Family office

Family offices are private advisory firms set up by affluent families (or individuals) primarily to manage their wealth, investments and trusts – and on more day-to-day basis to cater to their financial and legal needs.

Family offices are an important source of funding for small and medium-sized businesses, despite their reputation for being elusive and highly selective.

You’ll come across many different definitions but usually a family office will offer wealth management (i.e. investment), wealth planning/transfer, budgeting, insurance, charitable giving, family governance, trust and corporate services, and tax planning. A family office might also handle non-financial issues such as private schooling, travel and other household arrangements.

Looking at the wealth management side, a family office invests in a similar way to a venture capital fund, but there is one potential difference. A family office typically manages money that’s been built up over generations and so, not surprisingly, the investment focus tends to be similarly long-term. In other words, a family office is more likely to offer patient (longer-term) capital because there is less imperative for fast returns – after all it doesn’t have a range of investors to appease on a short-term basis.

Some family offices have a general investment strategy while others might look to invest in companies that are (directly or indirectly) related to the core business on which the family wealth is built – or in companies that might boost the family’s legacy.

Single Family Offices (SFOs) usually look after one family, whereas multi family offices (MFOs) pool the wealth of multiple families.

The number of family offices in operation globally has risen tenfold over the last decade, to around 10,000. This correlates with the rapid increase in the number of ultra high-net-worth individuals (UHNWs) globally over the same time period.