Family Offices with Citi Private Bank

While they may have seemed like a luxury in the past, reserved for a select few, family offices are now seen more as a necessity for ultra-wealthy families who want more flexibility and control over their wealth management – ​​today and for future generations.

The growth in the number of family offices around the world is accelerating and the trend does not appear to be flattening anytime soon.

“There is no doubt that the professionalization and growth of family offices will continue,” says Hannes Hofmann, Global Head of Family Office Group at Citi Private Bank. “Wealth continues to be generated and we live in an increasingly complex regulatory and investment environment.

“The focus has shifted from local investing a generation or two ago to global capital allocation for today’s ultra-rich. I expect their numbers to grow and become increasingly sophisticated as wealth is passed on to the next generation. »

Global Families Need Global Expertise

Families are no longer localized but instead have real estate, business and investment interests – and family members – spread across continents.

“Every family office is unique, but you also have to think about the cultural context in which families operate,” says Hannes. “It’s not uncommon for a family to live in different countries, with different cultures and goals.

“Citi does business in more than 160 countries and jurisdictions, which is a real advantage when it comes to serving the needs of family offices. We are able to provide services locally in the regions where we operate with a global view, providing smooth and seamless service around the world.

“Every family is unique and every situation is unique, especially when it comes to estate and wealth planning.

“Importantly, we can also help families with the complex and costly challenges of finding resources in every location we serve.”

The advantage of a family office is, of course, that it only serves the family it operates for, which means everything is in one place and run with the proper ethics and principles.

But the cost and challenges of setting up a family office cannot be ignored. It is important to do some preparatory work: from identifying the objectives of its creation and its main services, to deciding on its location, the number of people it will employ and the infrastructure necessary for its operation.

“Fortunately, a company like Citi Private Bank is very well placed to help with the initial set-up,” says Hannes. “Citi has decades of experience and we’ve dealt with many family offices. Our dedicated advisors can help build a foundation that is efficient, effective and provides the services they need.

Hannes also points out that every family office is different and that a weak structure can have significant effects on family governance and operating costs.

Access to global investment opportunities

While the family office was originally designed to simply deal with wealth, it now does so much more – from helping to maintain and grow portfolios, to providing better understanding and control over where wealth is invested, to consider the needs and expectations of family members who may be geographically dispersed and culturally diverse.

When it comes to investments, the Family Office Group works with all types of offices to provide a single gateway to comprehensive services across Citi’s Private Banking, Commercial Banking and Investment Banking. The spectrum ranges from family offices that focus on asset allocation and work with outsourced CIOs, to family offices that invest directly in public markets, assist the family with private transactions and focused equity positions, and optimize the family’s balance sheet by actively engaging banks on deposits. and credit.

With experts on the ground in the main financial centers, the Family Office Group supports its clients in their global projects. “We are organized to make a business of over 230,000 easily accessible to investing family offices around the world.” Hannes said.

Connect a community of customers

As the number of family offices increases, the opportunities for peer-to-peer learning also increase, which can be extremely beneficial. Citi Private Bank hosts an annual Family Office Leadership Program, among other training and networking opportunities, bringing together Family Office leaders and practitioners.

“We have brought together more than 600 practitioners since the program was created in 2016. It is an opportunity to discuss all the topics that concern them such as economics, investments, sustainability, cybersecurity and family governance”, explains Hannes.

“We’re getting incredibly powerful feedback about the opportunity they have to gain additional information that helps them make better decisions on behalf of families.”

While every family has different needs, understanding how other family offices work helps you avoid common mistakes and replicate best practices.

Citi Private Bank publishes annual report ‘Family office survey report’which provides insight into the thinking and behaviors of various global family offices.

“This year, more than 126 families took part in the survey over a period of one month, in 30 countries. We asked about their outlook for the global economy, investment portfolio stocks and where they see potential opportunities and risks ahead,” he reveals.

“This year, we also inquired about their interests and concerns, including leadership transitions, family unity, continuity and philanthropy, and introduced an element of benchmarking.”

Citi offered a bespoke benchmark report to those who participated in the survey, allowing them to compare themselves to their peer group around the world. The report provides timely insight into potential shortcomings as well as advantages over peers without breaching the confidentiality of individual responses.

Plan an inheritance

Building a family legacy is definitely something that requires careful planning to ensure that financial wealth is passed down through generations to come.

“The first consideration in legacy planning is determining how to preserve and grow wealth,” says Hannes. “The second concern is how to distribute the wealth between family members and philanthropic causes. Historically, about 80% of families struggle to achieve the first goal: they create and lose significant wealth over three generations.

Sound investment advice and careful family governance aim to maximize the likelihood of a successful multi-generational inheritance. While investment decisions can be outsourced or delegated to family office staff, family governance is critically dependent on the indecisions of the founder or family, as it will form the basis of how the family interacts with each family member. for generations to come.

Fairness is a major consideration for founders, as well as agreement on the decision-making rights of different family members. Citi has dedicated advisors who can help families establish a governance framework based on best practices within the extensive network of family offices we work with.

“Every family is unique and every situation is unique, especially when it comes to estate and wealth planning. This is also where our bespoke service comes in to ensure that the family office actually holds the different family members together across generations.

There is no doubt that the number of family offices will increase – and the guidance, support and resources available to Citi Private Bank to help those who start and then grow a family office are key to their success.

“I expect more people will want to partner with Citi Private Bank so that we can put the power of our global and institutional businesses to work on their behalf,” concludes Hannes.

About Hannes Hofmann

Hannes Hofmann leads Citi Private Bank’s global Family Office Group, combining Citi’s extensive network and resources with private banking services to meet key family office needs.

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