What is a Family Office?

Family offices are traditionally investment-led, private wealth management advisory firms that assist ultra-high-net-worth individuals and families. They differ from pure wealth management firms in that they offer a holistic service to manage “the business” of the individual or family.

Typically, the level of complexity rises in line with wealth levels and therefore, a variety of operating models have developed over the years;

The ‘Single Family Office’ (SFO) is an organisational structure that manages the investments and other needs, such as other professional advice services (accountants, lawyers, tax advisers) for a single wealthy family. All the family’s needs are dealt with in-house and the typical wealth of a family with their own family office usually exceeds £100 million.

Because a single family office is driven purely by the needs and preferences of the underlying family, there is no standard for how one should be structured or operated.

The ‘Multi Family Office’ (MFO) structure is where numerous individuals and families have access to a family office which provides them with a broad range of investment services, similar to that of the ‘Single Family Office’, however these services will be shared by several families. Some Multi Family Offices are known to provide lifestyle management / concierge services too.

The typical wealth of a family who utilises the services of a multi-family office is usually over £50 million.

The ‘Virtual Family Office’ (VFO) is not necessarily investment led. Whilst some argue that the typical wealth for a virtual family office is in excess of £5 million, a virtual family office supports individuals and families by taking the role of a ‘trusted advisor’ to their clients; co-ordinating and managing a wide variety of needs and demands of an individual or family.

This doesn’t necessarily mean that all the specific advisors are based in-house. Often, virtual family offices outsource much of the professional advice required by their clients, by utilising a network of trusted experts and businesses.

A virtual family office offers support in all demands from investments and tax advice, to lending and lifestyle management, in effect enabling traditional family office services to be accessed by a much lower level of wealth.

Greg Wood