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CRE Insights Blog

The Difference Between a Holding Company and a Family Office

In this video filmed in front of the Petronas Towers in Malaysia, Richard C. Wilson of the Family Offices Group talks about the difference between a family office and a holding company. A family office typically helps manage the wealth, insurance, and trust and estate issues. A holding company is a portfolio of business equity stakes. To learn more about family offices, download a free e-book here: http://FamilyOffices.com/Family-Offic… Hello, this is Richard Wilson. I’m in downtown Kuala Lumpur. You can see the Petronas Towers there behind me and a bit of downtown here. Here to speak at a family office conference. I just wanted to create this short video for you talking about the difference between a holding company and a family office. This coming up quite often. Every event we hold, we’ve got dozens of family offices there or families that think maybe they should formalize into a family office or perhaps they need one, they don’t know. So I wanted to really quickly point out the differences between just a holding company and a family office. It can be confusing. For those of you that aren’t familiar with the term, a family office is just a holistic, full balance sheet wealth management solution for ultra wealthy, very wealthy families and individuals. So the difference between a holding company and a family office is that similar to Wilson Holding Company where we just have four different business divisions, we then have a division that deals with the startups and equity stakes. So really, you can count six or seven, but there’s only four main revenue drivers in our holding company and it’s really just a portfolio business equity stakes. That is different than a family office and that a family office would typically help manage the wealth and insurance aspects, maybe trust and estate issues. A family office might also be more likely to invest in fund managers or real estate fund, private equity fund, a hedge fund manager. A family office is much more likely to bring in professionalized financial staff, so a chief investment officer, somebody to manage the return of the portfolio and build in risk management metrics and analysis, but also risk measure to help protect the capital and the portfolio from an investment standpoint, not just a business standpoint. When you have a family office, you’re just looking at the financial wealth protection returns of the portfolio. Where in a business, you might have very longterm business ambitions. You might want to generate a certain level of income from the business, but you don’t typically think about it in the same risk management measures in draw down, et cetera, that you might look at within a hedge fund portfolio, for example. So I remember it very clearly, a holding company is typically owned by just one or two families, but it’s really just a portfolio of businesses or business interests where a family office is really a professionalized, holistic wealth management solution with professional wealth managers in place and not just a collection of business holdings. So this is Richard Wilson coming to you from Malaysia. Thank you for joining me and I’ll see you again soon.

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Richard Wilson