Thought PiecesAugust 10 2020

What is a Family Office?

2 mins read

Written by Wigmore Firms

Defining the term family office is not an easy task as there are many versions of family offices that bear little resemblance to each other. Today, private banks, law firms, accounting firms, trust companies, and others market family office services, thereby further confusing the term.

The reality is that every wealth-owning family has a family office, regardless of whether they know it or not. Someone, in every family, is taking care of things that a typical family office has to deal with. A family involved in a family business may have the chief financial officer or another individual who is handling the books for the business, also keep an eye on personal investments, perhaps liaising with asset managers, and also paying day-to-day bills on real estate, as well as managing private assets the family holds. In effect, the individual involved in the family office with such a broad range of responsibilities, may or may not be managing his function in a way that is best for the family, depending on how well structured the role of that individual is and the extent of their expert knowledge on such a vast range of subjects.

A more formal family office is one set up explicitly by a family, for their own dedicated and exclusive needs and it is difficult to find any two family offices that are the same. A senior accountant to the family business who may be coming to retirement with their firm may be appointed as the head of the family office function following the family business facing a liquidity event. This individual would be in charge of coordinating the external advisors and providing support to the family in relation to assets, structures and succession. This would be the start of a simple family office, with someone keeping an eye on things in a coordinated way.

For many families, the cost of a dedicated single family office (SFO) and the distraction of running it makes the idea of a multi-family office (MFO) of interest. An MFO provides services not just to a single family but to many families.[1]

This overview piece is a collaboration of thoughts from each Wigmore firm following these questions being asked more frequently than you may think. If you would like any further information regarding the Wigmore Association please contact us through the website.

[1] McCullough, T. and Whitaker, K. (2018). Wealth of Wisdom, p. 313.