“Most family offices with U.S. taxpayers are struggling with the requirements of the Dodd-Frank Act, view the Act as an unwarranted intrusion into privacy and are uncertain of the Act’s impact on them,” a report by the Advanced Planning and Family Office Group of law firm Handler Thayer LLP revealed, according to Financial Standard. “Escalating costs for Dodd-Frank compliance in addition to other operating costs are raising the bar to SFO formation and causing increased concerns regarding long-term sustainability.”
The consultancy firm of Oakbrook said that family offices were formerly not subject to registration with the Securities and Exchange Commission because those offices fell under the 15-client threshold where registration was mandatory.
Currently, family offices that are no longer afforded the automatic exemption may file for one if they meet the criteria of a “family” office – a small number of clients that are served based on genetic or legal association to the family tree, Financial Standard reports.
A shifting regulatory burden has spurred the creation of virtual family offices, multi-family offices and international SFOs. Richard Wilson, the president of the Family Offices Group, said that more high-end wealth managers are utilizing the family office approach rather than product recommendation to manage a family’s financials.
“[The VFO] allows wealth management firms to give more complete services to less clients while making more money,” Wilson said, according to Financial Standard. “When done right, everyone wins.”