The Isle of Man: The Clear Choice for Family Offices

Written by The Fortress Group

Ultra-High Net Worth families who are considering a family office have a number of options when considering the type of family office available and where to base it. There are two common types of family offices, single family offices (SFOs) and multi-family offices (MFOs) and these can be varied based on the family’s preferences and circumstances.

Single Family Office

Single family offices (SFOs) are private entities established by a single wealthy family to exclusively look after their financial affairs and generational planning. SFOs serve the needs and objectives of the family with highly personalized and tailored services. Through careful design they offer the family a level of direct oversight and influence over their wealth management strategies. SFOs are typically established by families with substantial assets and complex financial situations, seeking dedicated focus and attention to their affairs. They may have their own premised and directly employed specialist staff.

Multi-Family Office

Multi-family offices (MFOs) cater to the needs of multiple families, providing a shared platform with cost efficiencies. By pooling resources and expertise of several families, MFOs can access a broader range of services while sharing the associated expenses. MFOs offer a range of services similar to SFOs, and typically have a team of professionals with diverse skill sets to meet the various needs of the participating families. MFOs are a good option for families with significant wealth but who do not require the level of exclusivity or customization provided by SFOs.

Initially families may establish a SFO and later transition to a MFO to take advantage of shared resources or investment opportunities.

There are a number of licenced specialist fiduciary firms on the Isle of Man, like the Fortress Group that can provide an outsourced specialized model that offers the benefits of a comprehensive family office without the need for creating an in-house team providing:

• Expertise: Access to skilled professionals across various financial disciplines.
• Customization: bespoke strategies based on family goals and values.
• Cost-Efficiency: through sharing resources and operational costs.
• Flexibility

The Isle of Man is the optimal location for the set up and administration of family office structures and offers many unique advantages when compared to other “near shore” locations in the British Isles such as Jersey and Guernsey. The Isle of Man (and the Fortress Group) can provide all the similar company, trust, and foundation structures, in line with other jurisdictions that are key components to setting up a family office, but most importantly we also uniquely offer:

1) Accessibility – given the bespoke nature of family office work and its focus on the investment, generational and lifestyle requirements of the family, it is important that the family office location is accessible to the family members and to any key specialist staff that are needed in the operation of the family office. Family members who have already gone through the arduous steps to enter the UK say under programmes such as the British National Overseas scheme (or similar arrangements) can move residency to the Isle of Man (and technically out of the UK) easily. Where clients or family members are concerned about the forthcoming UK non-dom changes this could be less painless and timely than say applying to move into the EU or Switzerland. There are no property restrictions so a client or indeed specialist family office staff can buy a home or set up an office as easily as buying a property in the UK.

2) Scalability – apart from limited work permit requirements a client wishing to set up or base activities on the Island that involves employing specialist dedicated staff and having a significant presence can do so relatively easily. This in practise more difficult to achieve in the Channel Islands and Switzerland due to employment restrictions and the costs involved. This is why the Island is the home to international shipping, insurance, banking, investment and fund companies, e-commerce, e-gaming, cross border trading companies. Where economic substance is a key issue, the Island is perhaps one of the best places to locate a structure in the British Isles. The Isle of Man Government has a plan to increase the population by 15,000 in the coming years and has many grants and incentives in place to assist clients and companies in locating their businesses here. This could be of interest for wealthy clients and families that are looking to hold assets outside of the home region.

3) Risk diversification – in these troubled times many clients are looking to safeguard assets away from areas of potential regional conflict. The Isle of Man holds a Moody’s Aa3 rating with a stable outlook and I think our jurisdiction is well regarded professionally around the world.

As a mature international finance centre there are many specialist firms on the Isle of Man such as the Fortress Group that have the skills and expertise to assist clients looking to set up a family office and the Island has a well-established and experienced talent pool available to meet the sophisticated and bespoke needs and requirements of discerning family office clients.

Lee Penrose
Head of Business Development
The Fortress Group