Multi-family offices have become increasingly popular among many successful families. Single-family offices have long been considered a luxury only the very wealthiest of families can enjoy – typically families with at least several hundred million dollars in net worth. Having a dedicated team of investment professionals acting on your family’s behalf – and only your family’s behalf – can certainly seem enticing. However, for high-net-worth families who don’t meet the net-worth threshold to justify a single-family office, a multi-family office can provide many of the same holistic, deeply personalized services (and often more) at a fraction of the cost.
What is a multi-family office?
A multi-family office works with multiple high-net-worth families, providing private wealth management through tax and estate planning, risk management, investment management, trusteeship, lifestyle and concierge services, coordination of other financial professionals, and philanthropic strategy.
What is the difference between a single-family office and a multi-family office?
Single-family offices are typically developed for just one family, although they can have multiple generations and branches of a family represented. A multi-family office is designed for multiple families to share in the resources and talents of the firm, reducing the cost of operating the office and increasing the scale and diversity of services offered.
What are the advantages of a multi-family office over a typical wealth manager?
A multi-family office offers a team of specialists to work with your family, as opposed to a typical wealth manager, who is often a lone generalist. They can also provide visibility into best practices that similar families are using to manage their wealth. Finally, multi-family offices exist to help families aggregate their investments, particularly private investments, which allows greater leverage and buying power, as well as access to leading managers and investment opportunities.
3 Benefits of a Multi-Family Office
- Team of vetted specialists working together to the benefit of your family
- Visibility into best practices that other families of wealth utilize
- Aggregation of investments, allowing for greater leverage and buying power, resulting in lower costs/fees
What are the range of services provided by a multi-family office?
Multi-family office services provide a comprehensive suite of offerings that the complex financial situation of successful families require, including:
- Investment advisory, including access to private investments
- Accounting and reporting
- Financial planning
- Insurance analysis and management
- Family governance and education
- Philanthropic planning
- Tax advisory and regulatory compliance
- Estate planning
- Concierge services
Services typically include a multitude of other offerings, including wealth planning, estate and tax planning, charitable giving advice, concierge services, family vision and values exploration, and more. These services are often provided with multi-generational families in mind.
Family office services can also provide access to institutional-quality private investments and other alternative investment opportunities that are typically accessible only to large endowments and other institutional investors.
Team members include experienced investment managers, financial advisors and wealth planners, family governance and education professionals, as well as advisors who are knowledgeable in tax planning and risk analysis.
Do I need a multi-family office?
Because multi-family offices work with several families who pool resources, they can offer those client families economies of scale that allow for cost sharing. That lowers fees and expenses for client families, while simultaneously broadening the depth of resources available to those families.
As stated above, family office team members can include experienced investment managers, financial advisors and wealth planners, family governance and education professionals, as well as advisors who are knowledgeable in tax planning and risk analysis. There are numerous other potential roles within a family office, depending on the needs and types of families served.
The pros of a multi-family office include:
- Lower costs/fees as compared to single-family offices
- Diversity of thought and experiences among advisors
- Greater variety of services offered, because of the economies of scale resulting from serving multiple families
The cons of a multi-family office include:
- Not having a team of advisors exclusively dedicated to you and your family
- Greater visibility of the firm, as it will seek to engage other families to join
The pros of a single-family office include:
- Highly personalized service from a team that is exclusively dedicated to you and your family
- A high-degree of privacy and confidentiality, as there is no need to promote the office or recruit other families
The cons of a single-family office include:
- A significant cost to build and operate, often makes sense only for families with several hundred million dollars in net worth
- The risk of “insular thinking,” as the advisors will only be working with one family, and over time that can result in an “echo chamber” of ideas and approaches
How much money do you need to have a multi-family office?
As families become more successful and grow their wealth, particularly over generations, their financial pictures become more complex. This is when a multi-family office can make a lot of sense. Clients of a multi-family office typically have a net worth in excess of $25 million. Comparatively, a single-family office often only makes sense once a family’s net worth is in excess of several hundred million dollars, as the cost of operating a single-family office can be significant.
How do I get started with a multi-family office?
Research a multi-family office that shares the vision and values of your family. A multi-family office should be a fiduciary that is committed to transparency and acts on your family’s best interests at all times, with no conflicts of interest. Ensure that the family office you select can provide the full range of services you desire and has the depth of talent and experience to deliver on your family’s wishes long-term.
Contact us to learn more about how you can benefit from the scale and services of a multi-family office.