Family Office: A Global Trend Shyly Arrives in Croatia

What do the ultra-wealthy do with their money? Whether they have sold a company or accumulated wealth through successful business operations, at conferences, such as Lider’s ‘Future of Family Businesses’, where discussions often revolve around what to do after a sale, it can be heard that founders do not know what to do with that money. Many start investing in real estate, stocks, or other companies, becoming business angels for those just entering the world of entrepreneurship. Some decide to travel the world in search of inspiration and new ideas, while others return to entrepreneurship and establish a new company. Overall, there is that bittersweet period after the sale of a company in which one must decide what to do next and how to manage their assets.

In countries that have a longer tradition of entrepreneurship, or many private companies, such assets are managed as professionally as any family business. Due to the large number of successful family businesses in Croatia and the rest of the region, local entrepreneurs increasingly feel the need to organize the management of their assets. Some turn to professionals, namely banks and investment firms, while others open their own family office. This English term, for which there is currently no concrete Croatian translation, refers to a company that manages assets and, in addition to investment consulting and financial planning, offers personalized services to families and individuals with significant wealth.

For Rainy Days

Milovan Zvijer, a lawyer and partner at Four Legal and an advisor for the development of family companies in collaboration with Adizes South East Europe (ASEE), provided his definition of a family office for Lider. As he stated, there is no single definition of the term, but it could be described as a special company whose primary activity is asset management, mainly of surplus assets that the family does not need for current living expenses or financing the primary business.

– The term family office is globally recognized and common. Here and in the region, it has only been mentioned more frequently and used widely in the last few years. The reason this topic is just becoming relevant here is primarily that until about a decade ago, there were not many families with surplus capital. Additionally, a more conservative approach to managing the primary business led to surpluses, if they existed, being kept for rainy days rather than being used for investments outside the primary business. Based on practice, it can be said that such regional companies are mostly focused on investing in real estate. However, this is changing over time. They are becoming more active in capital markets, and in some cases, they resemble small private equity funds, said Zvijer.

The age of this practice in the largest world economies is illustrated by the fact that the American Rockefeller family office was established in the 19th century, specifically in 1882, and is still active today. However, the richest family office in the world currently is Walton Enterprises, a company that manages the assets of the Walton family, founders of the American retail chain Walmart; it manages over two hundred billion dollars of their assets. The second largest such company is Cascade Investment (170 billion dollars under management in 2023), which manages the assets of Bill Gates, while in Europe, the wealthiest such company is Fedesa, which manages the assets of the Ferrero family and managed 55 billion dollars in 2023.

A Trusted Person

Such financial companies employ dozens of professionals who manage the assets of the world’s wealthiest elite, but when looking at local entrepreneurs, they need a trusted financial expert who will advise them on how to increase their wealth. On the other hand, in the U.S., families whose assets exceed one hundred million dollars most often opt for their own family office with full-time staff. This is why the multi-family office (MFO) option is much more popular across the Atlantic. These are financial companies that work for multiple families, offering lower costs, broader expertise, and greater objectivity as they do not depend solely on one entrepreneur and one family. MFOs take on asset management for clients (allocating into different types of assets to ensure targeted returns), risk management, financial planning, etc.

And while this form of asset management is regulated differently in each country, the fact at the beginning of this text that there is no quality translation of this term in the Croatian language suggests that family office in Croatia​ is not legally regulated. This was confirmed to us by Andrea Smolić, a junior partner at the law firm BMWC, who stated that the term is neither specifically regulated nor defined.

– In Croatia, there is no legislative framework that explicitly regulates the operation of family office as a separate entity. Some local consulting firms offer services that functionally encompass what a family office does, but there is no special license or registration for that. It may happen that in the scope of services provided, a family office also performs some functions for which various licenses are required. For example, if it manages financial instruments, such as stocks or bonds of third parties, then such entities could fall under the Capital Market Act and would need to have the appropriate license, for instance, for investment consulting, portfolio management, or managing MTP, which is issued by Hanfa, explains Smolić.

Regarding the legal forms in which a family office appears, it is most often a limited liability company (d. o. o.), but it can also be a joint-stock company (d. d.), although this is rare and often not a practical solution, explains Smolić. Indeed, several companies in Croatia are classified as family office, but operate as d. o. o., such as Myberg owned by Emil Tedeschi, which recorded revenues of 8.57 million euros in 2024, or, for example, Lura owned by Luka Rajić, whose total revenues in the same year were 955,502 euros.

Trust is Growing

– In some cases, especially for philanthropic activities of families or individuals, a foundation can be established. However, for purely investment and business activities, it would not be the best solution in most cases. In the European context, the situation is similar. In many EEA member states, family office is not explicitly regulated, but the types of services they provide can prompt the application of various regulations. It is crucial to understand when such an obligation arises. In the European Union, the functions of family office are often taken over by private banks within their private banking departments, independent consulting firms, and investment advisors and asset management companies. If such entities manage someone else’s assets or provide financial advice, they are required to have the appropriate license in accordance with the rules of the MiFID II directive (EU directive on financial markets, note), which regulates financial markets in the European Union. On the other hand, a single-family office, which operates exclusively for the needs of one family and does not provide services to third parties, is usually not covered by regulation because it does not operate in the market in a broader sense, adds Smolić.

Therefore, it is not surprising that there is still no multi-family office in our region, and it is not easy to find a good investment advisor either. However, individuals and families with a bit more money can also take steps independently to ensure long-term asset growth and meet their financial goals, but are local ultra-wealthy individuals even aware of this segment of the financial sector? We posed this question to the founder of the domestic company Mathematica Capital Partners, Marin Onorato.

Global Practices

He commented that this is a very important topic because in Croatia, high-net-worth individuals too often ask what to do with their money. Most often, he says, the first investments are directed towards real estate, but after a certain number, they start thinking about other asset classes.

– I do not think that real estate is a bad investment; on the contrary, it has been an excellent investment in Croatia over the past few years. However, diversification is a very important aspect of investing, especially in terms of preserving value for some new generations, which we can only see in long data series, says Onorato.

In the end, although we have established that standard family offices as found abroad do not exist in Croatia, the real question is where to direct high-net-worth individuals, or what options are offered to them in the domestic market instead of a family office. According to Onorato, there are various options.

– People can invest on their own, i.e., through a broker and thus expose themselves to all listed asset classes, but they can also give money to various funds operating in Croatia for management. However, we often hear that high-net-worth individuals go to foreign countries, most often to Switzerland, to obtain asset management services. And this was one of the many reasons for establishing our alternative investment fund management company, Mathematica Capital Partners. We wanted to provide the best global practices and strategies in Croatia and offer funds whose assets are managed as family wealth should be managed. To think long-term, but taking into account all circumstances to achieve an optimal return-risk ratio. A good portion of our investors are precisely individuals who have previously sold their successful businesses, concludes Onorato.