have internally and what other professionals can provide to fill in any  gaps. Often the family, family office staff, and outsourced advisors work as a cohesive team to plan for the future and avoid costly surprises.

Increasingly, family offices use a hybrid model that calls for structural flexibility. To help determine the right blend of internal and outsourced expertise, consider the following: 

  • Identify core capabilities. Which services must be kept in-house to most effectively meet family objectives? How can you best leverage internal expertise? Say you have a particular focus in the real estate industry. It makes sense that you would want to have a real estate investment expert and real estate attorney within the family office, though you might want to contract with an external tax advisor specializing in commercial real estate. Even when you have an inside expert – say the real estate attorney – you might want to outsource more general legal services. 
  • Be strategic: Know when it’s time to get outside help. Can an external source provide the service at a higher quality than you currently have within the family and your staff? Is it costing you more to perform the service internally than it would if you outsource the function? Meet as a team to determine where there could be greater cost-efficiency through outsourcing. 
  • Find the right partners. Who has the talent to meet the needs of your family clients? Ask your network for referrals. Make sure there will be no conflicts and that the professional(s) will work with full transparency. Manage the relationships carefully by appointing key staff to conduct oversight.
  • Balance privacy with efficiency. Every family office is concerned with confidentiality, so you will need to build in checks and balances to ensure security. It is important that you engage highly certified risk management experts to conduct risk assessments on a regular basis. With direction from a business advisor with experience in fraud and risk prevention, consider whether you can designate a family member (or members) who can lead the effort to proactively integrate risk management into all of your business practices.

Above all, you’ll want trusted advisors who can offer expert, objective guidance. There is benefit in gaining the outside-in perspective from professionals who understand the competitive landscape and are a step ahead of the latest trends. Outsourcing can help your family office stay focused on what you do best. 

Questions about managing for your family office? We would be happy to discuss your strategy with you. Contact Goldin Peiser & Peiser at 972-818-5300.

Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.

Topics: Family Office