Outsourced family office trust administration services

While there is no standard definition, a family office can be described as an entity that supports the complex financial needs of a specific family group and acts as their “chief advisor.” A family office integrates the execution of investment, tax and philanthropic strategies and personal services. Many of these services can be outsourced to Sterling Trustees who can provide advantages over trying to manage these services through a single-family office. Some of these advantages include:

Cost – For smaller family offices the cost of hiring talent to maintain and run the family office is prohibitively expensive. As a single-family office, you must compete in the marketplace against large firms to attract and retain these people. This can be a costly and time-consuming proposition.

Regulation – If a family office is organized as a registered investment advisory firm, it will be regulated by the Securities and Exchange Commission (SEC). If it is organized as a private trust company, it will be regulated by a banking commission. In either case, the family office becomes an operating business subject to all state and federal regulations. Operating in a regulated environment has its advantages if you have an experienced management team in place.

Family conflict of Interest – Appointing a family member to lead the family office can create unpleasant challenges when family dynamics are factored in. When a family member decides to take on the role of wealth creator, spouse, brother, sister, father, mother, grandparent, you can imagine the potential conflicts that may arise. There are complex dynamics within wealthy families that can make it difficult even for outside professionals to perform well. All of these issues affect the professionals who work in a captive, single-family office. The family office can become part of the family drama.

Technology – Having the right technology to support the complex financial structures of wealthy families is another enormous challenge facing a single-family office. You can’t just go out and buy software for a family office or manage a complex, intergenerational investment portfolio on a simple spreadsheet. Mutli-generational families often have 20 or more custodian and alternative investment relationships that need to be managed and aggregated. In order to make prudent decisions, you need to see the whole picture to have productive discussions with advisors as to which strategies to pursue. Not every single-family office can afford to spend hundreds of thousands or even millions of dollars on leading-edge technology to provide this kind of advanced, aggregated reporting. Our services for outsourced family offices are supported by a robust cloud-based platform that aggregates data from multiple sources such as banks, brokerages and hedge funds.

Outsourcing is not necessarily an all-or-nothing proposition. Many families choose to outsource key functions of their family office, such as investment management or tax planning and compliance, while keeping other functions in-house. This hybrid solution may be right for your family and is an option that any sophisticated outsourced corporate family office should offer. For all these reasons, you may find that outsourcing your family office to Sterling Trustees gives you even greater control over the services provided to your family. It will also give you more time to focus on other priorities in your life, such as reinvesting in society through philanthropy or creating a lasting legacy for your family.

The role of Sterling Trustees in trust administration for family offices


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Sterling Trustees is a South Dakota-chartered trust company, regulated by the South Dakota Department of Banking. South Dakota, at the forefront of creating progressive trust legislation, is one of the country’s leading trust jurisdictions. That means that our company is able to help you leverage the latest and most advanced trust law available. read more