What is a Multi-Family Office?

Insights July 9, 2024

Key Takeaways

A multi-family office is a firm that specializes in comprehensive financial and wealth planning services for ultra-high-net-worth families.
Compared to single-family offices, multi-family offices leverage economies of scale to offer a wide array of investment opportunities and services at a fraction of the cost.
Multi-family offices offer a broad range of services that include wealth management, investment management, tax and estate planning and family governance, among others.
If you’re searching for a multi-family office, ensure the firm you pick is a fiduciary, provides the services you need and aligns with your family’s values and vision.

If your family’s wealth has grown to a size and complexity where full-time management is necessary, a family office may be just what you need. While single-family offices have long been reserved for only the wealthiest families, multi-family offices have grown in popularity for providing the same array of financial services for a fraction of the price.

Below, we explore what a multi-family office is, how you may benefit from one and how to evaluate firms once you begin your search.

What is a multi-family office?

To define a multi-family office, we first need to understand what a family office is.

Families with significant wealth have sophisticated and wide-ranging financial needs spanning investment management, tax and estate planning, succession planning, philanthropy, family governance and more. As the size and complexity of their wealth grows, these families may benefit from a centralized team of specialists who have the time and expertise to manage all their financial affairs under one roof.

A family office is just that – an advisory firm that provides customized and comprehensive financial services to ultra-high-net-worth families. In utilizing a family office, families aim to preserve their wealth across generations in alignment with their personal goals and values.

Family offices typically take two forms. A single-family office serves one family, while a multi-family office serves several families.

Single-family office vs. multi-family office

Besides the number of families they serve, how do single- and multi-family offices differ?

Single-family offices offer a high level of customization, client service and confidentiality. Because they serve a single family, the team is dedicated, and the services are tailored exclusively to that one family.

However, for the very same reasons, single-family offices are typically costly to operate – so expensive in fact that the cost is often only justified if a family has several hundred million dollars or more in investable wealth. Moreover, their small scale limits the extent of their in-house resources, investment opportunities and expertise, which may in turn introduce human capital concentration risk.

Multi-family offices, on the other hand, provide a wide array of opportunities and services at a fraction of the cost. How are they able to do this? By serving multiple families, multi-family offices leverage economies of scale. Their scale allows families to gain access to a broader, and often more exclusive, range of investment opportunities. With more resources, multi-family offices hire bigger teams that provide a greater variety of services, and their specialists can provide deeper and more diverse knowledge. Finally, multi-family offices can spread operating costs across families to offer lower fees. In fact, families with a minimum net worth of $30 million can benefit from multi-family office services – a far lower threshold than that of a single-family office.

In summary, multi-family offices can provide a greater breadth and depth of investment opportunities, financial services and team expertise, all at a lower cost.

Multi-family office services

Multi-family offices offer a broad range of services, serving as a “one-stop shop” for wealthy families’ various financial needs. While multi-family office services vary from one firm to another, they generally encompass:

Wealth planning and management: The thorough evaluation of a family’s financial situation followed by the development of a personalized roadmap that empowers them to achieve their goals from saving for their children’s education to charitable giving to leaving a lasting legacy.
Investment management: The development and management of an investment portfolio that aligns with a family’s financial objectives and risk tolerance. These portfolios often include exclusive alternative investments in asset classes like private equity, venture capital and real estate.
Tax planning: The optimization of a family’s financial affairs and leveraging of income tax strategies to minimize tax liabilities while ensuring compliance with tax laws and regulations.
Estate planning: The creation of a comprehensive plan for a family’s estate that’s tax-efficient and structured in accordance with their wishes in the event of a death or disability. Estate planning often involves creating a will and setting up trusts.
Insurance coordination: The process of assessing a family’s risks, conducting insurance policy reviews and coordinating coverage to minimize the likelihood and impact of certain events.
Philanthropy: The management of philanthropic activities to maximize a family’s charitable impact in alignment with their values and legacy goals. This may involve establishing a foundation, creating a grant and other charitable activities.
Family governance: The establishment of processes such as a family charter, regular family meetings and succession planning to facilitate communication, decision-making, and education among family members and across generations.

How do I choose a multi-family office?

Selecting a family office is a big decision, so be sure to thoroughly research a firm before partnering with them. To help, here are a few criteria to help you gauge whether you would benefit from a multi-family office along with criteria to evaluate your options:

Fiduciary: First and foremost, ensure the firm you pick is a fiduciary. Fiduciaries are legally obligated to act in the best interests of their clients at all times.
Net worth: Does your family have a minimum of $30 million in investable assets? While it’s far more cost-effective to employ a multi-family office compared to a single-family office, make sure the benefits justify the fees.
Services: What services does your family need: investment management, estate planning, family governance? Does your family have a complex tax situation or specialized financial needs like succession planning? Evaluate whether the firm can provide the full range of services and specific expertise your family requires.
Fit: Working with a multi-family office is a long-term partnership. Make sure the investment philosophy, communication style and culture of the firm align with your family’s preferences.
Reputation: Thoroughly vet firms by reviewing their track records, reading client testimonials and asking for references.

Searching for a multi-family office? Contact Certuity to learn how we can serve as a one-stop shop for all your family’s financial needs.