Multi-family office

A for-profit comprehensive wealth advisory firm or business unit that caters to ultra-high-net-worth (UHNW) individuals and unrelated discrete families. MFOs offer a range of services from narrowly focused on financial and investment matters to a wide range of financial and nonfinancial services. Alternative spelling: multifamily office.

The term “multi-family office” or MFO is widely used in the wealth management industry but has not yet been precisely defined with accepted standards. Some industry observers believe the term has no established basis and should never be used. Most professionals simply recognize that the term has had growing recognition over the past thirty years, even if there is inadequate validity or consistency in its use.

In more responsible firms, the primary goal of an MFO is to provide integrated and personalized wealth management services that align with the long-term objectives and priorities of UHNW individuals and their families. MFOs typically have multidisciplinary professional staff (e.g., CPAs, CFPs, CFAs, JDs) who demonstrate professional competencies and have the experience required to serve this level of wealth appropriately.   Many but not all MFOs rely on managing investments for the family and derive investment management fees to subsidize the additional services which some families may or may not utilize.

There are various business and service delivery models for MFOs.  These models include having all services fully delivered in-house, some services available on referral to external vendors or provider, or a network-type hub-and-spoke model where a majority of core services are offered in-house while outsourced services are integrated via the MFO advisor or advisory team. Some wealth advisory firms provide the same services that an MFO offers but do not identify themselves as a multi-family office.

Family Wealth Alliance (FWA) has proposed four standards for what defines a true MFO. These include the following: 

1. the nature of the clientele – at least ten complex multigenerational client family relationships with a median of $30 million net worth, within a firm with at least $1 billion AUM.
2. the services that are offered – ten core services offered in an integrated service delivery model.
3. the nature of the service delivery – client-centered; transparent in fees, products, and service relationships; fully regulatory compliant; no conflicts of interest; customized; a definable consistent process for working with outside providers.
4. experience – minimum three year existence; credentialed staff; stability in ownership and management; involvement with the professional field.  

Although these standards are well-grounded and often cited by the UHNW Institute and other organizations, they are not required for a firm to call themselves an MFO. This allows a wide variety of wealth management firms at the HNW and UHNW levels to advertise they are “a multi-family office” to attract clients and compete in the marketplace.