Why is there so much confusion around what a family office really is?

Why is there so much confusion around what a family office really is?

by Richard C. Wilson & Family Offices Group Association Team

Question: Why is there so much confusion around what a family office really is?

Answer: There are several reasons for this confusion such as a lack of public awareness of the industry, the recent surge in popularity of the family office model and the subtle difference between an SFO and a MFO.  For now, let’s focus on three primary causes:

First, the family office industry serves ultra-high net worth individuals and families, not the typical investor or individual banking client.  Thus, family offices cater to a more select group of clients and therefore you won’t see them advertising their services on TV or in mass market publications and you won’t hear your banker or financial adviser recommending a family office unless they see that you are a good match for a family office.  So, unlike typical financial or tax solutions, family offices are not universally known or understood by the average person.  This lack of awareness has led to much of the confusion associated with the industry.

Second, a family office provides a variety of services including tax advising, investing and even taking care of paying the bills for their clients.  Family offices often cater their offering to fit the unique needs of the different families they serve.  So, it’s hard to pin down what exactly is a typical family office when in some ways, there is no typical family office; it is a reflection of the needs of each particular family office client.

Third, multi-family offices are often confused with wealth management firms and it can be hard to distinguish what separates the two financial firms.  They provide similar services to their clients but multi-family offices are distinct in that they will provide a full-service solution to a ultra-high net worth family or individual, rather than limiting its service to simply managing the wealth like a wealth management firm does.

Download our free Family Office Report to learn more about the family office industry.

Read more Frequently Asked Family Office Questions.

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