Setting Up a Family Office

Setting up a family office is a comprehensive process customized to manage and preserve the wealth of high-net-worth families. It involves lots of time and higher costs so it requires careful planning, strategic decision making and meticulous organization. Here’s a step-by-step guide to establishing a family office:

Step 1: Define Your Objectives

Identify Goals

Clearly outline what you want to achieve with your family office. Common goals include:

  • Wealth preservation

  • Growth through investments

  • Estate planning

  • Philanthropy

  • Ensuring privacy and security for family members

Assess Needs

Evaluate the specific services your family requires, such as investment management, legal advice, tax planning and concierge services.

Step 2: Assess Your Wealth

Evaluate your family’s total assets to determine if a family office is the most efficient way to manage your wealth. Typically, families with assets of $100 million or more can justify the costs associated with a family office.

Step 3: Determine the Type of Family Office

Step 4: Establish Governance Structures

Develop a Family Charter

This document outlines the family’s vision, values and mission for the family office, serving as a guideline for future generations. It typically includes:

  • The core principles and goals that guide the family and its wealth management strategies.

  • High-level policies regarding family governance and the operation of the family office.

  • The family’s approach to philanthropy, social responsibility and how they wish to leave a lasting impact.

  • Commitments to family member development and education about wealth management.

The family charter is more about the why and what — it’s a statement of intent and principle that provides a foundation for the governance framework to build upon.

Create a Governance Framework

Decide on the decision-making processes, including:

  • Who will be involved in strategic decisions?

  • What would be the governance structure like having a family council, executive team and advisory boards?

  • What would be roles, responsibilities and authority levels for all involved in the family office, from family members to employees and advisors?

  • What accountability mechanisms will be used to monitor performance and make adjustments?

  • How decisions will be made (including which require consensus among family members and which can be made by the executive team)?

  • How conflicts will be resolved (either using mediation or arbitration mechanisms)?

  • What financial management policies and guidelines will be built to manage investments, spending and risks?

  • How family members will be educated about financial literacy and governance skills?

  • How all stakeholders will be updated and engaged?

  • How leadership roles will be transitioned within the family office?

  • How future generations of the family will be involved?

  • How philanthropic or charitable activities will be managed?

  • How sensitive family and financial information will be protected and so on.

The governance framework is more about the how of managing a family office and its wealth, focusing on operational effectiveness, risk management and ensuring that the office runs smoothly and efficiently.

Step 5: Create a Business Plan

  • Outline Services: Detail the services your family office will provide, based on the needs and objectives identified.

  • Budget Planning: Estimate the operational costs, including staffing, office space and technology needs. Ensure your family’s assets justify these expenses.

  • Financial Projections: Develop financial projections for the office, considering the costs versus the benefits it will provide.

Step 6: Assemble a Professional Team

  • Hiring Staff: Recruit experienced professionals, including a Chief Financial Officer (CFO), investment advisors, tax experts and legal counsel. Consider the need for administrative and personal service staff.

  • External Advisors: Identify areas where external consultants may be required, such as specialized legal advice or international investment opportunities.

Step 7: Develop an Investment Policy Statement (IPS)

Craft an IPS that outlines your family’s investment objectives, risk tolerance, asset allocation and guidelines for selecting investments. This will serve as a roadmap for managing the family’s wealth.

  • Legal Structure: Decide on the legal structure of your family office (e.g. LLC, trust and corporation) with the help of legal experts to ensure asset protection and operational efficiency.

  • Regulatory Compliance: Ensure compliance with all relevant financial and legal regulations, including SEC regulations if your family office will be managing investments.

Step 9: Implement Technology Solutions

  • Invest in Technology: Adopt financial management software, cybersecurity measures and communication tools to support the efficient operation of your family office.

Step 10: Develop Investment Strategies

  • Asset Allocation: Develop a diversified investment strategy that aligns with your family’s risk tolerance and growth objectives.

  • Risk Management: Implement risk management practices to protect your family’s assets from market volatility and other financial risks.

Step 11: Implement Wealth Management Strategies

With your team in place and your IPS as a guide, begin actively managing your family’s wealth. This includes investment management, tax planning, estate planning and addressing any specific needs outlined in your objectives.

Step 12: Set Up Philanthropic Endeavors

If philanthropy is a core objective, establish structures for charitable giving, such as private foundations or donor-advised funds. Define your philanthropic goals and how they align with your family’s values.

Step 13: Plan for Succession

Develop a clear succession plan to ensure smooth transitions of wealth and leadership within the family office. This includes estate planning, trusts and educating the next generation about wealth management.

Step 14: Establish Reporting and Evaluation Mechanisms

  • Performance Tracking: Set up systems for tracking the performance of investments and the overall efficiency of the family office.

  • Regular Reviews: Schedule periodic reviews of the family office’s performance, including financial audits and assessments of the office’s alignment with family goals.


Establishing a family office is a strategic decision that offers numerous benefits for managing the wealth and affairs of ultra-high-net-worth families. By following above step-by-step instructions, you can create a family office that not only meets your current financial management needs but also secures your legacy for future generations.

Remember, the key to a successful family office lies in clear objectives, strong governance, expert advice and the flexibility to adapt to changing circumstances. As you embark on this journey, keep your family’s values at the core of your decision-making, ensuring that your wealth management strategy reflects not just financial goals, but the broader aspirations of your family.

Frequently Asked Questions

How much wealth is required to set up a family office?

While there’s no strict minimum, setting up and operating a family office is usually cost-effective for families with investable assets of at least $100 million. For MFOs, the threshold can be lower due to shared costs.

What are the first steps in setting up a family office?

Start by defining your family’s objectives and what you hope to achieve with a family office. Then, assess your family’s total assets to ensure a family office is a viable option. Next, decide on the type (SFO or MFO) and the services you need.

How do I choose the right jurisdiction for my family office?

Consider factors like the political and economic stability of the jurisdiction, legal and regulatory environment, tax regime and privacy protections. Common jurisdictions include Switzerland, Singapore and certain U.S. states like Delaware.

What is the ideal corporate structure for a family office?

The structure should align with your family’s goals, tax considerations and regulatory requirements. Options include trusts, limited liability companies (LLCs) or partnerships. Consulting with legal and financial advisors is crucial.

Should I setup my family office as a Trust or Private Company?

Setting up a family office as a trust or a private company depends on various factors, including the family’s goals, privacy needs, tax considerations and the level of control they wish to maintain. If the primary concern is asset protection, privacy and succession planning without immediate need for high liquidity, a trust might be more suitable. Trusts are particularly advantageous for families focused on legacy preservation and intergenerational wealth transfer since assets can be transferred smoothly to beneficiaries without going through probate. On the other hand, if the family values flexibility, control over investments and operations and potential tax advantages, setting up a private company could be the preferred route. This is especially relevant for families actively involved in business activities or those who prefer direct management of their assets.

How do I build a team for my family office?

Identify the core competencies needed, such as investment management, legal, tax planning and estate planning. You can employ in-house professionals and/or outsource certain functions to specialized firms.

What are the key considerations for governance in a family office?

Establish clear governance structures that outline decision-making processes, roles and responsibilities. This may include forming a family council and developing policies for investments, succession planning and conflict resolution.

How can I ensure the sustainability of my family office?

Focus on long-term strategic planning, including succession planning, regular financial reviews and adapting to changing family needs. Also, invest in educating future generations about wealth management and governance.

What are the major challenges in managing a family office?

Challenges include aligning family interests, managing costs, navigating complex tax laws and regulations, ensuring privacy and security and making strategic investment decisions.

How do family offices handle regulatory compliance?

Compliance strategies depend on the jurisdiction and the services offered. Family offices may need to navigate financial regulations, tax laws and reporting requirements, often with the help of specialized legal and financial advisors.

What technological infrastructure is needed for a family office?

A robust technological infrastructure is crucial for effective management and security of family office operations. This includes advanced software for portfolio management, risk management and financial reporting. Security measures should also be implemented to protect sensitive information and assets from cyber threats.

How should a family office approach investment management?

Investment management in a family office should begin with a clear understanding of the family’s long-term financial goals and risk tolerance. It often involves a diversified approach across multiple asset classes to balance potential returns with risk management. Regularly reviewing and adjusting the investment strategy in response to market changes and family objectives is also vital.

What are the benefits of having a dedicated family office compared to using other wealth management services?

A dedicated family office offers personalized and comprehensive management of a family’s financial and personal affairs. Unlike traditional wealth management services, a family office can provide higher customization, privacy and a holistic approach to managing wealth, lifestyle, legal and tax issues. It also ensures that all actions are closely aligned with the specific values and needs of the family.

Related Pages