Family offices are as different as the families they serve—one size does not fit all. For families who are seeking to coordinate and consolidate their investment management and planning, a well structured family office can play a crucial role in the preservation and growth of wealth through the generations.

Some of the original family offices formed over 100 years ago are still presiding over the founders legacies, continuing to serve their families well as they adapt to changing circumstances. How do you go about establishing a family office Here we outline some key considerations.

What is a family office?

Families create family offices to manage their wealth while nurturing their identity and values. Family offices oversee a range of areas from wealth management to wealth transfer, philanthropy and family governance.

In its ideal form, the family office helps steward family wealth by supporting the following four dimensions of the family:1

  • Business legacy
  • Financial legacy
  • Family legacy
  • Philanthropic legacy

A storied history

Early family offices in the US were established by business-owning families that made their wealth during the Industrial Revolution. John D. Rockefeller Sr. began one of the first family offices in 1882 as a mechanism for centralizing the familys wealth and philanthropy. Numerous other business-owning families of great wealth followed, including the Mellon, Dupont and Phipps families.

3,000

Estimated single family offices exist today2

6,000+

Estimated single family offices embedded in primary family business2

What services do they provide ?

A family office can oversee or provide services directly, typically in the following categories.
business people discussing at window in room

What are types of family offices?

Ideally, family offices should be structured to meet a family's particular needs. Numerous for-profit entities provide family office services. These include private banks, private wealth divisions of large brokerage firms, registered investment advisors, accounting firms, private client law firms and consultants The family first needs to consider the type of family office it will create or participate in.
 

Single family office (SFO)

  • Manage the financial and personal affairs of one wealthy family.
  • Typically has several staff members including a chief executive officer, chief investment officer, staff accountants and bookkeepers.
  • Usually also has employees handling family real estate, art and family education and governance.
  • Typically outsource complicated tax planning, wealth transfer planning and investments such as hedge funds and private equity.

Virtual/coordinating family office (VFO)

  • Outsources most if not all activities.
  • Typically employs one or two people to handle day-to-day operations and coordinate outside advisors and outsourced services.
  • Usually headed by a senior family member, the family business chief financial officer or a trusted professional such as a CPA or attorney.

Family-owned multi-family office (MFO)

  • Manages the wealth of a group of wealthy families.
  • Usually owned by one or more of the founding families.
  • Aims to reduce the overall cost of services, compared to a full-fledged.

Commercial MFO

  • Typically a boutique investment firm.
  • Owned by a third party that provides investment and certain other ancillary services.
  • Can range from pure investment shops to firms providing a full range of family office services.

Dive deeper

For more information, including how to structure and fund a single family office, download Building a family office to steward family wealth and values. Connect with a UBS Financial Advisor to learn more about the family office services available to you.

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