The Family Office
What is a Family Office?
A family office is essentially a wealth management advisory organisation which provides services to UHNW (Ultra-High Net Worth) individuals or families. This differs from a “normal” wealth management firm in that its sole purpose is to provide a complete solution to managing the financial requirements of a particular individual or family.
Naturally, financial planning and investment management are a big part of this, but many family offices will also cover such matters as budgeting, insurance, tax considerations, charitable giving and philanthropy, wealth transfer planning, concierge services and more.
Some provide a wider scope of services, which in other families might fall to different staff members. These can include property management, payroll, legal services, governance, trusts and estates, household staff management, and travel management including yachts and aircraft.
As wealth is often passed down to the next generation of the family, many see part of the responsibility of the office as ensuring that the younger members of the family are properly educated in how their wealth is handled.
Single vs. Multi Family Offices
A large family office can cost over US$1million per year to operate, so to make financial sense it’s typically families with complex financial affairs and investable assets of US$50-100million+ who operate their own offices.
For this reason, whilst family offices are often just for one family, an office might be shared between a small number of families or individuals. These are usually referred to as Single Family Offices (SFO) or Multi-Family Offices (MFO) respectively.
In the same manner as a “normal” corporation, there are officers and support staff working within both varieties. Officers are typically compensated not only with a salary, but with incentives based on the profits or capital gains they generate – much as they would be in a similar role in a corporation. Staff are usually permanent employees of the legal entity that is the family office, and might report to the head/leader of the office (equivalent to a CEO), or to the family’s principals directly.
Some family offices make their own investments in private equity, venture capital, real estate or hedge funds, and others allocate funds to outside management firms in order to make investments.
Multi-family offices (MFOs) provide essentially the same services as a single family office (SFO), but working for a group of families or individuals. Staff within these might be assigned to a particular family’s account, or work across the requirements of all the families the office represents. This setup is much more like a traditional wealth-management firm with multiple clients, however it remains focussed on the matters pertinent to the families’ needs.
Because of this broader approach, MFOs tend to concentrate on core professional services such as financial and investment management, legal advice, trusts and governance. MFOs are sometimes independent businesses, actively seeking new families to represent as they grow.
Is a Family Office the same as a Wealth Advisory Firm?
Not as such. While there is obviously some crossover in services offered, a wealth advisory firm will typically have many clients potentially from a broad spectrum of sectors. A family office focusses on one client – i.e. the family in question (or several in the case of MFOs – but typically a small number). As mentioned earlier, a family office might well do more than offer financial advice – the responsibilities in managing the family’s household affairs can be quite broad. The undertakings of a family office can vary a great deal, specific to the needs of a particular family or individual.
Staff Roles within a Family Office
As the responsibilities of an office can vary with the particular family, so the staff required to operate it might also differ. However, common roles include:
- CEO / Head / Leader
- Investment managers
- Legal counsel
- Tax specialists
- Financial analysts
- Wealth planners
- Trust officers
- Accountants
- Asset managers
- Philanthropy experts
- Family governance experts
- Executive assistants
At Pembury Partners, we recognise that no two family offices are identical. We offer consultation and advice to principals and their executives seeking to set up or expand a family office.
We have great experience discretely placing members of staff in this arena, and have done so globally on a regular basis.
