Asset management structures for LATAM Family Offices – Wealth management

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The concept of Family Office finds its roots at the end of the 19e century when prominent American families like the Rockefellers and the Morgan family (of the JP Morgan dynasty), established offices for the sole purpose of managing the family’s assets. In Europe, banks such as Julius Baer and Bank Rothschild began to manage the wealth of the wealthiest families in Europe.

Fast forward to today, and we see this setup unfold and explode in emerging markets such as Asia and Latin America. Asia has seen a remarkable increase in the establishment and growth of family offices since 2017. Rather than reinventing the wheel, these new family offices are building on the education and experience of their more mature counterparts, making a modern and sophisticated family office setup both cost effective and relatively straightforward.

Campden Research estimates that there are 7,300 single family offices around the world. Adding in multi-family offices and hybrid models (those that cater to more than one UHNW family or enlist the outside help of professionals), it is believed that family offices manage assets of more than 5 , US $ 9 trillion.

Hybrid and multi-family offices, although less common than single family offices, are increasingly sought after by the new generation of UHNW individuals as they seek more agile ways to manage their wealth and preserve their wealth and assets. Today, many Latin American families, for example, are moving into the family office space and establishing proprietary single-family offices or part of a larger multifamily office network.

Regionally, South Florida has seen explosive growth over the past decade, with many Latin American families abandoning the model that banks manage all (or nearly all) of the assets of a family. family. Private banks were seen as having an inherent conflict of interest, as they tended to promote proprietary products and serve high net worth clients with a unique approach. Wealthy families, on the other hand, were becoming more sophisticated and wanted a sophisticated, tailor-made wealth management solution that met their individual needs, rather than “pre-packaged” services that supported bank efficiency. Capital withdrawals after the 2008 financial crisis also created a feeling of mistrust and concern about traditional models of investment management. Families took a closer look at passive investing through ETFs and more allocations to alternative asset classes.

For families wishing to establish family offices with a trust structure, the most important decision they can make is to identify a professional independent trustee with whom they wish to work. An independent trustee enables objective selection of investment managers, allocation of assets and supports the management and resolution of any (potential) conflict. The trustee can also promote good overall family governance and guide families in their ESG aspirations and objectives. If family members wish to participate in the actions of the Trustees, this can be easily achieved. Protection or investment committees can be set up or set up by joining the board of directors of a specifically established private trust company, subject, of course, to appropriate guidance.

The Covid-19 pandemic has had devastating consequences, especially on the economies of much of Latin America. The wealth management industry has since focused on creating an ecosystem that families can rely on when needed. Hybrid family offices (a combination of internal and external professionals) enable an agile model. Hybrid family offices meet the needs of the modern UHNW family and have been particularly popular due to their cost efficiency and ease of installation.

Hard-hit countries (notably Brazil, Peru and Mexico) suffered structural damage as a result of the pandemic and their tax revenues declined as a result. The pandemic and the likely tax consequences have increased the interest of wealthy Latin American families in the concept of family offices and generational wealth planning. Post-pandemic trends have so far focused on asset preservation / protection and succession planning. There has also been an equally strong discourse around ESG and impact investing following the success of the Strüngmann brothers and BioNTech and many families are looking to diversify their investments outside of “traditional” asset classes. .

Turks and Caicos is an interesting British Overseas Territory from a wealth planning perspective. The country has no direct taxation, is a US dollar economy, and has a relatively low international profile as a place of financial services, hence the number of the ultra-rich who choose to live and visit. A new Trust Act (2016) based on Jersey and Cayman Special Purpose Laws, VISTRA Options, Private Trust Companies and a New Corporations and Insolvency Law (2017) based on the equivalent BVI proves that Turks and Caicos is a highly regulated and robust country. jurisdiction.

Coriats has been advising sophisticated UHNW families, together with their national advisers, for over 40 years. We are a regulated and licensed trust company, holding the number one (1) Trustee License in the Turks and Caicos Islands. Founded in 1978, Coriats is committed to providing long-term strategic advice to wealthy and international families and businesses and their trusted advisors. With strong relationships with investment advisers, international banks, law firms, accountants and real estate agents around the world, Coriats is well positioned to help those they serve achieve their goals. Since 2016, Coriats has been part of the G&P Group, one of the largest professional services teams in the Turks and Caicos Islands, made up of lawyers, business leaders and trust services in separate but allied teams. Coriats currently manages assets worth approximately US $ 1 billion, including real estate, investment portfolios, businesses, airplanes, yachts and other assets.

(The above article is not legal advice and no responsibility is taken for the general comment it contains: each case is different and the appropriate advice must be taken from a qualified professional before any structuring. tax).

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.


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