A new study has highlighted the importance of the ‘family office’ in protecting and preserving the wealth of London’s elite families.
The research from the London School of Economics and Political Science (LSE), published in Sociologica, finds that Family offices can consist of any number of employees who work to support the lifestyles of extremely wealthy families and manage their investments. The research suggests that family offices play a key role in elite families’ wealth reproduction, ensuring that capital is preserved while the family lineage and culture is preserved.
According to the study, a family needs to be worth at least $100m US$ (£81m) to employ a multi-family office, which work to serve a small number of families, or at least $250m (£202m) for an exclusive, single-family office.
Family office employees can manage every aspect of elite families’ lives, from the personal to the professional.
For example, overseeing the financial and legal side of the family’s interests, a family office may manage investments across the world, property portfolios, family succession, inheritance, and divorces. They normally count economists, lawyers or psychologists on their payroll.
The offices could also set out family constitutions, which define the rules all members have to follow, stipulate how succession is worked out, how inheritances are planned, or what happens when family members are not involved in the family businesses.
The family office may also assume a lifestyle management function, overseeing every aspect of the families’ daily lives. It is responsible for running the more mundane domestic aspects of the families’ lives, providing a comprehensive and bespoke service, ranging from holiday planning to managing their residences and ensuring that identical clothes are available at each destination.
Dr Luna Glucksberg, a researcher in the International Inequalities Institute at LSE and one of the papers co-authors, said: “The role of the family office goes far beyond that of private bankers, whose short-term outlook mainly focuses on quarterly figures and yearly bonuses. They are about creating dynasties, ensuring generational transfers of wealth and the maintenance of the families’ culture.
“The rise of elite dynasties, economic inequality, and the vast concentrations of global wealth in recent times means that the role of the ‘family office’ in our society demands scrutiny.”