Wealth – it’s complicated. But it doesn’t need to be

With an active M & A market, creating more high-net-worth individuals (HNWI), this trend is set to continue.

While entrepreneurs and business owners are financially savvy, and have a good understanding of cashflow and reporting particularly in the early days, are they prepared to manage their own more substantial personal wealth? And how many would apply the same discipline to their family finances?

Wealth creates opportunities and can manifest major changes in an individual’s or family’s lifestyle and ultimately increased financial responsibility. 

Changes might include managing multiple properties, potentially including overseas property, multiple bank accounts and investment portfolios, payroll for household and administration staff amongst other responsibilities. Budgeting can also become quite complicated. 

You might think that wealthier families wouldn’t need this level of money management, but on the contrary – a lot of affluent families have their wealth structured in such a sophisticated way that it can be a challenge to ensure they have liquidity when needed.

So how best to monitor and manage those longer-term financial matters? Sometimes the tools you need the most are the most obvious, such as information.

Having a good understanding of your spending habits and living expenses is key when taking steps to plan your future finances, so that you understand your available income for setting aside, or your requirement for a return on your investments.

For people who are in this position wealth can seem burdensome and potentially overwhelming. There is an advisory and service solution that goes beyond conventional accountancy – we call it family office.

What is a family office?

A family office is a group of specialist accountants and advisers tasked with offering a truly tailored suite of services such as budgeting, charitable giving, foundations, and wealth transfer planning (succession), tax services for HNWI.

Often, a family office provides high-level financial planning through an integrative approach. Combining asset management, cash management, risk management, financial planning, lifestyle management, and other services, family offices help clients navigate the complex world of wealth management. 

While a dedicated family office may be appropriate for some extremely wealthy individuals and families, most highly affluent people would be well served by the professionals in an outsourced family office team such as ours.

Within the professional services team here in Cambridge, we help families manage their finances by tailoring budgets for personal finances and recording and reporting on spending.

The depth and format of how this data is presented varies from family to family, always customised to suit the client needs. And, importantly, the knowledge gained through such reporting allows our clients to make informed decisions such as the level of distributions from a family trust, or how much income an investment portfolio will need to generate. 

Article sources:
*Source: Cambridge Ahead
**Source: Cambridge News