The future of family offices: Evolving needs, enduring structures

Many are establishing dynamic, multi-purpose platforms to suit their unique governance, investment management, philanthropic and succession needs. 

The Channel Islands boast an exceptional concentration of professionals with a depth of experience in private wealth, investment structuring and capital (including "non-traditional capital") management as well as political stability, global connectivity, tax neutrality and approachable yet robust regulators.  For families looking to institutionalise their affairs or use their in-house talent to make their own empowered, direct investments, Guernsey and Jersey provide both flexibility and rigour. 

Through the below discussion of the typical components of a family office structure, we explore the suitability of Guernsey and Jersey for family offices and how our multi-disciplinary team can help HNWIs, UHNWIs and families establish and evolve family office structures in the Channel Islands. 

What does a family office structure look like?

Typically, a family office brings together:

A holding platform to hold wealth and manage risk

Essentially this can be comprised of any type of legal structure but often involves trusts, foundations and companies.  Where trusts are involved, the trust administration may be outsourced to professional trustees or a private trust company (PTC) incorporated to act as trustee of the trusts established for the family in question.

Our multi-disciplinary team work together to advise on the structure that best suits the needs of the family involved, taking into account the tax position of relevant family members (where family members are involved in decision making this will be of particular importance and may dictate the suitability of one form of arrangement over another), the benefits or disadvantages of financial regulation of the structure, the intended level of presence in the jurisdiction (which can range from minimal to employee and/or family relocations) and the family's values and ambitions.

An investment arm, often through a private fund or SPV structure

Through this part of the structure a family office can, if desired, make its own direct investments acting upon the recommendations of its in-house investment committee in addition to (or as opposed to) investing via third-party investment managers. 

Depending on the needs of the family, it can be advantageous to regulate vehicles of this nature.  There are suitably robust yet flexible and cost-efficient routes to regulating such vehicles in both Guernsey and Jersey, including under their respective "Private Investment Fund" regimes (see further here in relation to the "Guernsey PIF" and here in relation to the "JPF").  Families are increasingly using the Guernsey PIF and JPF to co-invest and pool capital with other like-minded individuals or extend investment opportunities to friends, extended family, or other trusted parties, particularly in high-growth areas like venture capital (VC) and other alternative asset classes such as data centres and e-gaming.  Some families utilise vehicles of this nature to help achieve their philanthropic goals, driving wealth creation and innovation in areas close to their hearts.

We advise in relation to every aspect of the establishment and "launch" of any vehicle of this nature (whether regulated or unregulated) and throughout its lifecycle, in relation to all corporate actions including, to name a few, acquisitions, financings, migrations, mergers and dispositions as well as in relation to regulatory compliance, beneficial ownership requirements, tax and economic substance.

Family governance tools, such as charters, family councils and decision protocols

Our private capital and trusts practitioners work closely with families, onshore advisers (where relevant) and local service providers to draft governance documents to reflect family values and control mechanisms against the relevant tax, regulatory and economic substance backdrop.

Administrative operations, including staff, service providers, and office infrastructure

Specialists from our employment team are on hand to assist with relocations to Guernsey (including matters of licensing and immigration), employment contracts, director service agreements and staff policies. 

Our corporate and regulatory practitioners can advise in relation to any service provider and outsourcing arrangements, data privacy and information sharing agreements.  We have a wide network of professionals offering all relevant reporting, data security and digital transformation services to family enterprises and are happy to share our recommendations in this regard, working closely with the appointed providers to achieve the level of sophistication required.

We apply the same integrated and innovative services that we offer to global financial institutions to private clients. HNWIs, UHNWIs, families and their advisors look to us to help them navigate the complexities of global jurisdictions efficiently for wealth creation, asset protection and succession planning.