The centimillionaire family office

When a single family office makes sense

An SFO is designed around one family. It can coordinate investment activity, reporting, administration, risk management, and family priorities in one structure. A family may consider one when advisers work separately, the family itself is carrying information between them, or the work involved in managing businesses and investments has become difficult to coordinate.

Direct investing can also shape the decision. A family that owns operating businesses or real estate, or that wants to evaluate investments directly, may need dedicated staff and processes to review opportunities and monitor them over time. A family office can support that work while the family retains decision authority.

The wealth threshold is a starting point for discussion, not a guarantee that an SFO will fit. A useful comparison is whether the expected value of coordinated work, risk oversight, and time freed for family members justifies the people and systems involved. Some families start with a holding company or a virtual office and formalize the structure as needs grow. A virtual office keeps a small internal team and outsources other functions.

Costs come from the work

There is no single operating cost that applies to every office. The main cost drivers are the number and seniority of employees, the investment activity handled internally, the complexity of the family's assets and entities, and the services purchased from outside providers.

Technology and reporting can add expense, especially when the family needs consolidated information across different custodians, investments, businesses, and illiquid assets. Legal and tax needs vary, as do accounting, cybersecurity, insurance, and administration requirements. Location can affect access to staff and providers as well as tax planning.

A lean model can keep fixed staffing limited, but outsourcing still requires coordination and oversight. A larger in-house operation may offer more control and continuity while bringing additional management responsibilities. For a focused discussion of the main cost categories, see how single family office operating costs are estimated.

First hires and the operating model

The first role should address the family's biggest coordination gap. That may be an executive who can organize priorities and providers, or an operations-focused professional who can improve reporting, administration, and follow-through. Investment talent makes sense when the family intends to source and assess opportunities internally. A family office does not need to hire every specialty at launch; legal or tax work can be outsourced, along with accounting, technology, and other services where appropriate.

Before hiring, map the family's entities and advisers. Then identify its assets and recurring decisions. Define who owns each process, what information the family needs, and which responsibilities require an employee. Recruiting and balancing different family members' needs can take time, so the team design should follow a clear assessment guided by the family's needs.

Governance, privacy, and decisions

Governance sets out who can make decisions, how money moves, how advisers and employees are selected, and how conflicts are handled. It should fit the family's actual size and working style. Written policies can cover investment approvals, hiring, charitable giving, family support, record access, and financial review.

Controls matter even in a small office. Define who can authorize payments and transfers, who reviews financial activity, and when independent review is required. An investment policy can state what due diligence is expected and how conflicts are disclosed. Family meetings can provide ways to share information, while an advisory board can bring outside perspectives, especially as more generations participate.

Privacy also needs practical rules. Decide what staff may share, who can access family records, and how public communications are handled. Security planning should reflect the family's actual concerns and the way its office operates.

Deal flow and investment focus

Deal flow is useful only when it matches the family's investment scope and capacity. The office can define sectors, asset types, geography, risk limits, and the evidence needed before a proposal reaches decision makers. A consistent process helps distinguish an interesting introduction from an opportunity that merits diligence.

Relationships with operators and investors can surface opportunities, as can connections with advisers or other family offices. The office still needs a screening process, diligence standards, conflict disclosures, decision authority, and post-investment monitoring. These functions can be shared between internal staff and outside specialists. Family Office Club, founded by Richard C. Wilson, has held 340+ events since 2007 and about 30 events a year, creating opportunities for education and professional connections.

SFO or MFO?

An SFO serves one family and can be tailored to its priorities, reporting preferences, and governance. It also requires the family to oversee the people and systems that make the office work, along with its providers.

A multi-family office serves more than one family. It can offer access to professional services without requiring each family to build the same internal infrastructure. Services and attention are shared, and the arrangement may be less tailored to one family's preferences. A family comparing the models should review the services included and decision authority. It should also consider conflicts, data access, fees, and how providers are selected. A family office overview explains the basic structures.

The 12-part family office series

The How to Start a Family Office series follows the work from the decision to build an office through its ongoing development:

• Part 1: Why Start a Single Family Office?considers the case for dedicated coordination and a virtual office.
• Part 2: Creating Your Family Compasssets out the family's mission and values, then covers its goals and operating policies.
• Part 3: Fundamentals of Creating a Single Family Officecovers needs, location, and operations. It also addresses risk and governance.
• Part 4: Partners, Vendors & Service Providersconsiders which functions to keep in-house and which to outsource.
• Part 5: Portfolio Modelscompares broad approaches to portfolio construction.
• Part 6: Single Family Office Governanceexplains decision rules and accountability, along with family participation.
• Part 7: Family Office Public Relationsaddresses public presence and family privacy.
• Part 8: Single Family Office Talent Searchfocuses on finding and attracting suitable staff.
• Part 9: Single Family Office Operational Processesfollows recurring work such as screening and diligence, then monitoring and reporting.
• Part 10: Building Your Deal Flow Totem Polelooks at sourcing direct investment opportunities.
• Part 11: Investment Committees and Advisory Boardscovers decision rules and outside advice.
• Part 12: The Future of the Single Family Office Industryconsiders forces that may shape the field.