Part 4: Partners, Vendors & Service Providers

Decide what to keep in-house

Start by looking at your assets, your strongest areas of expertise, and what is too sensitive or proprietary to hand to a third party. Families with less than $500 million often outsource a large portion of their office. Families with $1 billion to $3 billion may outsource a few areas, such as IT, investment consulting, accounting, or fund administration. Above $3 billion, outsourcing may be limited to global or occasional specialist needs.

These are rules of thumb, not a substitute for examining each function on its own. A provider adds costs and creates more work coordinating people and responsibilities. Evaluate whether the service is necessary and whether the family could manage it internally. Review outside relationships at least once a year.

Match investment help to the gap

An outsourced chief investment officer or investment consulting firm can support investment decisions where the family lacks confidence or in-house capacity. A family may be comfortable investing directly in real estate or bonds, for example, but want help with liquid investments or hedge funds.

Fund-of-funds and alternative investment advisory firms can also provide access to investment managers when the office does not have the resources to hire and oversee many managers directly. Some firms offer customized portfolios and advisory services alongside a fund structure. Consider whether that arrangement addresses a real capacity gap for your office.

For direct investments, co-investing, and investment banking, a family office may receive offers from bankers, or it may seek a partner to source specific acquisition opportunities. That sourcing role could sit in-house or with an outside professional, depending on the family's needs and costs.

Use outside help for specialist work

Family office accounting and reporting may be handled by a CFO, CEO, or analyst who already has the necessary skills. If the core team cannot cover it, the chapter recommends outsourcing rather than hiring someone full-time just for that work, except for very large offices or where reporting has been a particular blind spot.

Fund administration is a different service. It can be useful when a family has complex trust or fund structures. A third party can help with valuation, reporting, and administration, freeing the team to focus elsewhere and reducing the risk of errors or fraud.

IT needs vary. Some offices need customized systems for accounting, reporting, trading, and investment management. Others may be able to reduce costs by carefully reviewing their needs, especially as basic technology becomes more web and cloud-based. When complex support is needed, a firm on retainer or billed hourly may be an alternative to a full-time hire.

Security providers can address needs ranging from personal protection and cybersecurity to safe rooms and investigative research. Compliance support may be needed when business and investment arrangements are complex, involve outside capital, or raise regulatory questions. Legal counsel can review contracts, guide negotiations, and help protect the family from legal exposure.

Consider communications needs

Public relations and marketing support may matter when the family makes high-profile investments, public statements, or projects that need broad support. A communications professional can help shape how the family's actions and ideas are presented. Whether that means a PR team, a chief marketing officer, or an official spokesperson depends on the scale and scope of the work.

A virtual family office takes outsourcing further: the CEO's role is to coordinate the outside professionals delivering services to the family. That model makes coordination a central responsibility.