A family office is a financial advisor firm that provides comprehensive wealth management services to a single individual or family. A multi-family office simply expands on the same concept. Instead of working with just one family or individual, a multi-family office provides holistic wealth management services to a variety of different families and other ultra-high-net-worth individuals. Multi-family offices tend to be registered investment advisors (RIAs), but they may also be law firms, accounting firms or other types of companies. This is by virtue of the fact that multi-family offices provide advice and help with a wide range of investment and financial matters.
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What Is a Multi-Family Office?
A multi-family office is a wealth management firm that provides comprehensive financial services to families and individuals with an ultra-high-net-worth. Since they work with such high-net-worth clients, multi-family offices may vary significantly in the types of services that they provide or the types of clients they choose to work with.
While family offices are quite common, multi-family offices tend to be fewer and farther between. Multi-family office are sometimes formed when a single-family office merges with another single-family office or decides to take on additional clients. Larger wealth management firms may also create a multi-family office division, or a team of financial professionals may create a multi-family office firm from scratch.
What Does a Multi-Family Office Do?
Functionally, a multi-family office provides the same service as a family office, but to more than one family or individual. While a wealth management firm typically provides investment portfolio management services and financial planning services, a multi-family office’s services extend beyond the strictly financial.
Multi-family offices are typically registered investment advisors (RIAs), but they don’t have to be. These types of organizations provide a wide array of services, which can include legal, insurance, business and tax services, as well as investment management, estate planning and charitable giving expertise. A multi-family office may even provide personal concierge services to clients, which handle personal matters and lifestyle needs.
However, the vast majority of family offices and multi-family offices provide investment advising services, so they’re often lumped in with traditional wealth management firms that work with a variety of different clients.
Another key difference that makes a multi-family office stand out is the fact that it will typically only work with ultra-high-net-worth individuals and families. Typically these people will have more than $30 million in investable assets.
Pros and Cons of Working With a Multi-Family Office
There are benefits and drawbacks when it comes to working with a multi-family office. For starters, multi-family offices offer tailored financial planning and investment management services that can be easy to manage and share with multiple clients.
For example, high-net-worth families with estate planning and charitable giving needs could benefit from a multi-family office because it’s able to pool resources from multiple clients to create and manage trusts, foundations and other programs. This allows clients to draw from the office’s combined expertise to plan and execute on these financial structures efficiently.
Multi-family office clients can also benefit from cheaper costs when compared with single-family offices. Advisors and other office professionals can charge less because they are working with multiple clients. And as the office grows, it will also be able to offer more comprehensive services, which could be comparable with other advisory firms.
As a drawback, you should note that while single-family offices provide individualized service, many multi-family offices can also offer an individualized experience. But it will depend on the size of the clientele. And as a result, this could end up becoming a less personalized service.
Finally, you should also keep in mind that resources will vary, depending on the size of the office. So you should always research the office before engaging in services to make sure that it is the right fit for your family’s needs.
Multi-family offices are just one way for ultra-high-net-worth families and individuals to receive wealth and asset management services. While single-family offices are better known, there are a number of important differences between the two, and multi-family offices can often provide a better service for clients at a lower cost.
However, it’s important to weigh the pros and cons in your specific situation. Given the nature of the multi-family office business, you may come to a different conclusion as to whether you should work with one.
Tips for Investing
- Not all of us can work with a multi-family office. Investing on your own can be difficult, but a financial advisor is often a great resource for helping you figure out how to build your portfolio. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- If you’re investing entirely on your own, it pays to be knowledgeable and prepared. SmartAsset has you covered with a range of free online investment resources. For example, give SmartAsset’s free invesment calculator a try and get started investing today.
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