As your wealth grows and your financial life gets more complicated, you might start asking yourself if it makes sense to consider employing the services of a multifamily office. While some high-net-worth families swear by them, others do just fine with a solid wealth advisory team.
What is a family office?
A family office is a private wealth advisory team dedicated to serving ultra-high-net-worth individuals and families. Think of it as your personal financial command center, covering everything from financial planning to investment management and beyond. Here’s what a family office typically handles:
There are three main flavors of family offices:
Single-family office: This is the traditional setup where a wealthy individual sets up a dedicated entity and hires a team—think wealth advisor, tax pro, estate planning attorney, accountant, etc. It’s bespoke, but it comes with hefty costs since you’re footing the bill for everything.
Multifamily office: Here, a firm manages the finances for multiple families. You get the expertise without hiring directly, and they usually charge a percentage of the assets they supervise, making it a more cost-effective option than a single-family office.
Outsourced family office: This is a network of independent pros working together for you, with a central “quarterback” (like a wealth manager) coordinating everything. It’s the least expensive but requires some relinquishing of control.
Should you consider a family office?
Deciding if you need a family office is personal and hinges on your financial situation and needs. Traditionally, family offices are designed for the ultra-wealthy, but wealth may not be the only deciding factor to invest in family office services. According to J.P. Morgan, the average cost to run a single-family office is $6 million per year while Citibank estimates that even a small single-family office with two full-time professional staff and four full-time support staff will cost between $1.5 million and $1.8 million annually.
Your amount of wealth may justify a family office but another major factor to consider is the complexity of your life. If most of your wealth is in the value of your business and your personal liquidity and income is relatively low, then the lack of complexity likely means you can rely on your company’s management team and your personal financial advisor without the need for family office services. However, if you have a large amount of liquidity, an appetite to make non-public-grade investments, or have a large amount of personal assets that require management such as vacation homes or art collections, then you may want to consider a multi-family or traditional family office to help manage your assets.
Another often overlooked benefit of family office services is management and payment of household bills. If you find that paying and tracking your personal expenses is taking up too much of your time, then a family office bill pay service may be of exceptional value to you.
The complexity of an estate plan is another important factor when considering the need for a family office. Many sophisticated estate plans include trusts, foundations, and family partnerships which require funding, management, and reporting which might require professional staff to maintain.
At GatePass, we aim to make family office services accessible to more investors, offering comprehensive problem-solving across all financial aspects. A family should consider family office services when your financial life gets too complex to manage alone. If your career is demanding, your home life is hectic, and your financial situation is intricate, GatePass Preserve (our branded multifamily office) can help streamline everything.
If leaving a legacy is your goal, especially involving a family business, a multifamily office can help set a clear vision and ensure smooth wealth transfer across generations. It facilitates family communication and sets clear expectations and responsibilities for the future. Our clients receive a wide range of in-house services, including wealth advisory, investment management, private investments, tax planning and preparation, insurance, estate planning, business owner services, and international wealth consulting. This comprehensive approach can give you all the advisory services you need at a fraction of the cost of running your own family office.
For more information on how we can support your complex financial needs, schedule a call with our team. We’re excited to get to know you.
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