What is a family office and how do they invest?
Short answer
I define a single family office as a full-balance-sheet wealth management solution dedicated to serving one affluent individual or family. Its purpose is to coordinate investments, service providers, operations, and other important financial matters around the family's objectives. Family offices can invest in public markets, real estate, private businesses, funds, and direct acquisitions. However, every family has different priorities, so understanding its specific investment strategy is essential.
Checklist
- Understand the distinction between single family offices and multi-family offices.
- Recognize that family offices often coordinate multiple professional advisors.
- Learn whether the family prefers direct investments or funds.
- Understand its preferred industries and investment characteristics.
- Identify whether it wants passive investments or active ownership.
- Recognize the importance of long-term wealth preservation.
- Understand how investment committees and governance influence decisions.
- Research the family's investment strike zone before presenting opportunities.
From my talks
"A single family office is a ... full-balance-sheet wealth management solution for an affluent individual or family."
I have worked with families that prefer to own real estate and operating businesses directly.
One example from our family office investing discussions involves families acquiring profitable operating businesses because they already understand how to manage and grow companies.
Other families prefer to partner with experienced operators or co-invest alongside other family offices. In our co-investing discussions, family office representatives described working with partners who contribute specialized industry knowledge.
A family office is an organization making decisions based on the objectives, expertise, and priorities of the family it represents.
What to do next
- Learn the differences between direct investing, fund investing, and co-investing.
- Research the investment priorities of any family office you hope to approach.
- Prepare questions that help determine whether your opportunity fits those priorities.
Related questions
- How do I get in front of family offices?
- What do family offices look for in a deal?
- How do billionaires decide what to invest in?
Work through it with the family office fit check. See all family offices questions.
