What Exactly is a Family Office?

by Daniel Conn on Jun 08, 2017

Family offices are among the most rapidly growing investment vehicles in today’s economy. In fact, approximately half of the family offices around today were founded in the past 15 years. However, it is difficult to estimate just how many family offices there are in existence, because the definition of a family office can vary so widely.

A family office can be any type of organization that manages large, private wealth. They can either be family-owned companies designed to pool the family wealth, or they can be private companies or even departments within a bank dedicated to providing financial services to these clients. Furthermore, a family office can either be a “single family office” or a “multi-family office” providing services to other families as well.

Functions of a Family Office

The simplest way to define a family office might be to say that it is an organization that provides day-to-day administration and management of family wealth and affairs. This means that a true family office needs to provide more than standard asset management services. While an organization does not need to provide all of the services mentioned above to be considered a family office, it should provide some range of these services.

Since the individual services of a family office are usually specific to the client, there is no all-inclusive package that can be offered. Some of the more common services that your family may require are listed below:

  • Investment Strategy and Implementation - Investment policy development, in-house portfolio management, custodial oversight, special asset class research and more.
  • Integrated Financial Strategies - Balance sheet analysis, retirement planning, bank financing analysis and more.
  • Client Information Management - Cash flow analysis, monthly entity accounting and reporting, recordkeeping for personal property and more.
  • Wealth Transfer Planning - Development of objectives, multi-generational snapshot of existing strategies, financial modeling of alternative strategies, action plan to implement changes and more.
  • Trusteeship Services - Cost analysis and negotiation of trustee fees, selection and training of trustees and protectors, estate administration and more.
  • Liability Management - Trustee liability audit, life insurance analysis, personal security and more.
  • Lifestyle Enhancements - Personal bill paying, property management, cash flow management.
  • Family Continuity/Client Education - Family governance, leadership training, career planning, coaching and mentoring and more.
  • Family Philanthropy - Personal giving programs, foundation trustee training, private foundation management, governance and board development and more.

A family office can also handle issues that are not strictly financial, such as private schooling, automobile maintenance, etc. Remember that there is no standard package for family office services, so it is important to build your family office to tailor to the specific needs of your family.

Daniel Conn

Daniel Conn

Daniel Conn is the Director of Finance for Demetree Global. He oversees the full accounting process, cash flow, income tax, trust management and is frequently called upon for investment analysis.