Wealth management in a family office: Professional advice between investment, law, and family responsibility

Large private fortunes place special demands on advisory services and management. They are frequently distributed across companies, real estate, securities portfolios, or holding companies while simultaneously tied to succession issues. For wealth managers, this creates a task where financial decisions are only convincing when their legal consequences and the interests of the family involved are also taken into account.

From Prof. Dr. Maximilian A. Werkmüller, LL.M., Professorship for Finance and Family Office Management, Allensbach University Constance

The idea that asset management essentially consists of selecting suitable investments falls short when it comes to large private fortunes. Even the initial inventory can be considerably complex. A significant portion of an entrepreneurial family's wealth may be tied up in their own company, while further funds lie in real estate, securities, or private equity. In addition, there may be foundations or corporate legal structures whose purpose extends far beyond a current investment decision. Anyone advising such wealth must therefore first understand what economic functions its individual components fulfill and what commitments are associated with them.

These requirements are accumulating in the family office. The term refers to an organizational and service environment designed to coordinate the affairs of wealthy families. Depending on its structure, a family office can prepare investment decisions, generate reports on the total assets, coordinate external advisors, or assist with succession planning. The organizational form also varies. Some families have their own dedicated structure, while others rely on service providers that manage multiple client accounts.

The real difficulty therefore rarely lies in a single technical problem. The work becomes demanding where multiple decisions depend on one another. A change in the ownership structure can influence future liquidity needs. An anticipated transfer of assets may alter the options for control within the family. When a company is being prepared for the next generation, the interests of the family must be taken into account just as much as the corporate structure and the economic stability of the business. The wealth manager must recognize such interactions, even if subsequent specialized advisers handle individual legal or tax issues.

Investment in the context of total assets

Portfolio management remains an essential component of professional wealth management. In the case of large fortunes, however, the isolated evaluation of individual asset classes is rarely sufficient. The crucial factor first is what function an asset component fulfills within the total wealth. This can be illustrated by the example of an entrepreneurial household. If a significant portion of the wealth is already tied up in one's own company, an economic concentration exists there that must be taken into account in further investment decisions. Real estate can also tie up capital for a long time and cannot be sold at any time without friction losses. More liquid investments may therefore fulfill a different function than private equity or business interests, whose performance is assessed over the long term.

A sound asset allocation requires that such differences be recognized. Risk tolerance cannot be captured solely through a general category such as „conservative“ or „opportunity-oriented.“ It also depends on existing liabilities, expected distributions, and which parts of the wealth must be available at short notice. Portfolio management thus takes on a different meaning than in ordinary investment advice: it must integrate the liquid portfolio into the economic structure of the total wealth.

Inflation and the use of debt can also only be reasonably assessed in this context. Leverage can increase the return on an investment, but at the same time it increases dependence on financing costs and market values. Inflation affects different types of assets in different ways. A scientifically grounded engagement with portfolio theory therefore helps above all to analyze such relationships in a comprehensible way and not to reduce investment decisions to individual return expectations.

Legal structuring requires coordination

When dealing with family wealth, legal issues regularly arise where assets are tied up or transferred over the long term. Inheritance law and corporate law therefore play an important role. Foundations can also become relevant if a family wishes to dedicate wealth to a specific purpose on a permanent basis or preserve it under defined conditions. Wealth managers do not assume tasks that are reserved for attorneys or tax advisors. However, they must understand which issues require legal advice and how the outcomes affect the overall wealth. This ability to coordinate is among the most demanding tasks of the family office.

Particularly succession processes demonstrate why a purely financial perspective is not sufficient. The transfer of a business concerns ownership and the power of disposal. It can impact future distributions and potentially alters the position of individual family members. A legally permissible arrangement is therefore not yet a sufficient answer to the question of whether a solution fits the family's situation. The same applies to asset protection or corporate law reorganizations. Structuring options must always be examined to determine which legitimate purpose they serve and what consequential effects arise. For wealth-related advisory services, this means that they must understand legal outcomes and integrate them into the broader decision-making process.

Family Governance as an independent consulting service

The difference from traditional financial advising becomes particularly clear in family governance. Families with substantial wealth or a shared business must make decisions whose consequences often affect multiple generations. In the process, interests can diverge. One family member may want to pursue entrepreneurial activities, while another is primarily interested in regular distributions. The next generation may develop different ideas about the company than the one that built it. At the same time, the question arises as to who receives information, who is involved in decisions, and what responsibility arises from ownership.

Such conflicts cannot be resolved through an optimal portfolio structure. They require procedures that make different interests visible and decisions comprehensible. Family constitutions, advisory boards, or established rules for certain decisions can be suitable instruments for this. However, whether they work depends on how they are designed within the respective family.

This creates a demanding role for advisors. They must take family relationships seriously without losing their professional distance. A trusted advisor is precisely characterized by the fact that they do not confuse client interests with personal closeness. Their task consists of preparing factual matters precisely, identifying differing positions, and professionally preparing decisions. This dimension of wealth management is difficult to acquire solely through professional experience. Experience undoubtedly helps in recognizing typical situations. However, it does not replace a conceptual foundation with which governance structures can be compared or conflicts of interest can be methodically analyzed.

Corporate governance becomes relevant in corporate assets

Many large family fortunes are closely linked to businesses, which brings questions of corporate governance into focus. Owner families must clarify how management and control are organized, what information boards need, and how responsibilities are delineated from one another. Compliance is also factually significant in this context. Shareholding structures or foundations are subject to legal requirements. Anyone working in a coordinating capacity in the family office must therefore be able to recognize where compliance requirements arise and which specialists need to be involved.

The combination of family governance and corporate governance is particularly interesting because two different systems meet. A family is driven by personal relationships and a shared history. A business, on the other hand, requires roles, responsibilities, and decision-making processes that must function independently of personal ties. As soon as family members are simultaneously owners, managing directors, or members of a supervisory board, these two systems can collide. Professional family office management must recognize such overlaps. The goal is not to organize family relationships according to corporate rules, but rather to clarify where personal interests end and institutional responsibility begins.

Why continuing academic education makes sense in this field

Asset management is one of those activities in which experience is of great importance. Many situations can only be assessed with certainty once advisors have already encountered similar constellations. Precisely for this reason, academic continuing education can be useful. It allows experiences to be examined using professional models and to be distinguished from one another. This University Certificate „Certified Wealth Manager Allensbach University“picks up on this thought. The part-time continuing education program is offered at the master's level and is conducted in cooperation with Finanz Colloquium Heidelberg. It comprises 45 ECTS and can be applied toward the M.Sc. Finance from Allensbach University be credited, provided the respective requirements are met.

In terms of content, the program first covers the business models and services of family offices. Further course content relates to legal and tax issues, as well as family governance and the role of a trusted advisor. This is complemented by portfolio management and corporate governance, including compliance. This composition reflects the nature of the field of activity. A family office needs individuals who can assess financial matters and at the same time understand when legal structuring is necessary. Anyone advising families must also recognize how ownership, entrepreneurial responsibility, and family relationships are interconnected.

The distance learning format accommodates the professional situation of the target group. Many interested parties already work in banks or asset management, in family offices, or in advisory professions. The degree program is conducted entirely online and with no mandatory attendance. The required assessments consist of two online exams and three written assignments. The examination achievements in particular are relevant for academic continuing education. They require knowledge to be applied in a comprehensible manner; mere participation in seminars is not sufficient for this: anyone assessing a legal constellation or analyzing an asset structure must disclose their assumptions and arrive at a reasoned conclusion.

Wealth management as a professional coordination service

The professional profile of the asset manager is also evolving because family wealth can be organized more complexly and advisory services are increasingly structured through a division of labor. At the individual level, digital reporting systems are transforming information processing within the family office. International wealth structures further increase demands because different legal systems or tax frameworks may be involved. And despite these changes, the fundamental task remains remarkably constant. Those who manage large private assets must place individual decisions into a broader context. An investment may appear attractive from a financial perspective and yet be unsuitable if it disregards liquidity needs. A legally permissible arrangement can create conflicts if its consequences are not understood within the family. A governance rule can make formal sense and still fail if it ignores the actual roles of the participants.

Professional wealth management therefore requires sound judgment. This stems from expertise and experience, but must be tested repeatedly against concrete cases. An academic qualification can provide a suitable framework for this because it systematically combines different areas of expertise and requires decisions to be justified. In a family office in particular, this represents a central prerequisite for good advice. Large fortunes can only be professionally guided in the long term if financial decisions are embedded in the legal and familial situation. Those who understand these connections do not merely manage individual asset positions. He or she can help ensure that a family remains capable of action even when facing complex decisions.