Family office

This article is about offices that manage the wealth of primarily one family. For offices that manage the wealth of several families, see multi-family office.
Chart of family office services

A family office is a privately held company that handles investment management and wealth management for a wealthy family, generally one with at least $50–100 million in investable assets, with the goal being to effectively grow and transfer wealth across generations. The company's financial capital is the family's own wealth.

Family offices also may handle tasks such as managing household staff, making travel arrangements, property management, day-to-day accounting and payroll activities, management of legal affairs, family management services, family governance, financial and investor education, coordination of philanthropy and private foundations, and succession planning. A family office can cost over $1 million a year to operate, so the family's net worth usually exceeds $50–100 million in investable assets. Some family offices accept investments from people who are not members of the owning family.[1][2][3][4][5][6][7][8][9] Some firms that cater to multiple clients offer personality psychology services for family members to support better alignment and communications among members of the family.[10]

A family office either is, or operates just like, a corporation or limited liability company, with officers and a support staff. Officers are compensated per their arrangement with the family, usually with incentives based on the profits or capital gains generated by the office. Family offices are often built around core assets that are professionally managed. As profits are created, assets are deployed into investments. Family offices might invest in private equity, venture capital opportunities, hedge funds, and commercial real estate. Many family offices turn to hedge funds for alignment of interest based on risk and return assessment goals. Some family offices remain passive and just allocate funds to outside managers.[11]

  1. ^ "EY Family Office Guide" (PDF). Ernst & Young. 2017.[permanent dead link]
  2. ^ Frank, Robert (June 10, 2004). "How to Bank Like a Billionaire". The Wall Street Journal.
  3. ^ "Family Offices". Investopedia.
  4. ^ Hawthorne, Fran (March 18, 2008). "The Family Office, Granting Every Wish". The New York Times.
  5. ^ KOLESNIKOV-JESSOP, SONIA (September 6, 2011). "Setting Up an Office to Manage a Wealthy Family's Affairs". The New York Times.
  6. ^ Das, Anupreeta; Chung, Juliet (March 10, 2017). "New Force on Wall Street: The 'Family Office'". The Wall Street Journal.
  7. ^ "Defining 'Family Office'". Familyofficecouncil.com. September 15, 2013.[permanent dead link]
  8. ^ Steinberg, Julie; Greene, Kelly (May 17, 2013). "Financial Advice, Served Rare". The Wall Street Journal.
  9. ^ Douglas, Craig M.; Wollack, Todd (June 8, 2007). "Case highlights family office risk". American City Business Journals.
  10. ^ Milburn, Robert (November 21, 2014). "Mr. Freud in the Family Office". Barron's.
  11. ^ "Opalesque BACKSTAGE Video-Terry Beneke: What attracts family offices to alternative investments". Opalesque. 30 April 2010.