Reference
Frequently asked questions
Direct answers to the questions readers most often ask about family offices and the structures that surround them.
- What is a family office?
- A family office is a private organisation that manages the financial, governance, and often operational affairs of a wealthy family. The scope ranges from a single employee handling bookkeeping to a 50-person operation running investments, philanthropy, and concierge services. The unifying feature is a fiduciary mandate to the family rather than to a fee structure.
- What is the difference between a single-family office and a multi-family office?
- A single-family office (SFO) employs staff who serve only one family — full control, full cost, full governance burden. A multi-family office (MFO) shares infrastructure across many families at lower per-family cost but with trade-offs in alignment and bespoke service. Below roughly $250M of investable assets the MFO economics usually win; above $500M the SFO model becomes viable.
- How much wealth do you need to justify a family office?
- There is no fixed threshold. Most families formalise a family office between $100M and $500M of investable assets, but the trigger is rarely AUM alone. Operating-business succession, multi-jurisdictional residency, branch fragmentation, and rising compliance burden typically matter more than the absolute number.
- What does a family office cost to run each year?
- Running costs scale with scope. A focused single-family office at the lower end of the AUM range usually costs $1.5-3M annually in operating expenses; large offices with multiple jurisdictions, philanthropic activity, and concierge functions can exceed $10M. Multi-family-office relationships typically charge between 30 and 100 basis points on AUM, depending on services.
- What is a family constitution and why does it matter?
- A family constitution is a written document that records the family's shared values, governance structures, and decision-making rules. Fewer than 30 percent of family offices with AUM above $500M have one, and the ones that do experience materially fewer disputes during succession events. The drafting process is generally considered more valuable than the document itself.
- Which jurisdiction is best for setting up a family office?
- There is no universal answer. Switzerland leads on stability and banking depth; Singapore on treaty network and regulator quality; Luxembourg on EU access and fund infrastructure; the UAE on speed and founder-friendly residency. The right choice depends on where the family lives, where the assets sit, and which regulatory regimes the family is comfortable operating under for the next decade.
- What is direct investing for a family office?
- Direct investing is taking equity stakes directly into operating companies or assets, rather than going through a fund manager. It compresses fees and increases control but requires proprietary deal flow, in-house due-diligence depth, and post-investment governance capability. Without all three, families typically end up with a portfolio of one-off positions that look like a programme on paper but underperform structurally.
- What is FATCA and why does it matter for family offices?
- FATCA — the Foreign Account Tax Compliance Act — is US legislation that requires foreign financial institutions to report account information about US persons to the IRS. For family offices with any US-person beneficiaries, settlors, or structure participants, FATCA compliance is operationally significant: every entity must be classified, every controlling person identified, and documentation maintained or banks may withhold or close accounts.