The family office business is booming, with billionaires and other ultra-high-net worth individuals around the globe funneling trillions of assets into the private wealth management companies as they look to have more direct control over their fortunes. These one-stop-shops help wealthy families with everything from budgeting to tax services to charitable giving and more. But they are also becoming dominant players in the investing world, where their ever-growing pools of capital and influence are shaking up sectors like venture capital and private equity.
Though the exact number is difficult to quantify, there are now over 8,000 single-family offices worldwide, 68% of which were established this millennium, managing more than $3 trillion in assets, according to Deloitte Private’s 2024 Defining the Family Office Landscape report. That’s a dramatic jump from the approximately 6,100 family offices that existed in 2019. The number is expected to grow by 75% by 2030.
As their influence continues to grow and new investment opportunities arise, some investors may be wondering when it makes sense to form one. Each office is different, and depends on the needs of the investors and their goals and values. But here are some things to consider, according to industry experts.
Establish a vision
Most people who start a family office do so with certain goals or values in mind. It makes sense to think through what you want to accomplish. A family office, for example, will likely cost more to operate each year than banking and investing through an established institution, especially if you want to hire the best people.
One main consideration: whether you want a single-family office (SFO) or to be part of a multi-family office (MFO). As the names imply, a SFO serves one household, while a MFO works with potentially dozens. There are pros and cons to each: With a SFO, you potentially receive a higher level of customization, control, and privacy; but you’ll likely be paying more for those privileges. You also know the office is working solely in your family’s interest.
With a MFO, on the other hand, you can pool assets with other families to get access to potentially more enticing investment opportunities, and fees and operating expenses are typically lower.
Even within each of these two broad categories of family offices, there are countless variations: From simple two or three person teams to those with dozens of staff working across investment strategies, accounting, legal, and so on. Some single family offices have multiple branches, including abroad, while others keep some services in-house and outsource others.
“Our pitch is, hey, why should you pay for the back office? There’s no value to it,” says Bruce K. Lee, founder and CEO of Keebeck Wealth Management, a multi-family office. “Why would you want to spend money on your [chief investment officer] when we’ll take care of everything?”
Assets under management
At what level of wealth does it make sense to be part of a family office? The average global total net worth of families with family offices is $1.4 billion, according to J.P. Morgan’s 2024 Global Family Office report (the median is $661.6 million), and the offices typically manage about 60% of the family’s total net worth.
It breaks down family offices into three different asset levels:
- Small: $50 million to $500 million in assets under supervision.
- Mid-sized: $501 million to $999 million in assets under supervision
- Large: $1 billion or more in assets under supervision
But Lee says $500 million is a good place to start for a SFO, which typically requires a larger amount of assets under management than a MFO (though plenty of the richest people in the world, including Mark Zuckerberg, are part of multi-family offices).
While many families of significant wealth are interested in exploring family offices, families with more modest levels of liquid or investable assets are most likely to rely on outside advisors who can provide a high level of service, consolidated reporting, bill pay, and concierge services, according to the JPM report.
Types of services provided
While many offices are initially formed ahead of a single liquidity event—say, the sale of a business—they will grow and expand to fit the evolving needs of the family and establish long-term practices.
There are three main categories, according to JPM:
- Administrative focused: Providing financial services like accounting and taxes and lifestyle services.
- Investment focused: Providing investment guidance, especially in the private market.
- Full service: A combination of the above, as well as succession and legacy planning, insurance management, legal services, and so on.
“Regardless of their primary focus and character, family offices can adopt different approaches to managing the delivery of the desired service,” the report reads. “While the family may choose to manage certain services entirely in-house, it may decide to rely on third-party advisors for other key functions and also adopt a hybrid approach for still other objectives.”
Investment management especially important
Investment management is at the core of most family offices, and, with over $6 trillion in assets under management, they have become major players in different investing spaces, including private equity and venture capital. Once overlooked in the wealth management space, now different firms are clamoring for family office capital.
Because family offices often support multiple generations of the same family—or plan to—they have much longer time horizons for investments than other investors, making them attractive to some startups.
Family offices are especially interested in alternative assets to try to generate higher returns than they could yield with a standard public stock-and-bond portfolio. In fact, private equity recently surpassed public equity as the top asset class for family offices invest in, according to Deloitte's 2024 report.
This is where the office's talent comes into play. "It's all about access," says Lee. The office may be competing against large investment and private equity firms to hire the best of the best, and pay the price to do so. According to a 2024 Botoff Consulting report on family office compensation, the median chief investment officer makes $500,000 per year, plus bonuses and other incentives. Overall, a full-service family office can cost $1 million or much more to operate annually.
To learn more about how famous billionaires using their family offices, read Inside the secretive finance centers that cater to billionaires like Jeff Bezos and the Walton family
