What Is a Family Office? Structure, Purpose and Cost

A family office is a private organisation that centralises the management of a single family's capital, governance, administration and, often, its succession and philanthropy.

Key takeaways

A family office manages decisions, not just money: allocation, governance, administration and continuity.

The two main forms are the single family office (SFO) and the multi-family office (MFO).

Running a dedicated SFO typically only becomes efficient at substantial scale; below it, an MFO is usually more rational.

Governance and succession, not investment returns, are what most often determine whether it endures.

What a family office is

A family office is the private structure a wealthy family uses to manage its capital and affairs in one coordinated place. It sits above individual investments and advisers, and its job is coherence: making sure that allocation, tax, legal structure, reporting, and succession all point in the same direction.

What it actually does

The remit varies, but most family offices cover some combination of investment management and allocation, consolidated reporting, tax and legal coordination, administration of entities and property, philanthropy, and the education of the next generation. The best of them treat the last item as seriously as the first.

Single vs multi-family

A single family office (SFO) serves one family exclusively. It offers maximum control and privacy, at maximum cost. A multi-family office (MFO) serves several families and shares its infrastructure across them, trading some bespoke control for far lower cost and immediate access to expertise. The choice is mostly a function of scale and temperament.

What it costs

A dedicated SFO carries real fixed costs: senior staff, systems, compliance, premises. Those costs are only rational above a certain level of assets, because below it they consume a return the family could have kept. An MFO converts most of that fixed cost into a variable fee, which is why it is the sensible default for all but the largest fortunes.

When it makes sense

The trigger is rarely a number alone. It is complexity: multiple entities, jurisdictions, operating businesses and family branches that can no longer be coordinated informally. When the cost of disorder exceeds the cost of structure, a family office earns its keep.

Frequently asked questions

What is a family office?

A family office is a private organisation that manages the wealth, structures and affairs of a single wealthy family in one coordinated place. Its purpose is continuity: preserving and growing the family's capital, and the family itself, across generations.

How much money do you need for a family office?

A dedicated single-family office typically makes sense from a few hundred million dollars in investable assets, given a running cost of roughly one to several million a year. Lighter models such as a multi-family office or a virtual family office extend the idea down to the low tens of millions.

What does a family office do?

It coordinates investment management, tax and legal structuring, reporting, governance, succession and often lifestyle and philanthropy, so the family manages its wealth through one accountable organisation rather than a scatter of separate advisers.

What is the difference between a family office and a private bank?

A private bank sells the family products and profits from doing so. A family office works only for the family, as a fiduciary, and is built to serve its interests rather than to sell to it.

This guide is educational and general in nature. It does not constitute investment, legal, tax or financial advice.