Family Office
A family office is a private wealth management advisory firm that provides financial, legal, and other services to a single family or a group of closely related families.
It’s a type of financial institution that is set up specifically to manage the financial affairs of a wealthy family or group of families.
Family offices are typically created to manage the complex financial needs of ultra-high-net-worth individuals (those with a net worth of $100 million or more).
The services provided by a family office can vary widely, but they typically include investment management, tax planning and compliance, estate planning, philanthropic planning, and other financial and legal services.
Some family offices also provide concierge-type services, such as travel planning and personal assistance, to their clients.
One of the main benefits of a family office is that it allows wealthy families to centralize the management of their financial affairs and to have a single point of contact for all of their financial needs.
This can help to streamline the process of managing a complex financial portfolio and to ensure that all financial decisions are aligned with the family’s overall goals and values.
In addition to providing financial services, family offices can also serve as a gathering place for members of a family to discuss financial matters and to make important decisions about the future of the family’s wealth.
This can help to develop a sense of unity and collaboration within the family and to ensure that everyone is working towards common goals.
Key Takeaways – Family Office
- Typical Clients – Ultra-High-Net-Worth (UHNW) individuals and families, often with multi-generational wealth, complex asset structures (including operating businesses, multiple properties, international holdings), and sophisticated personal needs.
- Typical Assets – Generally starts around $25 million – $50 million, extending into the billions.
- Multi-Family Offices (MFOs) serve several families and might have minimums starting from $10M – $25M+. They share overhead costs and expertise.
- Single-Family Offices (SFOs) serve only one family and are typically viable for families with $100M+ due to the high operating costs.
- Services Offered – The most comprehensive and integrated level of service, acting like a dedicated CFO and COO for the family’s entire financial and often personal life. Includes all Private Banking services plus:
- Highly customized, institutional-level investment management (including direct investments).
- Management of complex holdings (real estate, private businesses, collectibles).
- Consolidated reporting across all assets, entities, and custodians.
- Advanced tax and estate planning across generations and jurisdictions.
- Family governance support (family meetings, mission statements, education for next generations, succession planning).
- Risk management (personal security, complex insurance needs).
- Philanthropic foundation management.
- Administrative services (bill pay, bookkeeping, aircraft/yacht management, property management).
- Lifestyle management and concierge services.
- Structure/Fees – SFOs are private companies owned/controlled by the family. MFOs are independent firms. Fees can be AUM-based, a flat retainer, or based on actual costs (especially for SFOs). Control, customization, and privacy are paramount.
What Are the Central Roles of a Family Office?
A family office is a private wealth management firm that provides a range of financial and other services to a single family.
The purpose of a family office is to manage and oversee the financial affairs of the family, including preserving and growing the family’s wealth, managing investments, and providing financial advice.
Family offices can also provide a range of non-financial services, such as legal and estate planning, philanthropy, and family governance.
There are several key purposes of a family office:
Wealth management
The primary purpose of a family office is to manage and oversee the financial affairs of the family.
This includes preserving and growing the family’s wealth through careful investment planning, as well as managing the family’s assets and liabilities.
Financial planning
A family office can provide a range of financial planning services to help the family achieve its financial goals, including retirement planning, estate planning, and tax planning.
Non-financial services
In addition to financial services, a family office can provide a range of non-financial services to the family, such as legal and estate planning, philanthropy, and family governance.
Family education
A family office can also play a role in educating and advising family members on financial matters, helping to ensure that the next generation is well-equipped to manage the family’s wealth.
Overall, the purpose of a family office is to provide a comprehensive range of services to help the family manage its wealth and achieve its financial and non-financial goals.
Who Needs a Family Office?
A family office is a private wealth management advisory firm that provides financial and investment services to high-net-worth individuals and their families.
These services can include managing investments, estate planning, tax preparation, philanthropy, and financial education.
Family offices often handle the financial affairs of multiple generations of a single family, and may also manage the day-to-day needs of the family, such as paying bills, arranging travel, and coordinating family events.
Family offices are typically used by families with significant wealth, as the services they provide can be expensive and have significant fixed costs.
However, the level of wealth required to justify using a family office can vary.
Some families may choose to use a family office if they have complex financial affairs that require specialized expertise to manage, or if they want to centralize their financial decision-making and have a single point of contact for all of their financial needs.
Other families may use a family office to help them preserve and grow their wealth over multiple generations, or to ensure that their wealth is distributed according to their values and priorities.
How To Start A Family Office From Scratch
How a Family Office Makes Money
Family offices can make money through a variety of means, including:
- Investing in various assets such as stocks, bonds, real estate, and alternative investments like private equity and hedge funds.
- Providing wealth management services to the family, such as financial planning, tax preparation, and estate planning.
- Generating income through businesses and investments owned by the family office.
- Charging fees for the services they provide to the family, such as investment management fees or advisory fees.
- Engaging in philanthropic activities and charitable giving, which can also generate tax benefits for the family.
The specific ways in which a family office generates income will depend on the particular goals and needs of the family it serves, as well as the size and complexity of managing the family’s wealth.
Types of Family Offices
There are two main types of family offices: single-family offices and multi-family offices.
Single-family office
A single-family office is a financial advisory firm that serves the financial needs of a single family.
These offices are usually set up by wealthy individuals or families to manage their financial affairs, including investments, tax planning, estate planning, philanthropy, and legal and accounting services.
They may also provide lifestyle management services, such as travel planning and concierge services.
Multi-family office
A multi-family office is a financial advisory firm that serves the financial needs of multiple families.
These offices typically provide the same range of services as single-family offices, but for multiple families.
Multi-family offices may be set up by financial firms or by a group of families who have pooled their resources to access a wider range of financial services.
Both single-family offices and multi-family offices offer personalized financial advice and services to their clients.
They typically have a team of financial professionals, such as investment advisors, financial planners, and accountants, who work closely with the family to develop a financial plan that meets their specific needs and goals.
Regulatory Environment
Registration Requirements
Single Family Offices (SFOs) are typically exempt from registering as investment advisors under the Dodd-Frank Act. That is, provided they meet specific criteria such as managing assets solely for one family and not holding themselves out as serving the public.
In contrast, Multi-Family Offices (MFOs), which cater to unrelated families, are generally required to register with the SEC or relevant state regulators as Registered Investment Advisors (RIAs).
Compliance and Oversight
While SFOs may escape formal SEC oversight, they still face fiduciary, legal, and tax compliance obligations.
MFOs, being regulated entities, must implement formal compliance programs, designate Chief Compliance Officers (CCOs), conduct annual reviews, and meet disclosure and reporting requirements similar to traditional advisory firms.
Detailed Setup Process
Legal Structure and Location
The first step is choosing the legal entity – often a limited liability company (LLC) or limited partnership (LP).
Jurisdiction matters, with families often selecting tax-favorable states or countries with strong legal privacy protections.
Initial Hires and Timeline
Establishing an SFO can take 6–18 months.
Early hires typically include a CEO or Managing Director, legal counsel, and a small operations team.
Consultants may be brought in to handle setup planning, vendor selection, and infrastructure deployment.
Operational Challenges and Risks
Cost and Complexity
Running a family office is expensive – operational costs for an SFO often exceed $1 million annually, with some far higher depending on scope.
Sophisticated risk systems, travel coordination, and concierge services add layers of complexity.
Talent and Key Person Risk
Attracting and retaining professionals with deep expertise in law, investments, and private equity is challenging.
Dependence on one or two key figures (e.g., CIO or lead advisor) can pose continuity risks if succession planning is weak.
Family Dynamics and Governance
Family conflict, unclear governance, and lack of generational alignment can derail operations.
Disputes around control, investment decisions, or succession are common challenges.
Cybersecurity and Data Protection
Family offices are high-value cyber targets due to their wealth and privacy.
Many offices lag behind institutional standards in digital security infrastructure.
As such, this is a growing concern.
Staffing Structure and Key Roles
Typical Organizational Chart
A mature family office may include:
- CEO or Managing Director – Oversees strategy and staff
- Chief Investment Officer (CIO) – Handles portfolio strategy and manager selection
- Chief Financial Officer (CFO) – Manages budgeting, taxes, and financial reporting
- General Counsel or Head of Legal – Covers structuring, compliance, estate planning
- Operations Manager – Oversees vendors, technology, and internal workflows
- Philanthropy Officer – Coordinates giving, foundations, and impact strategies
Support staff may include accountants, analysts, executive assistants, and family liaisons.
Investment Philosophy Details
Core Philosophies
Family offices typically focus on long-term capital preservation, intergenerational growth, and tax efficiency.
Portfolios may include:
- Public markets
- Real estate
- Private equity and venture capital
- Hedge funds and alternatives
- Direct investments in operating businesses
Trends and Customization
Many pursue ESG and impact investing, especially among younger generations.
There’s also a growing trend toward direct investing, where families acquire equity stakes in private companies rather than relying solely on funds.
Technology Integration
Systems in Use
Technology is increasingly critical for:
- Portfolio Management – Real-time tracking and rebalancing
- Consolidated Reporting – Unified view across custodians and asset classes
- Communication – Secure messaging and document sharing
- Operational Efficiency – CRM software, task tracking, and expense management
Challenges
Selecting and integrating systems across multiple service providers is often difficult.
Some offices build proprietary platforms. Others use vendors like Addepar, Eton Solutions, or Arch.
Performance Measurement and Benchmarking
Investment Performance
Due to bespoke portfolios, benchmarking is difficult.
Many family offices compare performance to a mix of custom indices, peer groups, or absolute return targets rather than broad indices like the S&P 500.
Operational Metrics
Success is also measured by non-investment KPIs:
- Tax efficiency
- Cost control
- Governance effectiveness
- Succession readiness
- Family satisfaction
Current Trends and Evolution
Rising Professionalization
Family offices are becoming more institutional.
They hire former hedge fund managers, CFOs, analysts, and lawyers from top firms.
Governance structures, formal investment committees, and risk oversight are increasingly common.
SFO vs. MFO Dynamics
The high cost of running an SFO is leading some families to shift toward MFOs for shared infrastructure and professional-grade services.
MFOs also offer diversified access to deal flow, networks, and specialized advisors.
Next-Gen and Sustainability
Younger family members are demanding transparency, digital tools, and sustainable investing options.
Offices are evolving to include education programs and impact-driven mandates.
Detailed Cost Breakdown
Operating Budgets
An SFO typically costs $1.5–10 million+ annually, depending on scope, staff size, and services.
Smaller offices serving under $250M in assets may run lean with budgets closer to $1M, but scale quickly with complexity.
MFO Fees
Multi-family offices generally charge:
- AUM-based fees (e.g., 0.25%–1.0%)
- Flat retainers (e.g., $150,000–$500,000 annually)
- Project-based pricing for estate planning, tax work, or special investments
Fee structures vary widely based on service scope and customization level.
FAQs – Family Office
What is the purpose of a family office?
A family office is a private wealth management advisory firm that serves the financial needs of high-net-worth individuals and their families.
The primary purpose of a family office is to manage the financial affairs of the family and to preserve and grow the family’s wealth over time.
This can include a wide range of activities, such as investment management, tax planning, estate planning, philanthropy, and risk management.
A family office may also provide a range of personal services to family members, such as concierge services, travel planning, and personal assistants.
The goal of a family office is to allow the family to focus on their personal and professional pursuits, while the family office handles the financial and administrative aspects of their life.
What qualifies as a family office?
There is no specific legal definition of a family office, and the term can be used to describe a wide range of private wealth management advisory firms that serve the financial needs of high-net-worth individuals and their families.
Generally, a family office is a company or organization that is established and funded by a wealthy family to manage their financial affairs and provide a range of personal and professional services to family members.
There are two main types of family offices: single-family offices and multi-family offices.
A single-family office is established and funded by a single wealthy family to serve their specific needs and is typically run by members of the family or trusted advisors.
A multi-family office, on the other hand, serves multiple families and is typically structured as a business that provides wealth management services to its clients.
A multi-family office may be more economical for many families, as the fixed costs may be lower, as many families are managed under one umbrella. But it may provide less personalized services.
To qualify as a family office, a company or organization must typically be focused on providing financial and related services to a single family or a small group of families.
In addition, a family office should be independent and not affiliated with any other financial institutions or product providers, so that it can act in the best interests of the family without conflicts of interest.
How much money do you need for a family office?
There is no specific amount of money that is required to establish a family office.
The cost of setting up and running a family office will depend on a number of factors, including the size of the family and the complexity of their financial affairs, the services that the family office will provide, and the location and overhead costs of the office.
Generally, a family office is intended for high-net-worth individuals and families who have significant assets and a need for professional financial management.
The amount of assets or net worth required to justify the establishment of a family office will vary depending on the circumstances, but it is typically in the range of tens of millions of dollars.
Some sources suggest that a net worth of at least $100 million is needed to justify the cost of setting up and running a single-family office, while others suggest that a net worth of at least $50 million is sufficient.
It is important to note that the cost of setting up and running a family office can be significant, with operating costs that can exceed seven figures, and it is not a decision that should be taken lightly.
Families should carefully consider whether the benefits of a family office justify the costs, and should seek professional advice to determine the most appropriate structure for their needs.
What is the difference between a family office and a private foundation?
A family office is a private wealth management organization that provides financial, tax, legal, and other services to a single family (most common) or multiple families (less common).
The main purpose of a family office is to manage the financial affairs of the family and to help preserve and grow the family’s wealth over time.
A family office may be structured as a corporation, a trust, or a partnership, and is typically owned and controlled by the family it serves.
A private foundation, on the other hand, is a type of charitable organization that is funded by a single individual, family, or corporation.
Private foundations are typically established to fund charitable causes, such as education, health care, or the arts, and are required to distribute a certain portion of their assets to charitable organizations each year.
Private foundations are tax-exempt and are subject to specific rules and regulations set forth by the Internal Revenue Service (IRS).
While both family offices and private foundations may engage in philanthropic activities, the primary focus of a family office is to manage the financial affairs of the family and preserve and grow the family’s wealth, whereas the primary focus of a private foundation is to fund charitable causes.
What other names do family offices go by?
Family offices also go by the terms private investment office, strategic philanthropy advice, and private company services.
What types of fees do family office operators charge?
Family offices may charge fees for their services, often as a percentage of assets under management or as an hourly rate.
They may also receive performance-based incentives if they achieve certain predetermined goals.
Conclusion – Family Office
A family office is a financial services company that provides a range of financial and investment-related services to a single family or group of closely related families.
These services can include asset management, tax planning, estate planning, philanthropy, and other financial and investment-related functions.
The purpose of a family office is to help the family manage, preserve, and grow its wealth over time.
One of the main purposes of a family office is to manage the family’s financial assets, including investments, real estate, and other financial holdings.
This can involve developing and implementing a long-term investment strategy, monitoring and evaluating investments, and making changes as necessary to ensure that the portfolio is aligned with the family’s goals and risk tolerance.
A family office may also provide tax planning and estate planning services to help the family minimize its tax burden and protect its assets for future generations.
This can include developing and implementing strategies for charitable giving, setting up trusts and other estate planning vehicles, and advising on tax-efficient investment and wealth transfer strategies.
In addition to managing financial assets and providing financial planning and advice, a family office may also help the family with philanthropy and charitable giving.
This can involve identifying and researching potential charitable organizations and causes, developing giving strategies, and assisting with the implementation of charitable initiatives.
Overall, the purpose of a family office is to provide a comprehensive range of financial and investment-related services to help the family manage, preserve, and grow its wealth over time.