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What Is a Family Investment Office?
Family investment offices (FIOs) are private companies that manage the financial assets and wealth of one or more families. Similar to venture capital funds, FIOs provide a more tailored, customized solution than their traditional counterparts.

Family offices of wealthy families are accountable for managing and distributing their family's wealth, including business interests, wealth transfer plans, estate planning, tax strategies, family trusts and philanthropic initiatives. Families may enlist the services of professionals from different disciplines to fulfill these tasks.

Working with a family office has many advantages. In addition to the professional services they offer, they can assist families in transferring businesses to new owners, teaching their children about asset protection and creating a legacy for future generations.

Family investment offices often employ a team of highly-skilled investment professionals who oversee the fund's investments. Depending on the size of the portfolio, these experts may include accountants, legal advisers and tax advisors.

Investment managers have a significant effect on the performance of family office investments. Finding an appropriate investment manager requires considerable thought, with several factors to be taken into account before making a final decision. Unfortunately, few family offices possess sufficient internal resources, networks or training necessary for thorough due diligence on potential hires.

Investing in Private Equity
Family offices often utilize private equity investments as a way of diversifying their investment portfolios. This strategy involves investing in companies that not only generate high returns, but also meet certain criteria such as social responsibility or ethical practices.

Family offices are seeing an uptick in this trend, which reflects investors' desire to incorporate values and ethical principles into their investments. EY's Helena Robertsson noted that factoring sustainability, environmental responsibility and social governance into analysis and valuation is one way family offices can guarantee their investments align with their beliefs.

Investing in Local Investments
A family office must invest at least 10% of the funds managed by them into local investments at any one point in time, either through direct investment or co-investments. If a family office fails to meet this requirement by application deadline, they are granted an extension of one year for compliance.

Private Direct Investment
Unlike private equity, which may be more challenging to invest in due to its higher risk profile, family offices can use private direct investment to invest directly into small and mid-size enterprises. This strategy necessitates a formal investment committee as well as ongoing monitoring and guidance of portfolio companies.

Investing in a family office is an excellent way to manage your assets, but you must be aware of the potential risks. These could include concentration of wealth in one location, conflict within a family and lack of control over assets. For this reason, consulting with experts before making any decisions is recommended.
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