Is A Single-Family Office For You?

While it’s impossible to precisely quantify the growth in single-family offices, the anecdotal evidence is clear. Relatively speaking, their numbers are booming. This trend is likely to intensify as it’s become self-reinforcing. Consequently, more than a few exceptionally wealthy families will embrace single-family offices to their chagrin. “When family office are created for the ‘right’ reasons and implemented expertly they can be enormously effective and extremely beneficial to the family,” notes Miguel Forbes, vice chairman, The Forbes Family Trust. “However, as more and more family offices are created, there are more and more failures.”

According to Hannah Shaw Grove, a family office expert and principal of boutique consultancy HSGrove LLC, “Most newly wealthy families I meet are surprised by the administrative burden of running an SFO and ultimately opt for another approach. In my experience, those that do create SFO’s usually have wealth in excess of five- or six-hundred million and do it because it’s a business decision that makes sense for them, while offering the control and privacy they value. Even though the support mechanisms for family offices are better than they’ve ever been, an SFO is not a structure for the semi-committed.”“We’re flooded with inquiries from ultra high net worth families and individuals about how to establish single-family offices,” notes Richard Flynn, principal, Rothstein Kass, and head of its family office group. “In addressing these inquiries, our initial step is to help the parties think through a number of issues.”

The following are some of the considerations and questions the exceptionally wealthy should likely consider in deciding on the viability of a single-family office:

Single-family offices either directly or by engaging external specialists deliver a sleeve of expertise to the exceptionally wealthy family.

What areas of expertise will benefit you and your family that you’re not receiving today at the professional levels you expect? Are these areas of expertise best addressed by establishing your own single-family office, becoming a client of a multi-family office, or by dealing with these matters in some other manner?