Outsourcing Family Office Operations for Middle Eastern Families
For generations, the Middle East’s most prominent families have excelled at building extraordinary businesses. Across the region, there has been a growing trend to professionalise approaches to wealth management1. Yet many families still identify a skills gap within their organisations, particularly in the areas of investment, governance and long-term wealth preservation – expertise offered by an outsourced family investment office, designed either to provide a full service or fill the gaps in high-net-worth families private operations.
Flexibility and rigour
One major appeal of outsourcing family office services is scalability. Consulting experts outside the family can boost institutional discipline while offering the flexibility to scale up or down as circumstances – or skills gaps – demand. Support from an established family office helps a family consolidate their assets into a single view even when they are diversified across multiple geographies, generations and managers.
Features such as a bespoke ‘investment policy’ framework can be transformative, enabling families to sit down with their adviser team and articulate together their risk appetite, objectives, and time horizons – a crucial starting point for any family office relationship.
A culture of custodianship
In many parts of the Middle East, wealthy families describe a strong culture of stewardship, in which capital is not ‘owned’ but passed from one generation to the next. This culture of custodianship – and the need to ease the pressures and responsibilities it creates – sits at the core of a true family office model.
The emphasis placed on continuity and custodianship fits hand in glove with families who have built up generations of sector-embedded expertise within a family business. Be it manufacturing, real estate or construction, the network of experts and their collective intellectual capital are part of what creates a rich community for family office clients.
Though the skills that made the family successful entrepreneurs may not automatically translate into navigating markets or setting asset allocation, their contacts and risk management knowledge should be welcomed into any properly functioning family office ecosystem.
Bridging Generational Gaps
Wealth evolves as families evolve. The founder who builds the business may prioritise capital preservation, while the next generation places greater emphasis on global diversification. Outsourcing family office services helps to bridge these generational shifts in several ways.
One of the most important ways is by embracing the next generation, which allows families – advised by a third party – to ensure that their voices are ‘heard’ in a controlled, professional forum. This helps a family to stay aligned even as its members’ priorities diverge.
As the Middle East region enters a new phase of internationalisation, the need for families to shore up their governance and structures grows. Younger generations are coming to the table with fresh expectations of how to ensure the safe transition of wealth across the generations.
Where families may have dozens of members and multiple branches, across several jurisdictions, ensuring that the family is supported within a flexible, rigorous framework is a necessity not a luxury.
Based in Zurich, Taymour Mortagui is a Director and Senior Relationship Manager in our Family Office Division, serving families globally with a focus on the Middle East and North Africa.