Family Office

 Family Office Meaning

Family Office is a management entity that holistically manages investment and other finance-related needs of ultra high-net-worth families. It is difficult to define the qualifying level to be branded as a UHNW family.

Family Office

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Key Takeaways
  • A family office is a group of companies whose mandate is to manage a multi-million investment of ultra-high-net-worth families.
  • Ultra-high-net-worth individuals (UHNWI) are people who possess net assets worth $30 million and above.
  • They manage a UHNW family’s finance-related needs, such as investment, wealth management, accounting, financial advising, tax accounting, legal compliance, travel arrangements, etc. Professionals are hired from all these domains for expert management.
  • A single-family office caters to one family, and the multi kind caters to many.

How Does it Work?

  • Individuals take the services of an investment bank to help manage their capital and to make it grow. UHNW families handle multi-million funds which require expert services like that of a family office which ensures professional management and thorough confidentiality.
  • The office manages all of UHNW family’s finance-related needs. Some services provided by the office are investment-centric, wealth management, accounting, financial advising, tax accountingTax AccountingTax accounting is the framework that considers the tax returns instead of public financial statements disclosure while recording and presenting the business transactions in the books of accounts. It complies with the rules and policies of the company's Internal Revenue more, legal compliance, travel arrangements, educational services, staff salary distributions, bill payments, background check, charity work and the like.
  • The underlining goal is to preserve and grow the family’s wealth for the current and future generation. In a sense, these professionals are the preservers of the wealthy family’s legacy.
  • The legendary Rockefeller family and the Mellon family are believed to have brought family offices to life in the 19th century. The Rockefeller family established an office to look after its wealth by hiring professionals from various domains. Professionals in these offices generally belong to investment, tax, legal, welfare, etc.
  • Drawing professionals from different streams ensure expert advice and handling of the matter. For example, the tax experts ensure that all the tax obligations are met including those on real estate, liquid assets, financial securities, gold investments, properties, hotels, etc. They ensure that their clients park their money intelligently so that there are multi-dollar tax savings as well.
  • Another vital role of them is to provide financial advice to each family member to preserve and grow their wealth with time.
  • Traditionally, such an office served only one family as such; it was called a single-family office. It gradually grew into a business of its own. A 2016 EY report has estimated that there were over 10,000 such offices in existence around the globe. These offices started handling more than one client, leading to a diversification of the structure and the rise of multi-family offices.

Where Do Family Offices Invest?

They have a broad scope of investment which works well for single and multi-family services. Studies have been conducted time and again to understand the investment pattern of these offices. The family office investors usually invest in bonds, equities, real estate, hedge funds, and venture capital, etc.

As per a UBS 2020 Study, over 69% of family offices consider private equity a prime driver of returns. Moreover, the portfolios showcased the dual play of “growth-sensitive assets and wealth-preservation assets.” The diversification in the portfoliosDiversification In The PortfoliosPortfolio diversification refers to the practice of investing in a different assets in order to maximize returns while minimizing risk. This way, the risk is kept to a minimal while the investor accumulates many assets. Investment diversification leads to a healthy more was such that 35% belonged to alternative investments. Private equity was at 16% and the real estate at 16% respectively.

Besides, they focus on expanding their existing business in terms of demographics, product and service line as a way to grow their wealth. For example, indulging in acquisitions and mergers is a way to multiply their wealth and reach. So, when Walmart took over the Indian e-commerce company of Flipkart, it was a straight-cut move to enhance its reach in the e-commerce domain in a country that serves a massive potential for growth.

Single-Family Office

It is dedicated to the financial management of a single-family. Its main aim is to centralize business management. There is direct control of staff, making it easy to manage any conflict. Also, the team can concentrate on the affairs of one family. Members need to agree to sacrifice their time collectively.


#1 – Tailor-Made Services 

The services they offer are unique to you, which is a plus to your business. Thus, no other person has the same ideas as you and thus contributing positively to your business.

#2 – There is no competition from other groups of families

Since there is no competition, no one can steal the unique ideas of the professionals.

#3 – Wealth management from a centralized place

There is a dedicated office to plan and conduct everyday activities with a team. There is also easy staff control. Running a single office is costly as talents need to be grown and managed regularly. If a professional quits, it jeopardizes the whole process till a replacement is found and trained.

#4 – Confidentiality

Firms hold family information with utmost care. Leakage of ideas is well managed and thus enhanced family growth. Secrecy agreements are usually a part of the deal.

Multi-Family Office

Such an office manages the wealth of more than one family. Since it involves several families, the overhead costs are shared, making it more cost-effective for the management. Besides, having multiple experts and professionals provide a regular stream of expert advice.

One such example is the Walton Enterprise LLC, the company behind Walmart that holds a stake 50% in Walmart, valued at $160 Billion. The enterprise is a prime example of the growth of such offices. It operates most large hypermarkets in the USA. What started as a family dynasty has grown to serve several clients in the USA.


#1 – Varieties of experts

Legal and financial experts meet together. You get a view from different experts before making a move. Investment decision making becomes easy.

#2 – Overhead cost-sharing

Having a different category of people in the same investment category allows the spread of costs. Hence it minimizes the overall business operatingBusiness OperatingBusiness operations refer to all those activities that the employees undertake within an organizational setup daily to produce goods and services for accomplishing the company's goals like profit more cost.

#3 – Easy management

It becomes easy to manage all under one roof units than different units in separate paces. Hiring a property manager at this level becomes essential, which makes these offices more sensible.

This has been a guide to What is Family Office and its Meaning. Here we discuss where do family offices invest along with working, advantages and disadvantages. You may also have a look at the following articles to learn more –