Summary
- A family office is a private company dedicated to the wealth needs of a single family.
- Services are wide-ranging and can include wealth management, investment advising, philanthropy, succession and estate planning, tax planning, personal assistance, and more.
- A family office is best for those with a net worth north of $100 million.
- Unbiased can connect you to an advisor to help answer your questions about wealth and estate planning, taxes, and more.
What is a family office?
A family office is a private company with a dedicated team of wealth management experts that provides specialized services for a family’s complex financial situation.
A dedicated staff can help unify goals and clarify how wealth is invested, managed, and transferred within a family.
Some of the duties may include:
- Tax planning, accounting, and compliance
- Investment advisory
- Risk management
- Administrative functions
- Trust and estate planning
- Philanthropy
- Business succession
Many families who choose to use the services of a family office have finances that have become more complex than they can handle. It’s also common to establish
How much money do you need to use a family office?
A family office starts to make sense when you have a net worth of over $100 million.
As a family office can cost more than $1 million each year to operate, at $100 million dollars, a family office makes more sense than hiring a wealth management firm.
Below this level, you may pay less by hiring a multi-family office or a wealth management firm.
What does a family office offer?
The main draw of a family office is the wide range of services tailored to a single family's needs. This focus is a valuable service for families with complex financial situations. Privacy and continuity planning are also important.
Some of the main services a family office provides are outlined below. Financial advisors, attorneys, managers, accountants, and assistants all make up a family office.
Tax planning, accounting, and compliance
Tax planning is essential to preserve wealth for high-net-worth individuals. A family office can centralize tax planning and efficiently transfer assets within legal bounds. Financial reporting and compliance are also essential for individuals with complex financial and legal structures.
Investment advisory
A family office can offer more personalized advising for investments. The family office may oversee portfolio construction, asset allocation, alternative investments, property management, and more.
Financial planning and wealth advisory
The family office can handle long-term financial planning, retirement, education, cash flow, and funding other life events. Integration and comprehensive services provided by a family office can prove valuable.
Risk management
Risk management in a family office can proactively identify risks and introduce a framework to protect the wealth, reputation, and security of the family. Issues addressed can include reputation, enterprise and personal risk, personal security, insurance, cybersecurity, and more.
Administrative functions
The family office can handle day-to-day operations of the family, such as paying bills, estate upkeep, luxury asset management, personal assistance, concierge services, and more.
Trust and estate planning
Trust and estate planning within the family office focuses on the efficient transfer of wealth. The family office works with your legal team to advise you on the pros and cons of each type of legal structure. The family office can also help distribute assets to beneficiaries according to the family’s wishes.
Philanthropy
A family office can establish a unified mission for creating meaningful impact through philanthropic pursuits and donations. Families can play a larger role in sharing values and responsibility for their wealth.
Business succession
A family office offers the opportunity to put a business succession plan in place and communicate it with family members, which ensures continuity of the business. Roles and expectations are laid out. It offers the opportunity for younger generations to participate in the decision-making process.
What are the different types of family office?
There are three main types of family offices.
Single-family offices (SFOs): A single-family office is dedicated to the needs of one family. It can support multiple generations, households, and branches of the family. You have complete control over operations, investing decisions, tax planning, wealth transfer, and more.
Multifamily offices (MFOs): A multifamily office manages the wealth of several families. Like a single-family office, they offer highly personalized services, but have more than one family they serve. Multi-family offices could make sense for families with a net worth between $50 million and $100 million.
Virtual family office: A third type of family office is the virtual family office, where services are outsourced to external advisors. Services provided are more cost-effective.
What are the benefits of a family office?
A family office stands out for its personalized services and dedicated staff. Some of the benefits can be summarized as follows:
- Highly personalized services: There’s no limit to what a family office can offer you in wealth services. Whether you’re managing a large real estate portfolio, an NBA team, or preserving wealth for the next generation, a family office is tailored to meet your needs.
- More control and privacy: Family offices offer more control and privacy in all aspects, whether it's investment decisions, trust funds, or succession planning.
- Wealth transfer and succession: Family offices are set up to educate and train the next generation on their wealth, roles, and responsibilities. Beneficiaries should be aware of investment strategies, tax and estate planning, and how the family governance operates. Family offices can help prepare families and future generations to manage wealth.
- Greater communication and governance: Most families don’t lose their money on bad investments. Most wealth is lost through undisciplined family governance, unclear expectations, and infighting. A family office can help offer the vision, guidance, and clarity a family needs to thrive.
- Help meet philanthropic goals: A family office can help the family meet their philanthropic goals and establish a legacy.
Bottom line
A family office is valuable in its comprehensive, personal service. Everything is handled in-house, offering greater privacy and control.
It can be difficult to decide on the type of structure you need for your wealth. Unbiased can match you to an advisor with the expertise and experience to answer all your questions. An outside perspective can be immensely helpful for all the complex issues wealth brings.
Connect to a financial advisor today.