Those who don’t have one probably think of a family office as a place where several generations of a family work together, generally in one location, and often operate a small business. Though there is no set definition for the term, in the world of finance, family office services are much broader in scope. Family offices are not generally physical locations in which the family works together but are private wealth management firms that provide an array of customized services that go far beyond investing and financial planning.
Families with ultra-high net worth (UHNW), however, are more likely to use a family office than a typical financial advisory firm due to the breadth of services they provide. This might be due to the fact that original FOAHK were responsible for managing the finances of a single, extremely wealthy family like the Rockefellers, Vanderbilts, or du Ponts. Multifamily offices are bringing a level of expertise that few single-family firms can match.
These professionals tell us they would prefer to work for a family rather than a single-family office. A family office differs substantially from an ordinary financial advisory relationship because there is no rigid definition of what makes it unique. There is also great subjectivity regarding a family’s needs and the services offered. Family offices are, at a minimum, institutions that provide clients with comprehensive, holistic financial planning that helps them with many aspects of their lives.
UHNWs do not necessarily require a family office, but those who do say they make life much easier by having a family office. Particularly useful for families with a complex and time-consuming financial structure are individuals who handle the majority of aspects themselves. A former C-suite executive who retires and no longer has a personal assistant can find this particularly beneficial.