A Brief Guide to the Family Office

guide for family office

Family offices are an increasingly common concept as more people become wealthy in the United States and around the world and look for ways to handle their finances with the ultimate goal of hopefully being able to not only preserve but grow their wealth and transfer it across generations.

A family office’s primary function is wealth management, but there are often many other areas of focus. For example, tax and estate planning and charitable giving tend to be managed under the umbrella of a family office.

The following are things to know about family offices, which can be relevant if you’re a startup founder looking for capital, or you’re interested in investing in general.

An Overview of the Family Office

To put it in the most basic terms, a family office is an organization that deals with the administration of a family’s affairs. A “family” in this sense can be a wealthy individual, an actual family or there are multi-family offices sourced often through a family office database. More about multi-family offices are detailed below.

A family office usually college students handle financial and administrative management for individuals and families with assets of at least $100 million, although sometimes the threshold is described as $250 million or more.

The goal of a family office in the broadest sense is to provide a cost-effective financial management strategy with an inherent sense of privacy and control.

There are some philosophical objectives many family offices work to follow.

For example, they have a mission and well-defined, written process for decision-making and performance assessment.

A family office will also provide education to younger generations and will regularly work toward meeting long-term goals and objectives.

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Some of the other things a family office might work on include the acquisition of art, travel plans and school planning. Sometimes a family office is compared to a high-level concierge service.

The team that works at a family office can include wealth and investment managers, tax advisors, and lawyers.

Some of the considerations that play a role in family office needs include how many people are part of the family, the legal structure, and the type of investments.

Single- vs. Multi-Family Office

There are two broad distinctions in family offices—there are single- and multi-family offices. Single-family offices have become increasingly common in recent years.

A single-family office is a private group that manages not only the financial but the personal needs of one family or one individual. For a single-family office to be created, the minimum asset amount is around $50 million.

Multi-family offices, on the other hand, provide capital management to several families or individuals who aren’t related to one another. A multi-family office is more likely to be focused entirely on investments and wealth management as opposed to the personal dealings a single-family office might focus on.

A multi-family office is less expensive to be part of, and it’s typically a more structured environment with more clearly delineated employee roles.

Services provided by a multi-family office can include retirement and legacy planning, insurance planning, and risk management in addition to wealth management and estate planning.

Is It Better to Join a Multi-Family Office?

If you’re in the position of being able to join or start a family office, which is the better option? Single- or multi-family?

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When joining a multi-family office, there is a lower cost associated with services, and it gives you access to a broader level of expertise. On the other hand, a single-family office may be more expensive, but the family maintains more control over it.

They can select their own staff, and that staff works only with them, but that means these staff members have to be found and hired, which can be a challenge in and of itself.

Before joining a multi-family office, there are considerations to weigh. First, a family needs to know its own objectives and long-term strategy and goals before they can find a multi-family office to join.

They need to have a clear picture of the needed services, their net assets, and what type of communication they’re most comfortable with. For example, some might want to have ongoing and rather constant communication with their family office, while others might want updates quarterly.

If you’re interested in learning more about family offices and in particular, multi-family offices, it might be useful to select a software platform with a database of family offices. Family offices are inherently private, so it can be difficult to find information about them otherwise.