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Origin of Family Office

Family offices are exceptionally innovative, adaptable, and resilient enterprises that can achieve short- and medium-term objectives while furthering a vision and legacy that spans generations. Although each family office is unique to the profile of its founders, principals and beneficiaries, the primary purpose of the vehicle is to establish robust frameworks for the effective administration of a wealthy family’s finances- and bring their vision to life.


While Family Offices have developed at pace with the global economy and built international networks to expand wealth through the pursuit of purpose, the original template for family wealth management can be traced to the legacy established in the United States by John D. Rockefeller in 1882.


Rockefeller expanded on the private banking model widely adopted among American industrialists who exponentially increased their wealth by building infrastructure and production facilities during the late 19th century. Unlike other industrialists of the era, who founded private banks to act as agents for the family firm, Rockefeller set up a full-service office for the sole purpose of managing his family’s wealth and philanthropic interests in 1882.


From the beginning of his career as an accountant with an agricultural commodities brokerage, Rockefeller was passionate about his personal values and donated a significant portion of his monthly salary to churches and charitable organizations. He took the same approach with his family office. As a steadfast advocate of social equality, he dedicated considerable resources towards abolishing slavery, creating educational opportunities, and improving public health.


Rockefeller originally built his fortune with a small investment in an oil refinery in Cleveland, Ohio. Within a decade, the business grew into the Standard Oil Company, which outgrew and acquired its competitors to establish a monopoly in the state of Ohio, and eventually control the production and transportation of kerosene fuel throughout the United States.


Standard Oil became a driving force in the growth and development of the United States, and by the end of his life in 1937, Rockefeller’s net worth was 1.4 billion USD, equivalent to 255 billion USD today. Rockefeller remained highly committed to social welfare and dedicated his later years to philanthropy.


Upon establishing his personal legacy, Rockefeller began planning for the long-term administration of his family’s assets. He turned to his chief investment advisor, Frederick Taylor Gates, who had helped establish the University of Chicago, to head the Rockefeller Family Office with a dedicated professional services team and clerical staff.


Establishing a specialized vehicle to manage family affairs was unprecedented at the time; while wealthy families’ financial interests were generally handled alongside the family firm, the unprecedented scale to which the Standard Oil Company grew created a need to establish a separate entity for the Rockefellers’ finances.


By hiring dedicated staff, Rockefeller was able to streamline the cost and complexity of engaging external firms and agencies to handle investment structuring, trust planning, asset management and private banking. The extent of the resources at hand also granted Rockefeller access to a much higher standard of services and facilities than conventional institutions were equipped to provide at the time.


But most importantly, a single organization dedicated to a family’s needs and objectives over an extended timeframe would benefit from a continuity of operations that could not be achieved by multiple agencies in the long run. The complexity of a family’s needs can multiply as wealthy family grows into a dynasty over the course of generations- its projects and holdings, including philanthropic work, expand to a far greater scale.


Today, the trusts that John D. Rockefeller originally set up for his children still hold the majority of the family’s fortune. However, each successive generation has brought more family members, which has made the inter-generational wealth transfer process more complex than ever before.


The same pattern holds true for other wealthy families that have established family office vehicles throughout the 20th century, which have steadily grown after the second world war as many company founders monetized their stake in in their businesses upon retirement. In recent years, the multifamily office has emerged as a strategy for wealthy families to combine their resources and draw on a greater scale of resources to drive a more effective strategy and gain an edge in their investment portfolio.


This is how international family office networks have developed across the world, as they have grown into global organizations in their own right during the first two decades of the 21st century.


As the number of High-Net-Worth Individuals in Asia continues to increase, financial centers like Hong Kong have emerged as key international family office hubs, owing to their exceptionally high caliber of professional services. As Asia’s World City, Hong Kong is also home to culturally diverse service providers that match technical expertise with an intuitive understanding of social context.


Over the years, we have helped a wide range of family businesses from a variety of sectors, including retail, manufacturing, hospitality, and construction. We have worked closely with our clients over decades to implement effective succession plans, while helping family businesses realize their growth aspirations.


This year, we greatly look forward to reaching new heights as we open minds, open hearts and open borders. We are proud to partner with globally minded organizations to open new possibilities with dedicated professional services tailored to the individual needs and circumstances of all our clients. Should you have any enquiries about setting up a family office, trust, or any cross-border business and trade services, we are always available for a free initial consultation.