Who Needs a Family Office? Signs It's Time to Consider One
A family office isn't for everyone. It's a significant commitment of resources and effort.
But for the right families, it's transformative. Here's how to know if you need one.
The Traditional Answer: Asset Thresholds
The most common benchmark is assets under management.
Single-family office: $100 million or more in investable assets. At this level, the cost of running a dedicated office (typically $1-3M annually) becomes reasonable relative to total wealth.
Multi-family office: $10-50 million in assets. You get sophisticated services at lower cost by sharing resources with other families.
Virtual family office: $5 million and up. Technology-enabled services make family office capabilities accessible to smaller portfolios.
But assets alone don't tell the whole story.
Beyond Assets: Complexity Indicators
Some families need a family office at lower asset levels because of complexity.
Multiple Income Sources
If your wealth comes from various streams—business income, investments, real estate, royalties—coordinating everything becomes challenging.
A family office centralizes management and ensures nothing falls through the cracks.
Geographic Spread
Assets and family members across multiple states or countries create tax complications and coordination challenges.
Cross-border wealth management requires specialized expertise that a family office can provide.
Diverse Investment Types
When you're invested across public markets, private equity, venture capital, real estate, hedge funds, and direct investments, tracking and optimizing everything requires dedicated attention.
Business Ownership
Family businesses add another layer of complexity. Separating business finances from personal wealth, planning succession, and managing liquidity all require careful coordination.
Multi-Generational Wealth
Once wealth spans multiple generations, governance becomes critical. Different family members have different needs, risk tolerances, and timelines.
A family office creates structure for managing these competing interests.
Signs You Might Need a Family Office
Consider a family office if you recognize these situations:
You're Managing Too Many Relationships
If you have separate advisors for investments, taxes, estate planning, insurance, and banking—and they don't talk to each other—you're doing the coordination yourself.
A family office acts as the central hub, ensuring all advisors work together.
You're Spending Too Much Time on Financial Administration
Wealthy families face constant demands: signing documents, reviewing statements, making decisions, handling requests.
If financial administration has become a part-time job, a family office can take it off your plate.
You're Concerned About Privacy
Public wealth managers report to regulators. Family offices don't.
If privacy is paramount, a family office provides confidentiality that traditional wealth management can't match.
You're Thinking About Succession
How will your wealth transfer to the next generation? Who will manage it? How will family members be educated about money?
Family offices specialize in multi-generational planning and wealth education.
You've Had Coordination Failures
Missed tax deadlines. Conflicting advice from different advisors. Investments that don't align with your overall strategy.
These are symptoms of a coordination problem a family office solves.
Who Typically Establishes Family Offices?
Family offices serve diverse groups:
Entrepreneurs After a Liquidity Event
You've sold your business and suddenly have significant liquid wealth. The transition from running a company to managing investments is dramatic.
A family office provides structure during this transition and beyond.
Multi-Generational Wealthy Families
Old money families often have established family offices. But any family planning for generational wealth transfer can benefit.
High-Earning Professionals
Athletes, entertainers, executives, and professionals with exceptional income sometimes need family office services earlier than their net worth alone would suggest.
Their income complexity and career risk require sophisticated planning.
Families with Philanthropic Goals
If giving is a major part of your financial life, a family office can coordinate charitable planning, manage private foundations, and maximize impact.
International Families
Global citizens with assets, businesses, and family members across countries face unique challenges that generalist advisors can't address.
When a Family Office Isn't the Answer
A family office isn't right for every situation.
You have straightforward finances. If your wealth is in simple investments without business interests, real estate, or complex planning needs, traditional wealth management may suffice.
You're hands-on by choice. Some people enjoy managing their own finances. If that's you, a family office might feel like giving up control.
You can't commit the resources. Family offices require ongoing investment. If you're not willing to fund proper staffing and systems, you'll end up with an underpowered office that doesn't deliver value.
Family dynamics are unresolved. A family office won't fix fundamental family conflicts. In fact, it can make them worse by formalizing control structures.
Alternatives to Consider
If you're not ready for a full family office, consider these options:
Multi-Family Office
Join an existing MFO. You get professional management and shared expertise without building an organization.
Virtual Family Office
Use technology and specialist networks to create family office capabilities without full-time staff.
Enhanced Wealth Management
Some private banks and wealth managers offer "family office-like" services. It's not the same, but it's a step up from standard advisory.
Outsourced Family Office
Hire a firm to provide family office services without establishing your own entity. Good for families testing the waters.
Questions to Ask Yourself
Before deciding, reflect on these questions:
- How many hours per week do you spend on financial administration?
- How many different advisors and service providers do you work with?
- Do your advisors coordinate with each other, or do you do it?
- Are you confident your tax, estate, and investment strategies are aligned?
- Do you have a plan for the next generation?
- Is your financial information organized and accessible?
- How important is privacy to your family?
- Are you satisfied with the quality and integration of your current services?
If several answers concern you, a family office might be worth exploring.
Taking the Next Step
If you think a family office might be right for your family, start with research.
Talk to other families who have family offices. Interview multi-family offices. Consult with attorneys who specialize in family wealth.
Most importantly, have honest conversations with your family about goals, governance, and commitment.
A family office is a long-term investment. Make sure it's the right one before you begin.
Conclusion
You need a family office when your wealth becomes too complex, too time-consuming, or too important to manage without dedicated resources.
Asset thresholds are guidelines, not rules. What matters more is whether your current approach is working—and whether a family office would serve your family's needs better.
Take time to evaluate honestly. The right answer is different for every family.