Making the Connection: How a Financial Advisor Can Help Establish a Family Office

Are you looking to learn what a family office is? Did you know you could have a team of experts managing every aspect of your family’s wealth, from investments and taxes to lifestyle needs like property management and travel arrangements?

For high-net-worth families, this is the reality, thanks to family offices. Let’s explore the functions of family offices, the various types available, and how to determine if now is the right time to establish one for your family.

What Exactly Is a Family Office?

A family office is a private wealth management advisory firm that offers comprehensive financial and personal services exclusively to high-net-worth (HNW) families. It is a centralized hub that manages all aspects of a family's wealth, including investment management, tax planning, estate planning, philanthropy, and business succession. 

Beyond financial management, many family offices also provide lifestyle services, such as property management and concierge services, like arranging travel or helping with property purchases and management. 

Ultimately, the goal of a family office is to preserve and grow the family's wealth, streamline complex financial affairs, and support the family’s long-term goals across multiple generations.

The Types of Family Offices

Single-Family Office

A single-family office (SFO) is the ultimate bespoke financial solution. It’s designed to manage the wealth of just one family—yours. Everything from investment management to succession planning is customized to your family’s unique goals and values.

An SFO offers the most personalized financial management but comes with significant costs. Initial startup expenses can range from $1 million to $2 million, covering legal fees, regulatory compliance, and staffing. In addition, the complex process of structuring the office, establishing governance, and creating legal entities can take several months to complete. 

Beyond that, annual operating costs can reach 1% to 2% of managed assets, with personnel compensation being a major driver. This hefty price tag means SFOs are typically reserved for families with at least $200 million in assets​.

The Rockefeller family office, founded in 1882, is a famous example of a successful family office.

Multi-Family Office

If you want the benefits of a family office but don’t need a fully dedicated team, working with a multi-family office (MFO) might be your sweet spot. MFOs serve multiple families, which means you can access wealth management, tax services, and more, but you share the costs with other families.

This option works for families with at least $30 million in assets, offering a balance between personalized service and cost efficiency. Many multi-family offices even offer outsourced family office services, further reducing costs while maintaining a high level of service.

In short, an MFO is like having access to top-tier services at a fraction of the cost, making it a smart choice for families who want expert financial management without the expense of a dedicated family office.

Virtual Family Office: Cutting-Edge Convenience at Your Fingertips

The virtual family office (VFO) is gaining serious traction in today's digital world. VFOs offer all the benefits of a traditional family office—investment management, tax services, concierge services—but everything is managed remotely.

This model is perfect for affluent families looking for flexibility and who don’t mind outsourcing services to cut overhead costs. A VFO can provide financial planning, risk management, and even strategic guidance—all through digital communication and technology.

What Services Do Family Offices Offer?

Family offices are like Swiss Army knives for your wealth—they do it all. Here’s a glimpse of the high-end services you can expect.

Investment Management

A family office oversees everything from private equity and stocks to real estate and hedge funds—to ensure your money grows in line with your family’s investment philosophy. Investment advisers aim to make wealth work harder by providing comprehensive wealth preservation and risk management strategies.

Tax and Estate Planning

Nobody likes taxes. The good news is that family offices specialize in tax planning and estate management to help you keep as much of your wealth as possible. From setting up trusts to optimizing philanthropic activities, they ensure your money stays in the family and out of the taxman’s hands. Advisory services are tailored to manage taxes for complex family businesses and multi-generational wealth.

Succession Planning

Wealth isn’t just about the now—it’s about the next generation. Family offices oversee succession planning and family governance, ensuring your family is set up for long-term success. Whether preparing your children to take the reins or laying down family governance rules, family offices ensure your family legacy stays strong, guiding future family members.

Concierge & Lifestyle Management: Because You Deserve It

From travel arrangements to property management, the concierge services offered by a family office mean your personal life runs as smoothly as your financial life. Need a private jet? Done. Vacation home staff? Handled. They take care of the details, so you don’t have to. This is especially valuable for client families with busy schedules or multiple residences.

Philanthropy with Purpose: Aligning Wealth with Your Values

Philanthropic planning is often a crucial part of managing wealth. Many affluent families want their money to make a difference, and family offices assist with establishing charitable foundations, structuring donations, and conducting due diligence. It’s not just about giving—it’s about giving purposefully, ensuring your wealth has a lasting, positive impact.

Is It Time to Establish a Family Office?

Now, here’s the million-dollar question (literally): Is it time for your family to establish a family office? Here are a few signs that it might be.

1. You Have Significant Wealth

Families with $10 million or more in net worth might want to start thinking about a family office to manage the complexities of their financial lives. Those with over $100 million? A single- family office might be in your near future.

2. Your Wealth Is Diverse and Complex

Managing multiple asset classes—like private investments, real estate, or hedge funds—can be overwhelming. A family office centralizes everything, giving you peace of mind.

3. You Want to Build a Legacy

Family offices are experts in succession planning and family governance, helping you not only grow your wealth but also safeguard it for the next generation. 

4. You’re Juggling Wealth and Lifestyle Needs

Managing properties, coordinating travel, and handling personal logistics can become time-consuming. A family office streamlines these processes so you can focus on what matters most.

Balancing Costs vs. Benefits: Is It Worth It?

The decision to start a family office requires careful consideration of the costs versus the benefits. Two recent reports provide valuable insights into this comparison.

The 2023 Global Family Office Compensation Benchmarking Report indicates that the average cost of running a family office ranges from 0.1-0.5% of Assets Under Management (AUM), with mature markets like the UK seeing higher costs of 0.6-1% of AUM.

Interestingly, according to the Benchmarking Survey Report: Costs of Running a Family Office, 2021 the family office's focus also impacts costs. Investment-focused offices incur the highest expenses (0.54% of AUM), while trustee and philanthropic offices are the most cost-effective (0.28% of AUM).

So, if your family had 100 million in assets, and your family office charged 0.54% on AUM, your annual cost would be $540,000. Some SFOs and MFOs charge fixed fees, tiered fees, performance-based fees, and special project fees, so your costs may change from year to year..

Plus, with proper guidance from a family office’s financial advisor, the benefits can significantly outweigh the costs, making it a worthwhile investment for many high-net-worth families.

The Aligned Perspective: Establishing a Family Office

If managing your wealth feels like a full-time job, or if you need help securing your family’s financial future for generations to come, now might be the time to explore setting up a family office. After all, it’s not just about managing money—it’s about building a legacy that lasts.