A wealth company in Switzerland is a company focused on managing and growing assets, often for multiple clients or investors. It offers services such as investment advice, portfolio management and financial planning.

A family office in Switzerland, on the other hand, is a private organization set up specifically to manage the wealth and financial affairs of a single family or household. Family offices offer similar services to wealth companies, but focus solely on the needs and interests of a specific family. They may also offer additional services, such as estate transfer, succession planning, and philanthropy advice.

Does a family office need a license (fintech) to manage all kinds of assets?

A family office in Switzerland does not usually require a special license to manage assets, as long as it works exclusively for the family in question and does not offer any services to external clients. However, if a family office also works for external clients or is engaged in certain regulated financial services, it may be necessary to apply for a license or permit from the Swiss Financial Market Supervisory Authority (FINMA) or other competent authority. It is important to closely review the laws and regulations applicable to the family office and its operations to ensure all requirements are met.

There is also a Multi Family Office which manages the assets of several families. Does such a multi-family office need a special license for managing all kinds of assets?

Whether a multi-family office requires a special license to manage all types of assets depends on the jurisdiction and the specific services it offers. In many countries, such as Germany, family offices offering financial services are subject to regulatory requirements and may need to obtain a license or approval from a financial regulator such as the Federal Financial Supervisory Authority (BaFin). To ensure that a multi-family office meets all legal requirements, it should consult legal and financial experts.

Does such a multi-family office need such a license in Switzerland?

In Switzerland, multi-family offices that offer financial services are also subject to regulatory requirements. Depending on the services offered, it may be necessary to obtain a license or permit from the Swiss Financial Market Supervisory Authority (FINMA). Specific requirements may vary depending on the type of service. To ensure that a multi-family office in Switzerland meets all legal requirements, it should consult legal and financial experts.

What is the difference between an asset management company and a multi family office in the same country as Switzerland?

An asset management company is a company focused on managing assets and investments for clients. It offers investment advice, portfolio management and other financial services.

A Multi Family Office (MFO) is an organization that provides comprehensive wealth management services to multiple high net worth families. MFOs provide not only investment advice and wealth management, but also services such as tax planning, wealth transfer, risk management and philanthropy advice.

“The main difference is that an asset management firm focuses on investment management, while a multi-family office offers a broader range of services to high net worth families.”

What regulations and requirements are needed to set up a multi family office in Germany?

In order to set up a Multi Family Office (MFO) in Germany, you have to comply with various regulatory requirements and regulations. Here is an overview of the most important points:

1. Legal form: Choose a suitable legal form for the MFO, e.g. a GmbH or a GmbH & Co. KG.
2. Business registration: Register the business with the responsible trade office.
3. Financial services license: If the MFO offers financial services, you need a license from the Federal Financial Supervisory Authority (BaFin). This can, for example, be a permit according to Section 32 of the German Banking Act (KWG) or Section 34f of the Commercial Code (GewO).
4. Anti-Money Laundering Act (AMLA): MFOs must comply with the rules for the prevention of money laundering and, if necessary, a money laundering officer must be appointed.
5. Data protection: Observe the General Data Protection Regulation (GDPR) and appoint a data protection officer if necessary.
6. Professional liability insurance: Professional liability insurance is recommended to cover possible claims for damages.
7. Taxes: Register the MFO with the tax office and observe the tax obligations, such as sales tax, corporation tax, trade tax.

It is advisable to seek advice from a lawyer or tax advisor when setting up an MFO in order to meet all requirements and minimize possible liability risks.

What regulations and requirements are needed to set up a multi family office in Montenegro?

In order to set up a Multi Family Office in Montenegro, you need to follow the following steps and requirements:

1. Business structure: Choose the appropriate legal form for the family office, e.g. a limited liability company (DOO) or joint-stock company (AD).

2. Company Registration: Register the company with the Central Register of Business Entities (CRPS) and obtain a tax identification number (PIB).

3. Business Plan: Prepare a detailed business plan covering the Multi Family Office’s services, client profile and market analysis.

4. Capital Requirements: Make sure your business has sufficient capital to start and sustain operations.

5. Compliance and Regulation: Respect the laws and regulations in Montenegro, in particular the Law on Prevention of Money Laundering and Terrorist Financing, Tax Law and the Data Protection Law.

6. Expertise: Hire qualified people with wealth management and financial services experience.

7. Bank Account: Open a commercial bank account with a bank in Montenegro.

8. Insurance: Take out liability insurance to cover possible risks.

9. Marketing and Client Acquisition: Develop a marketing strategy to attract potential clients to your multi-family office and build long-term relationships.

Please note that this is a general overview and country-specific requirements may vary. It is recommended that you consult a local lawyer or accountant to ensure all requirements are met.

CONCLUSION:

Family office management in contrast to private wealth management

Differences between family office management (FOM) and private wealth management (PWM) are not immediately apparent to many. But a closer look reveals fundamental differences, which are briefly explained below.

Comparison of family office management and private wealth management

In personal wealth management, the wealth owner typically sets the direction for specific issues and procures services from a PWM provider (usually a bank). The PWM is therefore similar to the principle of a house bank, in which a bank is responsible for the comprehensive support of a customer or a family and their provision of (banking) services. The customer “orders” special services such as financial planning, estate planning or the analysis of his investment portfolio as a banking service. The PWM department runs these. However, the customer himself remains the one who decides selectively (often also opportunistically) which services and products he “purchases” and which not.

With regard to the management of liquid assets, with a conventional PWM mandate, the majority is managed by the bank that provides the service itself (house bank principle). There may be other bank details, but these are usually subordinate to the relationship with the house bank. A strategic management of all bank accounts or “liquid assets” does not normally take place.

Family Office: In the area of family office management, the approach differs: The family office, as a trustworthy advisor (“trusted advisor”), records the total assets at a certain point in time, creates a balance sheet according to commercial principles and documents the development of the individual asset areas from the time of the capture. In addition, in cooperation with the principal and according to his specifications, it optimizes the existing asset structure in the direction of a defined target structure.

In family office management, the family office assumes the role of the initiator. The agenda is usually created there and implemented step by step with the asset owner. In addition, in contrast to banks or specialized asset management departments (PWM), the family office always considers all measures in the overall context of the assets and therefore acts both with a different mandate and with a different perspective. The family office always looks at the issues “from the principal’s point of view”, while a PWM employee sees the customer from the perspective of a bank or an asset manager.

The different interests and perspectives

Based on the perspectives described above, there are also different dog-men for asset management: the family office works objectively and independently as a trusted advisor. In addition to the interests of its principal, it does not pursue any additional interests of its own. In a multi-family office, there is certainly an added financial interest in adequate remuneration; In the case of a so-called single family office, however, this consideration is irrelevant.

The PWM works completely differently: as a specialist department of a profit-making company, it primarily pursues its own financial interests. The bank can and even has to make a profit – difficult enough in times like these. A PWM customer knows or should know that this is the case. He therefore does not expect a trusted advisor there, but a businessman.

It shouldn’t come as a surprise that the banks’ own products usually contain fees and sometimes even “hidden” them. For this reason, a multi-family office cannot also be an asset manager at the same time. The interest in earning additional money in asset management and in maximizing one’s own profit burdens the objectivity and independence of the advisory service.

Compensation Structures:

As a rule, family offices work exclusively on the basis of remuneration-related remuneration, which is calculated according to the number of hours worked and billed retrospectively. This corresponds to the classic procedure. It is generally accepted that a (multi) family office must and can be profitable; nevertheless, only remuneration-related remuneration guarantees the transparency necessary for a family office business relationship.

When the customer understands what they are paying for, balance is maintained and principal-agent conflicts are avoided. A family office that is remunerated on the basis of an “all-in fee” makes itself suspicious of possibly putting its own financial interests ahead of those of the client. At most, a “flat fee” would be conceivable if the costs of family office management have stabilized over a certain period of time.

In contrast, the “all-in fee” at banks corresponds to the established business model and the often quoted principle “if things go well, we’re both happy”. However, if things don’t go well, the “all-in fee” in private wealth management could potentially create a desire for investments that deliver higher returns in the short-term and potentially mask structural deficits, but come with increased risk in the long-term.

Management of family Offices: a summary

Family companies and their representatives are regarded as reliable advisors to their clients. Figuratively speaking, they are on the same side of the table as the families they are advising, while bank representatives usually sit opposite. This contrast also shows why banks are not particularly convincing in the role of family business advisors, especially when they fail to differentiate the family business from the rest of the banking business.

Therefore, the study of administration of family companies is enjoying – and rightly so – growing popularity among students. Comprehensive investment advice within the framework of a mandate for family companies is becoming more and more important, especially against the background of the declining importance of banks in this function since the subprime crisis.

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