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Family Office Defined

family office is a privately held company that handles investment management and wealth management for a wealthy family, generally one with over $100 million in investable assets, with the goal being to effectively grow and transfer wealth across generations. The Rockefeller family first pioneered family offices in the late 19th century. Family offices started gaining popularity in the 1980s, and since 2005, as the ranks of the super-rich grew to record proportions family offices swelled proportionately.

Family offices have become more common in recent years after the rapid increase in valuations of technology companies have led to many people having newly created wealth. It’s arguable that no two Family Offices are alike which leads to the saying “When you have seen one family office you have seen one family office”. For this reason, we categorize the various firms encompassed by the term “Family Office” as follows:

  • Single family offices
  • Multi family offices
  • Family foundations
  • Family trusts
  • Asset management (Multi family office where registered investment advisors manage multi family investments)

Below is a detailed description of each of the family groups above to help guide you in your research. 

SFO (should be able to research family name) – A single-family office is a private company or similar entity which exists to fulfil a broad range of tasks on behalf of a single family. They are generally established only by families with a net worth in excess of US$150m and with sufficiently complex affairs to justify the expense – customarily in the order of 80 to 100 basis points of total assets under management (AUM).

MFO (no single-family affiliation) – A multi-family office (MFO) is a platform that provides professional services to a group of families or individuals, who share the same team of staff. MFO’s provide access to a wide range of experienced professionals and proven processes. Significantly, they are also much more affordable than SFO’s. However, it can be the case in some smaller MFO’s that one particularly ‘dominant’ family absorbs most the staff’s time, potentially to the exclusion of the other clients.

Family Foundation – tax-exempt organization generally established as either a trust or corporation under state law. Management responsibility rests with directors or trustees, and one of the main distinguishing factors from stand-alone charitable trusts is that private foundations can accept contributions from multiple donors. As a result, private foundations are often used by families seeking to establish a lasting charitable legacy, allowing for family members’ gifts to be pooled and then distributed to outside organizations (or used in-house) at the direction of the foundation.

Asset Management – focused more on personal service of individuals. The concept of asset management focuses on developing effective strategies for a family’s wealth. It deals with all financial aspects – financial planning, tax planning, portfolio management, retirement planning, estate planning, and more.