Ultra High
Net Worth

There is no official wealth threshold that dictates the need to establish a family office; however, families with assets of $100 million or more may wish to consider doing so. There are two main types of family offices to consider, with important differences between them:

– A single-family office (SFO), as the name suggests, serves one family. Employees of the SFO work exclusively for the family and provide various services such as accounting, investment and risk management. SFOs may also cover household management, bill paying, investment due diligence and other services, depending upon the family’s needs. The UHNW family pays the employees’ salaries and other expenses associated with maintaining the office but the SFO is not a profit-seeking entity. Note also that SFOs are not typically registered with the SEC as investment advisors.

– Multi-family offices (MFOs) are typically organized as registered investment advisers, trust companies, although some are established as accounting or law firms that are dedicated to serving multiple UHNW families. They charge fees for each of the services they provide and seek to make a profit for the MFO itself. The employees of an MFO work for the MFO, and are typically involved in addressing the needs of two or more families.

Whether or not to use a family office, and if so, whether to choose an SFO or MFO, is partly a function of the amount of the family’s wealth and the complexity of their assets, but is also highly dependent upon preferences. For example, paying the salaries of a team of professionals in an SFO would be more expensive than using external advisors or joining an MFO, but depending upon the family’s desire for control and privacy, and the services they need, it might be the right choice for that family.

While investment risks are our focus, we take a holistic view of UHNW clients’ risks, as there can be implications for wealth management and capital preservation when other types of risks are not thoroughly addressed. Here, we point out a few critical risks that are outside of the investment realm but that can affect UHNW clients’ security.

Cybersecurity – While hacking has created risks that affect everyone in today’s world, UHNW individuals are often targeted. Cyber-criminals seek to access sensitive information and use it to extort money from UHNW individuals whose reputations would be harmed by the release of that information.

Physical Security – Home security is a critical part of this risk, and should extend beyond having a modern security system. It is essential to do thorough background checks before hiring anyone to be part of the staff that takes care of the family and the home. Some UHNWs may want to hire a bodyguard, for themselves and for their families.

Threats to Privacy – This often-overlooked threat can arise from employees on the staff of the family’s home, and vendors who come into the home for repairs or remodeling work. It is advisable to require non-disclosure agreements that prohibit workers from posting anything about the family (including photos of the home or the family’s possessions) on social media.

High Net Worth (HNW) and Ultra High Net Worth (UHNW) investors differ greatly on financial needs and require a highly specialized approach by wealth managers who are well-versed in managing wealth for the ultra wealthy. An Ultra High Net Worth Individual refers to anyone who has over $10 million in liquid net worth, having investable assets of at least $30 million. A High Net Worth individual will have around $1 million in liquid assets. Read more on high net worth vs ultra high net worth.