Raising capital from family offices
Why Investors Want a Family Office: Virtual, Single and Multifamily
Why Do Investors Want A Family Office?
Wealthy individuals, founders after an exit, and advisors who want to understand when a family office makes sense and which type fits.
The short version
A person worth $200 million can walk into a bank and have their money managed, but a bank often designs its offering around its own structure. This talk explains why wealthy families build family offices to get more control and a setup shaped around what they actually want. It describes three types, which are virtual, single and multifamily offices, and how each fits a different level of wealth.
The talk also covers practical points. A single family office avoids paying an outside firm's fees for its core management, while a multifamily office spreads the cost of its experts across many clients. The speaker says about 15 to 20% of multifamily offices began as single family offices. Staffing often runs one full-time professional for every 30 to 50 million in assets, and total cost may be near 1%. Even very large families still use banks and multifamily offices for some tasks.
Five points worth keeping
- Control and a custom design. People want a family office to get more control and a setup built for their own wealth and goals. A bank may design a structure that is good for the bank first.
- Three types of family office. Virtual offices are lean and outsource almost everything. Single family offices can have a couple of staff or 100 plus employees. Multifamily offices serve many ultra wealthy families, with minimums that vary widely, in the speaker's experience starting around 7, 10, 20 or 50 million dollars.
- Trade-offs between SFO and MFO. A multifamily office brings many experts, such as a philanthropy expert who might cost around $300,000 a year in the speaker's example, paid through client fees. A single family office does not pay an outside firm's management fee, though the family still bears its own staff and service costs.
- Start with what you want. The speaker asks families to define their purpose first. It might be adventure, reaching 50 million in net worth, family memories or health. Building without that clarity risks a plan that mainly suits someone else's business model.
- Lower fees and better access. Reasons to start a family office include peer family access, better deal flow, lower fees, and a more aligned team. A larger account may be able to renegotiate fees, for example from 85 basis points to 25 basis points in the speaker's example.
In their words
"If you run your own single family office, there's no fee you're paying to a third party. It's your own organization that you've created for yourself."
"No matter how good of a single family office you build, you'll always need some banks and multifamily offices for some things."
"Make sure you start from where you want to go and then find things that fit the puzzle piece you're looking for, versus the other way around."
From the source
- Virtual family offices are very lean, small single family offices that outsource almost everything to keep expenses low.
- About 15 to 20% of multifamily offices started as single family offices, according to the speaker.
- Single family offices often hire one full-time professional for every 30 to 50 million in assets, with total cost around 1%.
Sources
From Richard C. Wilson's Centimillionaire Strategies YouTube channel: Why Do Investors Want A Family Office?. Quotes come from the video captions, lightly edited for readability. Figures are the speakers' own estimates and experience.
General education only. Not legal, tax or investment advice.
Talk to a securities attorney to explore options around family office structures, entity setup options and tax planning considerations. Do not use AI to write your own legal agreements.
Related questions
- How do I find the decision maker at a family office?Start by meeting the family through advisors, events and the people who manage their investments.
- How long does a family office take to make a decision?There is no standard timeline, and I would not trust anyone who gives you one number.
- Do family offices co-invest alongside other investors?Yes, many family offices invest alongside other investors, and they often feel more comfortable when another respected investor is already in the deal.
Questions about this video
Do multifamily offices usually start as single family offices?
Not usually, but it happens. The speaker estimates 15 to 20% began as single family offices, when friends or colleagues kept asking the family to manage their money too. Most were started by people from wealth management, accounting, trust and estate work or tax law.
How many staff does a single family office need?
Many hire one full-time professional for every 30 to 50 million in assets under management, though this varies greatly. A family with a strong operating company and a long-time CFO may need fewer dedicated staff.
What does a single family office cost?
The speaker says all-in cost is often around 1%, not counting the cost of the investments themselves, such as fund fees like 2 and 20. The aim is to be more effective than paying basis points to outside firms.
Put this into practice with the family office fit check. See all raising capital from family offices resources.
