A family office can serve as a vital tool for managing wealth, preserving legacy, and achieving goals. But how exactly does one go about starting a family office? In this guide, we break down the key steps to creating a successful family office tailored to your unique needs.
What Is a Family Office?
A family office is a private wealth management advisory firm that serves a single family. Unlike traditional wealth management firms, family offices offer a highly customized suite of services, including investment management, tax planning, estate planning, and philanthropic advisory. Some family offices also manage the family's day-to-day affairs, such as bill payments and household staff management.
Family offices come in two main types:
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Single-family offices (SFOs): Dedicated to managing the wealth and affairs of one family.
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Multi-family offices (MFOs): Cater to multiple families, pooling resources for cost efficiency.
Step 1: Define Your Objectives
The first step in starting a family office is to clearly define its purpose. Ask yourself:
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What are the primary financial and non-financial goals?
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Do you need investment management, estate planning, or both?
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How involved do family members want to be in decision-making?
Defining objectives early ensures your family office aligns with your values and long-term aspirations.
Step 2: Evaluate Costs and Feasibility
Starting a family office is not a trivial expense. Single-family offices often require a minimum of $100 million in assets under management to be cost-effective, given the high operational costs. Key expenses include:
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Staffing (financial advisors, legal experts, accountants, etc.)
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Technology and infrastructure (wealth management software, reporting tools)
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Office space and operational overhead
For families with fewer assets, partnering with a multi-family office can provide access to similar services at a fraction of the cost.
Step 3: Assemble Your Team
The success of your family office depends on the strength of its team. A typical family office team might include:
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Chief Investment Officer (CIO): Oversees investment strategies.
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Accountants and Tax Specialists: Handle tax planning and compliance.
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Legal Advisors: Ensure estate planning and regulatory adherence.
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Philanthropy Advisors: Assist with charitable giving strategies.
You may also need support staff for administrative tasks and family liaison roles. Ensure that team members share your family’s values and have a proven track record in their respective fields.
Step 4: Choose the Right Technology
Modern family offices rely heavily on technology to streamline operations and provide transparency. Consider implementing wealth aggregation tools to consolidate portfolio information and workflow engines to manage recurring tasks like capital calls or compliance checks. Robust document management systems can also help organize key records and contracts.
Step 5: Establish Governance Structures
Governance is critical for ensuring the smooth operation of your family office. Define roles and responsibilities clearly, and establish decision-making protocols to avoid conflicts. Many families create a family council or advisory board to oversee major decisions and provide strategic guidance.
Transparency is key. Regular family meetings and clear reporting help maintain trust and alignment among family members.
Step 6: Focus on Succession Planning
A family office should be built to last for generations. Succession planning ensures the continuity of your family’s values and financial strategies. Involve the next generation early, providing them with financial education and opportunities to participate in decision-making.
Step 7: Engage Trusted Partners
Few family offices operate in complete isolation. External partners—such as fund managers, estate attorneys, and investment consultants—can provide specialized expertise and enhance your office’s capabilities. Building a trusted network of advisors ensures you can tackle complex financial and legal challenges effectively.
Final Thoughts
Starting a family office is a significant undertaking, but it can be one of the most impactful decisions for preserving and growing family wealth. By carefully defining objectives, assembling the right team, and leveraging modern tools and governance structures, you can create a family office that serves your family’s unique needs for generations to come.
Are you considering starting a family office? Contact us for tailored advice and resources to guide your journey.
