All families desire to grow their wealth, share it with causes that matter to them, and ultimately pass it on to future generations. Achieving that can get complicated when you have a high net worth. That’s why many wealthy people emulate America’s first billionaire, John D. Rockefeller, who set up a structure that to this day protects his family’s legacy. That’s the idea behind a family office.
What Is a Family Office?
A family office brings the entire family’s financial needs under one umbrella for better management and coordination. To start, a family identifies the core values it wants its legacy to represent and the financial and charitable goals required for that legacy to endure.
Working from that perspective, the office handles a variety of financial responsibilities, such as the following:
- Wealth management: Identifying, assessing, and acting on investment opportunities; monitoring investment performance and asset allocation; and managing liquidity
- Estate management: Planning for and protecting the transfer of wealth to the next generation
- Philanthropy: Helping define and implement a donating strategy
- Risk management: Assessing insurance, disaster recovery, and data security needs and developing mitigating strategies
In addition, a family office may help manage household budgets, club memberships, and private travel. It often also educates upcoming generations who may have questions about what a family office is.
If one or more family businesses exist, the office may also provide financial and advisory services to them.
Is There Just One Family Office Type?
As an entity that helps fulfill a family’s legacy through financial, personal, and business-related advisory services, a family office can take one of three forms:
- Single-Family Office (SFO): A singular office set up to directly serve one particular family
- Multi-Family Office (MFO): An office that manages a limited number of families who benefit from the economies of scale of the joint arrangement
- Family Office Services: A wealth management firm that serves any number of families by providing a customizable menu of services based on individual needs
How Much Money Do You Need for a Family Office?
Many financial resources, including The Motley Fool, associate family offices with ultra-high-net-worth individuals and families by recommending an SFO for those with more than $100 million in assets and an MFO for those with assets between $20 million and $100 million.
In truth, other factors beyond asset size can justify a family office for people considered high-net-worth ($1 million to $5 million) and very high-net-worth ($5 million to $30 million), including the following:
- Family size, such as the number of households and generations involved
- Asset complexity for investments like real estate
- Number and structure of family businesses
Want to Learn More?
How do you find a family office advisor that’s right for you? Ask for recommendations from peers and run an online search. Look for firms in your local area or otherwise readily available to you that meet these criteria:
- Independent and unaffiliated
- Experienced in wealth management
- Certified Financial Planner
- SEC-Registered Investment Advisor
Most importantly, conduct your own due diligence to make sure a firm is committed to acting only in your best interest as a fiduciary advisor.
SkyOak advisors meet all of the above criteria and are dedicated to putting your wealth to its best use. If you’re looking to set up a family office in Las Vegas, contact us to set up a consultation.
Originally posted 2020-10-08 12:00:20.