Family Office v/s Wealth Management: What Should HNI's Choose

Introduction
 The goal of a financial advisory service is to help their clients get the most out of their money. 

The structure, clarity, and consistent level of this service are all important parts of reaching your financial goals. The type of financial advice a person needs depends on the type and amount of assets they have. So, when it comes to money, it's important to set clear goals and objectives. Family office and wealth management are two types of financial advisory services that are very important in today's fast-growing economy. These services are not the same as many people think. There is a thin line that separates them. But you need to know the small details about the difference between a family office vs wealth management.

What Is A Family Office?

One or more very wealthy families set up a family office to handle all of their financial affairs. Services usually include managing investments, finding the best way to pay taxes, planning your estate, coordinating your charitable giving, and concierge support. There are different ways to set up family offices:

• Single-Family Office (SFO): Single-family offices that help and serve only one family only.
• Multi-Family Office (MFO): Multi-family offices grow their business by working with a lot of clients.

The primary objective of a family office is to safeguard, enhance, and transfer family wealth in alignment with the family's values and aspirations for their legacy.

What Is Wealth Management?

Wealth management is when a third party gives financial advice to rich people and families. Here is a list of services provided under wealth management.

• Advice on investments and building a portfolio
• Planning for retirement and figuring out risks
• Planning and optimising taxes
• Planning for your estate and legacy 

Wealth managers work in systems that can grow and serve a lot of different clients. Their models usually charge fees based on a percentage of the assets they manage and focus mostly on planning finances and making investments.

Key Differences Between Family Office and Wealth Management

These differences show the pros and cons of highly customised and scalable advisory services.

When Should HNI’s Opt For A Family Office?

When HNIs should think about setting up a family office:

1. To make fixed costs worth it, you need to have at least $100 million in assets that can be invested.
2. Take full charge of decisions about investments and legacies.
3. Need more than just financial services, like concierge, travel planning, and managing donations.
4. Try to make it easier for families to manage their money and pass it on to future generations.
5. Want a single team that only cares about the goals and values of their family

When Is Wealth Management a Better Fit?

Wealth management may be better when HNI’s

• Have assets worth between $10 million and $100 million and want lower fees based on those assets.
• Need expert investment advice but don't want to pay for a separate office.
• Want a more hands-off relationship where you trust your advisors to make decisions about your portfolio.
• Need solutions that can grow across many areas of finance without having to pay for custom lifestyle services.
• Value the ability to easily switch between advisory firms and access investment products from around the world.

Conclusion 

Family offices and wealth management firms want to grow and protect wealth, but they do it with different groups of wealthy people. Family offices provide ultra-high-net-worth families with the best personalised service and a full range of services, but they are expensive.

Wealth management companies provide flexible, affordable financial advice that works for a wider range of wealthy clients. HNI's can choose the structure that best fits their long-term goals and legacy goals by looking at asset thresholds, service needs, and governance preferences.