Test-Drive the Family Office Model

A Family Office serves as a family’s personal financial and administrative office, overseeing every aspect of a family’s financial affairs with the same degree of professionalism as a family business.


Family Office services vary depending upon the personal needs and professional expertise of the family members, and the nature of a family’s assets. The range includes everything from sophisticated strategic investment, tax and financial planning to concierge services. Most Family Offices provide trust administration, foundation management, personal tax planning and compliance, estate planning, investment recordkeeping, property management, and financial reporting services.

Most advisors to the high net worth community would agree that the Family Office model is the optimal wealth management model. Because the specific family members are central to the entire operation, a Family Office delivers advice and services that are most aligned with a family’s goals, needs and desires.

A Family Office does not replace a family’s existing team of professional advisors, but can make the team better coordinated, more efficient and more effective. By centralizing and organizing financial data, Family Offices can help a family and its team of advisors move from a “need to know” to a “can know” environment. With a Family Office, a family also benefits from:

• Leadership and coordination of a team of third party wealth advisors;

• One central source for information on, advice about or oversight of all of a family’s financial matters;

• Sophisticated professional advice that is unbiased, and based upon a total view of a family’s dynamics and financial situation;

• A completely confidential, family-focused environment;

• Continuity for managing multi-generational family entities, and perpetuating family values; and,

• Access to professional advisors who can help the family understand and assume the responsibilities associated with business succession, asset ownership, trusteeship, and corporate governance.

According to research done by the Family Office Exchange, a typical Family Office is overseeing at least $100 million. Most Family Office advisors would agree that the primary factor which justifies the existence and overhead of a Family Office is not net worth, but rather complexity – sheer numbers of transactions, entities and family members.


For the vast majority of the high net worth community, family net worth is below the $100 million “sweet spot”, and operating a Family Office is viewed as a time consuming endeavor that is simply not cost effective. The time requirements and operating costs parallel that of any other active business.

In recent years the concept of a “Multi-Family Office” (MFO) has gained considerable momentum as a Family Office alternative. The idea is that a small group of families can share personnel, technology and office space, but still access a high level of day-to-day personal attention and professional expertise. The typical point of entry is a much lower net worth of about $20 million.

Some law firms, accounting firms, and investment management firms are now offering “Family Office services” to their clients. The vast majority of firms that offer Family Office services to multiple families fall into one of two categories; the Chief Investment Officer (“CIO”) model, or the Chief Financial Officer (“CFO”) model.

• Under the CIO model, the core competency is investment strategy and asset management, with limited other wealth management services offered as both a convenience and a “loss leader”.

o Families most attracted to (and most eligible for) this model are those facing a liquidity event that results in an immediate need for portfolio strategy and management.

• Under the CFO model, the core competency is financial strategy and financial management: tax, estate, business and financial planning; recordkeeping, and reporting.

o Families most attracted to this model are those with established wealth that requires a significant amount of recordkeeping and sustainability related strategy (e.g., asset protection, tax minimization, governance, and family dynamics).

The skills and experience required to be a CIO are vastly different than that of a CFO. While some MFOs attempt to offer both, families often get stuck with a “single point of contact”. It may be best to engage two different firms that both get access to the entire family balance sheet – one to provide comprehensive investment strategy, and one to provide financial strategy and management.

An MFO can successfully replicate the benefits of a Family Office without some of the associated costs and administrative burdens under certain circumstances. With an MFO, a family is positioned more like a client than an employer. This seemingly subtle distinction can be dramatic, unless these critical Multi-Family Office attributes exist:

• The MFO must not sell any financial products;

• The family to advisor ratio must be very low - a dozen families, not a hundred;

• The MFO must charge fees on a fixed retainer, or based upon a percentage of assets under advisement - not hourly;

• The MFO must have experienced staff, capable of providing advisory services - not just administrative support;

• The MFO must have experienced staff, capable of leading a specific family’s existing team of wealth advisors; and,

• The MFO must have superior technology to handle complex financial transactions, to protect data, and to connect advisors.

Families looking for a Family Office experience must align themselves with an organization that can provide leadership and won’t ultimately leave them feeling either “sold” or “on-the-clock”. Professional guidance, open communication and mutual trust will drive-home the family-centric benefits of the Family Office model.