There are many good reasons to open a family office that go beyond level of assets. That being said, it's not the right option for everyone.
What is a family office?
A family office is the organization a family creates, often after the sale of a family business or another realization of significant liquidity, to support the financial needs of a specific family. While no formal data exists, we estimate there are between 2,500 and 6,000 family offices in the United States, and that another 5,000 exist informally inside privately controlled businesses in the U.S. In Europe and Asia, the concept of life and wealth management in a family office is evolving, but new family offices are still being formed monthly in these areas.
Family groups decide to start offices for many different reasons. A family typically starts a family office to invest the assets generated by the sale of a family business (or after another realization of significant liquidity). FOX research indicates that for a family with US$100 million or more in assets—and if the family has a desire for privacy and control and is willing to manage a sophisticated financial business—it makes sense to consider a dedicated family office.
Reasons to Start a Family Office
Control of the Assets: The family’s stated goals for financial security, wealth preservation, and family legacy drive the work of the family office. With a family office, the family is able to directly oversee decisions about family financial matters.
Continuity of the Family: Many families rely on the family office to foster a sense of community and family unity over time. The family office serves as a partner in the work of sustaining the family’s assets.
Objectivity in Decision-making: Clients of a family office have access to a dedicated team of trained professionals whose sole purpose is coordination of the family’s key assets. There is no conflict of interest in this business model; the interests of the family are aligned with the interests of the advisors because the advisors work directly for the owners.
Customization of Services: The service menu, educational offerings, and customized financial reporting of a family office are developed with the family and for the family.
Confidentiality of Information: This dedicated business entity provides the best protection for the family’s privacy and security of financial information.
Integration of Financial Strategies: The job of the family office is to consider the impact of each financial decision—from bookkeeping to philanthropy—on the family’s strategic objectives.
Education of Owners: A primary role of the family office is to provide family members with the information they need to make informed and effective financial and philanthropic decisions.