Raising capital from family offices
Why Investors Want a Family Office and Which Type Fits
Why Do Investors Want A Family Office? - PODCAST - Family Offices & Family Office Club
Wealthy founders and entrepreneurs who are deciding between a bank, a multi-family office and building their own single family office.
What you will hear
A family office exists because wealthy people want more control and a structure built around them. The speaker says a bank will gladly manage $200 million but will design the game around its own business. He then describes three types: virtual, single and multi-family offices. A single family office can have a couple of employees or a hundred plus, while a multi-family office serves 10 to 200 families.
The talk also covers costs and trade-offs. A single family office may hire one full-time professional for every 30 to 50 million in assets, and all-in cost may be around 1%. Reasons to start one include peer access, better deal flow and lower fees. Even very large families still use banks and multi-family offices for some tasks, such as debt and currency exchange.
The 5 big lessons
- Start with what you want. Designing your own family office means deciding what matters most first. That could be adventure, health, family memories or growing net worth. If this step is wrong, everything built after it points in the wrong direction.
- Three types of family office. Virtual offices are lean and outsource almost everything. Single family offices range from a couple of employees to a hundred plus. Multi-family offices work like wealth management firms for the ultra wealthy.
- Single versus multi-family trade-offs. A multi-family office brings experts such as a philanthropy specialist, paid for through its fees. A single family office has no third-party fee. Its costs are only the ones the family chooses to have.
- Fees can be renegotiated. A retail advisor may charge 80 basis points or 1% and keep charging that after an exit. The speaker suggests going back, citing institutional-level status and three quotes from others, and asking for a lower fee such as 25 basis points. Outcomes vary.
- Banks are still needed. The speaker says that no matter how good the single family office is, some work often stays outside. Examples are due diligence on hedge funds, debt, currency exchange, hedging and international transactions.
Said on the call
"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 multi-family offices for some things."
"Make sure you start from where you want to go and then find things that fit your puzzle piece that you're looking for, versus the other way."
From the source
- A multi-family office targets people worth 7, 10, 20 or 50 million plus, and serves 10 to 200 of them.
- The speaker estimates 15 to 20% of multi-family offices began as single family offices.
- The speaker suggests a retail advisor charging 80 basis points or 1% might be negotiated down to 25 basis points after an exit, though results vary.
Sources
From Richard C. Wilson's Centimillionaire Strategies YouTube channel: Why Do Investors Want A Family Office? - PODCAST - Family Offices & Family Office Club. 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, fee arrangements and tax planning considerations. Do not use AI to write your own legal agreements.
Related questions
- What is the difference between single and multi-family offices?A single family office works for one family and is built the way that family wants.
- 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.
- 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.
Questions about this video
Do multi-family offices usually start as single family offices?
Not generally, but it happens. The speaker estimates 15 to 20% start that way, after friends keep asking the family to manage their money. Most were founded by wealth managers, CPAs, trust and estate advisors or tax attorneys.
What does a single family office cost to run?
The speaker says many offices hire one full-time professional for every 30 to 50 million in assets, though this varies greatly. All-in cost could be around 1%, not counting investment fees such as fund manager charges.
Why start a family office at all?
The reasons given are peer family office access, superior deal flow, lower fees, a team aligned with the family, and attracting capital partners. A family office can also co-invest with other families.
Put this into practice with the family office fit check. See all raising capital from family offices resources.
