Should I use a multi-family office or single family office?

Should I use a multi-family office or single family office?

by Richard C. Wilson & Family Offices Group Association Team

Question: Should I use a multi-family office or single family office?

Answer: The most important thing to remember about comparing single and multi-family office services is that single family offices are built around the needs and goals of a single family, so everything is catered directly to those needs.  In a multi-family office setting, there will be some chances for greater efficiency, in theory, but less of a 100% focus on serving the goals of any one family.  That is not to say that clients do not receive custom solutions, they do, but they do not have the 100% full attention of a whole office full of staff members.  Many times this results in multi-family offices offering some perks and miscellaneous services that would just not be feasible unless the costs were spread out among many families.  While multi-family offices can bring to the table lessons learned from working with multiple clients, a single family office will over time become more and more specialized in managing the types of investments and services that one family needs.  Single family offices, by their very nature, provide more privacy and confidentiality, so for some ultra-wealthy individuals who are consistently in the public eye this may also be an important consideration.

Many times, hedge fund managers and finance professionals ask me why they can’t set up a family office for themselves with just a $1M or $2M under management.  The short answer is that you can, nothing is stopping you from doing this; however, the costs are high.  If you truly want to hire professionals to manage your wealth full-time, you will want to make sure they know what they are doing, and that talent costs money.  If you are not careful, you will quickly spend your $1M simply setting up your family office.  The solution for most with less than $20M in assets under management is to join a multi-family office that accepts smaller clients, join a wealth management firm that is trying to climb up to “family office” levels of service, or form your own network of a CPA, wealth manager, life insurance professional, etc. and be a manager of sorts of your own “virtual family office.”   While you can attempt to run your own virtual family office, most highly successful professionals already have more than a full-time job’s worth of responsibilities

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