"Family Office"... fortune for fortune

Muhammad Salem Al Ali

September 22 2022

Family businesses in the UAE, with their jobs and major contributions to the country's domestic product, are a key element in the national economy, and an active partner in the process of development and development.

The wise leadership of the UAE has been keen to ensure the continuity of these companies and protect them from the dangers of fragmentation, through many decisions and legislation centered around their governance in the first place, and to encourage their inclusion in the stock markets, in addition to direct intervention through specialized judicial committees in order to resolve disputes that may arise. between family members after the death of the founders.

Perhaps what I will touch upon today is the term “family office” that has come to accompany family businesses, especially when they are passed on from generation to generation, this transition that may push them to seek the assistance of a third party in order to protect them and manage their business affairs in a manner that is agreed upon by all the heirs.

In brief, the “Family Office” is a private company that undertakes the tasks of managing family wealth with all its investment aspects, and here it plays a vital role for family businesses and their owners. First, it supports the family’s strategy and preserves its wealth, and secondly it develops its assets and ensures its effective transfer. Through generations, and thirdly, it provides peace of mind to family members knowing that there are people who work with them to preserve their money and take care of their interests in a professional and systematic manner.

The growing awareness of the importance of family offices has contributed to consolidating their prominent presence in the global transactions scene, whether through direct or indirect investments, until transactions reached billions of dollars and expanded to include most trends and sectors.

However, what these offices sometimes suffer is their failure to achieve stable and long-term returns for the investment portfolio, which leads to its erosion or unexpected fluctuations in it, which we can often return to bad investment decisions that are flawed by haste and lack of experience, as family offices manage investment portfolios Large, complex and multi-asset, which is not limited to local scales only, but also extends to cover global markets;

Therefore, it requires exceptional skills and highly qualified practices.

Of course, corporate governance is the cornerstone of the success of any office. The creation and operation of an effective portfolio must be based on research, analysis and in-depth investment studies, along with the availability of all highly efficient resources from employees, consultants, and technical and administrative systems, with reference to a very important factor, which is the necessity of That the portfolio managers’ experiences align with the expectations of family members, especially when making a decision.

In order to be more realistic, we must not exclude a fundamental factor that may affect the safety of investment options for offices, which is the adverse and changing economic conditions, or those sudden events that are difficult to predict. It had repercussions on global markets, and he also would not have expected the significant increase in energy prices and disruption of food supplies due to the Russian-Ukrainian war;

Therefore, the best reliance here is on adaptation and speed of induction. If inflation rates rise, the option is to own the property, because then the prices of real estate assets are on the rise, but if interest rates rise, the shares will decrease and trading in them will bring the most profitable returns;

The examples here are many and cannot be counted.

The “Family Office” is a private company that undertakes the tasks of managing family wealth with all its related investment aspects.

Founder of "Suhail Smart Solutions"

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