Single family offices have rapidly advanced over the past several years, essentially reforming the way in which the ultra-wealthy manage and allocate their capital. Although this transformation continues to add value for high net-worth families and individuals around the world, this evolvement has also added a new level of complexity to an already murky landscape. In an effort to provide further color on the private capital markets , we have summarized a number of common questions regarding single family offices.
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 high net-worth family or individual, as opposed to multiple families and individuals. Single family offices come in all size and forms depending on the wealth and overall dynamics of the family itself.
What are the main differences between single family offices and multi-family offices?
As mentioned above, single family offices and multi-family offices mainly differ the number of clients they offer services to at one time. Single family offices support and manage one family or individual whereas multi-family offices provide a broader range of services to a number of families and 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 and later expanded into multiple-family offices as they slowly took in others to form increased infrastructure and expertise.
From a fund-raising perspective, family offices are increasingly being seen as ideal investors, as they offer efficiency, streamlined decision-making, larger checks and oftentimes a higher level of flexibility and sophistication as compared to other types of investors. To successfully raise capital from a family office, you must first understand the fundamentals of each, and what sets them apart from one another. In an effort to clarify their subtle discrepancies, FINTRX assembled a white paper to help clarify any underlying assumptions relating to single family offices and multi-family offices.
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 entities. Some 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 entirely on the specific desires of the family or individual.
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 single family offices 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.
Understanding the reasons behind what makes family offices ideal investors can be a game-changer in terms of wealth preservation and wealth expansion.
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 the FINTRX family office data and research platform comes into play, providing immediate transparency into this cloudy family office ecosystem.
"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.
For more on our in-depth family office dossiers including AUM, source of wealth, investment criteria, previous investment history, sectors and industries of interest, among other key data points - request a personalized demo below.