Single-family offices, traditionally seen as a private wealth tool only for the mega-rich, are rapidly evolving into a potent new wealth management model as a growing number of wealthy families seek a platform that offers them more control, flexibility and long-term strategic clarity than traditional financial institutions, such as banks, asset managers and private bankers.
Single-family offices (SFOs) are focused solely on the family’s interests, free from any institutional sales pressures and fiduciary conflicts. They typically offer a wide range of services including investment management, estate planning, philanthropic activities and lifestyle management to the family they service.
By empowering families to take control over capital allocation, governance, risk oversight and investment strategies, they help to foster and build the governance, infrastructure and mindset that is needed to sustain and expand wealth across generations. They also operate discreetly with no obligation to report earnings or pressure to justify fees.
Family offices have experienced explosive growth in recent years. According to a recent report by Deloitte Private, there are now an estimated 8,000 SFOs worldwide, up from roughly 6,000 in 2019, and this number is projected to grow to around 11,000 by 2030. Similarly, family offices’ total estimated assets under management (AUM) are expected to rise 73% from USD3.1 trillion today to USD5.4 trillion by 2030.
Having identified SFOs as a key asset in its national financial services armoury, the Malta Financial Services Authority (MFSA) has been quietly updating its regulatory framework to further facilitate the setting up of SFOs in Malta, publishing the following revised rulebooks:
- The Investment Services Rules for Notified Professional Investor Fund and Related Due Diligence Service Providers.
- The Trustees of Family Trusts Rulebook in respect of Private Trust Companies (PTCs).
A PTC in Malta is a company established to act as a trustee for a specific trust or trusts, in relation to a specific settlor for the benefit of a single family. Unlike a public trustee, a PTC does not offer trust services to the public and therefore benefits from simplified licensing and ongoing compliance requirements.
PTCs are not subject to a minimum corporate capital requirement or minimum amount of assets under management, and are not required to submit a business model, strategy or details of the intended financial service activity, flow execution or settlement. Governance obligations are also lighter, with no statutory requirement for internal audit, a risk management framework or officer, or a dedicated compliance function or officer.
The most significant recent changes have been to update the legal framework governing PTCs to reflect modern family dynamics and the evolving circumstances in which individuals may be recognised as belonging to a family. The definition of ‘family member’ and ‘family dependant’ has been extended to expressly recognise:
- individuals who are in a stable and committed relationship with the settlor and who live in a joint household with the settlor.
- individuals with whom the settlor has descendants by consanguinity, adoption or affinity.
The definition now also extends to ‘family clients’, which may comprise former family members, key employees of a family office, former key employees and non-profit or charitable organisations funded exclusively by one or more family member, dependant or family client.
The extended definition applies when a PTC has: (i) been established and acts in the context of an SFO; (ii) the trust/family office has aggregate net assets of more than €50 million; and (iii) there is an intention for a portion of the assets to be invested in a Notified Professional Investor Fund.
The Investment Services Rules for Notified Professional Investor Funds have also been amended to allow them to be managed by a family office vehicle that invests the private wealth of investors without raising external capital.
“This is an exciting and potentially critical time for wealth planning as we expect to see a large intergenerational shift in family businesses. Family offices are typically looking to diversify their investments and key assets geographically, and Malta has served as both as an investment base for the European Union, as well as a wealth structuring platform for EU and non-EU high-net-worth families,” said Sovereign Trust (Malta) Managing Director Stephen Griffiths.
“Sovereign Trust (Malta) provides all the elements that are required to assist SFOs and HNWI clients, including PTC establishment, trustee services, foundations, immigration and residency assistance, directorship and management services, corporate governance consulting, company secretarial services, yacht and aircraft registration, HR and accounting services.”
For further information on setting up and managing SFO in or from Malta, please contact Stephen Griffiths.
