For the super-rich establishing their own family offices, the challenge of delivering every service at the highest levels of expertise cost effectively has led toward strategic outsourcing. This can be seen in many ways, from the use of outside money managers to the heavy reliance on outside counsel for advanced planning services. More than ever, outsourcing is particularly appealing for the array of lifestyle services many family offices make available. Another variation of this move to outsourcing is the outpost family office, an emerging trend where a family office in one geographic region creates a joint venture with a family office in a different geographic region. According to Richard Flynn, principal, the Rothstein Kass family office group, “This arrangement is proving particularly attractive to globe-hopping family members who want the hands-on high-end services and expertise of a leading family office, without having their own family office establish operational facilities in every jurisdiction where they might reside or have significant business interests.” The outpost family office proves especially attractive when children of the family are staying in foreign countries. Say the family office is located in the Far East. The children, for example, are going to college in the United States. In this situation, the outpost family office provides an array of support services to those children. The outpost family office also provides a safety net for the children in case of emergencies.
“Aside from being on call for the members of the primary family office, an expanding role of the outpost family office is the acquisition and oversight of specific types of investments – principally involving real estate and middle-market companies,” says Miguel Forbes, vice chairman of Forbes Family Trust. In these situations, local (which can be countrywide) coverage and expertise is required. So, the primary family office is leveraging the local knowledge and capabilities of the outpost family office in a number of ways, from sourcing and evaluating investment opportunities to providing ongoing monitoring. With the growth in the number and wealth of the super-rich, we’ll be seeing an expansion of the outpost family office model. “It only makes sense that an outpost or satellite office be created in the case where there is a lot of family travel to a certain region or multiple residences,” said Steffianna Claiden, founder and editor-in-chief of Family Office Review. “The main office staff can’t be expected to work 24/7 yet the family will need and expect that kind of coverage so it really is the best solution.”
