A wealth advisory firm, entity, or business unit established by a single family of wealth, or by or for a group of families, to manage their assets and affairs. Family offices provide a selection of personalized financial, investment, philanthropic, business, and/or other services, depending on their purpose, design, and goals.
A family office serves the unique yet complex needs of one or more UHNW families of wealth. Although a common misconception is that “if you’ve seen one family office, you’ve seen one family office,” family offices have many areas of commonality and can be sorted into understandable categories, depending on their breadth of offerings, number of families served, whether the office is part of an institutional entity, and whether a family business is present. The objective is to aggregate and coordinate the financial and other affairs of a wealthy family by assembling the right collection of resources to accomplish desired goals.
The term family office is frequently used as synonymous with single family office, i.e., an entity designed to serve the needs of one family with very significant wealth (in the US, typically well above $100 million – $250 million USD, depending on various factors). However, there are several types of family offices, with one classification scheme including the following nine types:
- Traditional family office – a business entity providing solutions over a broad range of service and advisory needs, typically through its own staff and often with close involvement by the founding principals or family
- Administrative family office – often limited to noninvestment-related activities and focused on managing personal asset and family activities, outsourcing investment management
- Embedded family office – a set of activities (rather than a separate business entity) integrated in the family business or operating company of the founding family
- Real estate family office – founded and continued by a predominantly real-estate-owning family that maintains a focus on real estate in its investing behavior and operations
- Active trader family office – typically a larger family office that takes an institutional approach to managing its assets, often focused on capital markets, private equity, and hedge fund operations
- Direct investments family office – often derived from investment banking and private equity, these offices focus on finding, evaluating, and managing direct investments
- Traditional multifamily office (MFO) – a professional service and/or advisory firm that provides a broad range of services for multiple unrelated families possessing at least $30 million to $50 million (USD) in net worth
- Commercial MFO – created or acquired by institutional financial service firms as a way to attract and serve wealthier, more complex families with extended banking, commercial, capital markets, and other needs
- Virtual family office – an office that coordinates delivery of services through a small in-house staff plus a range of third-party providers drawn from their network
See Also: Single-family office, Multi-family, Practice setting
Investopedia. “What is a Family Office and Do You Need One?” Last modified February 18. 2024. https://www.investopedia.com/terms/f/family-offices.asp
Kirby Rosplock. The complete family office handbook: A guide for affluent families and the advisors who serve them (Second edition). John Wiley & Sons, 2021
William I. Woodson and Edward V. Marshall. The family office: A comprehensive guide for advisers, practitioners, and students. Columbia University Press, 2018
