Single family offices have rapidly advanced over the past several years, reforming the way the ultra wealthy manage and allocate capital. While this transformation continues to add value for high net worth families and individuals around the world, this unprecedented maturation has also added a new level of complexity to an already murky space. In an effort to provide further color, we've summarized a number of common questions regarding single family offices. Continue reading for further insight...
What is a single family office?
In a general sense, single family offices are private groups that manage the financial and personal affairs of one wealthy, ultra-high net worth family or individual. Typically the minimum amount of assets needed to create a financial focused single family office is $50million or greater.
What is the difference between a single family office and a multi family office?
As opposed to single family offices who manage the financial affairs of one family or individual, multi-family offices provide financial services to a number of unrelated families or individuals. This can range from just a couple of families to north of 50+. In addition, you will often see multi family offices that began as single family offices & morphed into MFO's as they slowly took in others to form increased infrastructure.
How are single family offices structured?
Like any vertical dealing with the ultra wealthy, single family offices are unique in their setup and structure, as they are entirely driven by the needs of the family. When it comes to the staffing procedures for a single family office, keep in mind this number differs greatly among all family offices. Some may start with one or two employees managing the family's affairs, and over time, may grow to have more than 50 employees. Again - there is no set number, as it depends on the specific desires of the family.
Single family office talent often extends to:
- Private Lawyers
- Fund Managers
- Tax & Trust Specialists
- Accounting & Financial experts
- Real Estate Professionals
- Investment Due Diligence & Research Professionals
- Luxury Goods Oversight
- Senior Bankers
- Executive Assistants
Why would an individual or family create a single family office?
With greater wealth comes greater financial complexity - especially in regard to one wealthy family or individual. That being said, one would create a single family office to preserve and manage a large fortune for the coming generations. Free from institutional mandates, intermediaries, and other standard due diligence procedures, single family offices provide greater freedom and flexibility to allocate capital in a way that aligns with the values and desires of the family.
What services do single family offices offer?
Single family offices offer a multitude of personal and wealth management solutions that differ considerably depending on the requirements and fortune of the family. Those who do employ single family offices [normally] control the applicable services as well as how those services are delivered to the family. Traditional single family offices generally provide a wide array of specialized solutions.
Almost all provide some combination of the following services:
- Lifestyle/wealth management
- Investment implementation
- Asset allocation
- Legacy planning
- Legal advice
- Tax preparation
- Insurance planning
- Charitable assistance
- Banking/accounting operations
- Estate planning
- Risk management
- Bill paying/record keeping
- Family governance
What is the minimum asset amount needed for it to make sense to create one?
Assets under management (AUM) is the total value of all the assets managed by a family office. The true minimum AUM threshold to be considered a single family office is cloudy, and depends entirely on the services that the family requires. Some say $10 million, others prefer $20 million, and the list goes on. At FINTRX, we use $50 million.
Why are single family offices an attractive pool of capital?
Single family offices are an attractive pool of capital for a number of reasons. Despite the obvious structural advantages (their distinct flexibility, straightforwardness, perfectly tailored services, etc.), high net-worth individuals and families are also drawn to their privacy and confidentiality. Single-family offices represent attractive pools of capital for investment firms from hedge funds, private equity funds, real estate funds, and long-only money managers - to name a few.
What is the best way to source single family office information?
Running Google searches, scouring LinkedIn and surfing the web can be useful in some capacity, but tends to be laborious, time-consuming, and thin on quality data. To make things more difficult, static family office excel lists available for purchase often have limited or outdated information. Fortunately, that's where FINTRX provides immediate transparency to this cloudy family office ecosystem - providing comprehensive family office data, research, investment focus and history.
The reality is, the family office landscape is growing incredibly quickly and becoming more sophisticated by the year. Like anything else when it comes to raising capital and securing an investment, information is power. The need for an ever moving and intuitive data set in the family office space has never been greater - in a nutshell, that’s exactly what we do. - Russ D’Argento, CEO & Founder of the FINTRX Family Office Platform
What does the future look like in regards to single family offices?
The number of single family offices around the world is on the rise - and this trend shows no signs of slowing down any time soon. As more capital raisers turn to the space for funding, family offices are finding it more beneficial to become forward-facing, allowing for higher quality deal flow. Although the modern family office may be somewhat more transparent than those that came before it, finding the second layer of insight such as their investment criteria, portfolio, and contact information remains trying. Leveraging a high quality family office research solution like FINTRX offers an opportunity to gain new partnerships and gives capital raisers access to a niche, unique untapped pool of capital. As wealth continues to grow, there is no doubt that single family offices will play an even larger role in the management of substantial wealth in the years ahead.
We encourage you to explore further if reaching the opaque family office investor market is of value and interest. See how you can leverage our industry-leading family office data suite and custom asset raising tools. Request your free trial below!