Single-Family Office vs. Multi-Family Office—What’s the Difference?

What’s the difference between a single-family office vs. a multi-family office? In terms of offered services there isn’t much to discuss. However, the devil lies in details.

A single-family office allows for much more flexibility and customization since it was established and operates specifically for your family. On the other hand, a multi-family office enables you to cut down on expenses. Do you want to learn more? Then keep reading!

What Is a Family Office?

First, let’s explain what a family office is. It’s a fully-fledged company established to run a given family's finances. It manages everything from investments and day-to-day payrolls to philanthropy and even concierge services. 

A family office is established for high-net-worth individuals (HNWI). Its goals are to manage the finances, grow the family’s wealth, and ensure that the younger generation is financially educated. Apart from that, it operates like any other company, employing both expert wealth and asset managers as well as administrative staff.

Single-Family Office vs. Multi-Family Office

There are two main types of family offices: single-family offices and multi-family offices. As you might expect, the former work for one specific family, while the latter collaborate with multiple families. This is the main difference between them, since apart from that, both provide the same services.

However, if we look further, we find some hidden differences between a single-family office and a multi-family office. These differences are rooted in the pros and cons of both options.

A Single-Family Office

A single-family office provides fully customizable services. Since the whole company's purpose is to manage your family's finances, they are open to adapting to your needs and goals. As such, you have almost full control over the service.

The second difference can (but doesn’t have to) be found in the expertise of the wealth managers working in a single-family office. If you opt for this solution, you can hand-pick the specialists who will manage your finances. This means that the overall service quality strongly depends on you, but it also allows you to hire professionals already familiar with your financial history.

Naturally, these perks come with a disadvantage. Since such a family office operates just for you, it is more expensive to run. To start a family office, you need to have a net worth of at least $50 million, plus the office will generate costs—typically between 1%-2% of your net worth.

A Multi-Family Office

A multi-family office gives you less control, although this does not mean that it cannot customize its services. However, it will only adjust the standard operations to your goals rather than provide fully personalized services. Whether this is a disadvantage depends on the level of control and customization you seek.

Regarding expertise, you have less say in who will work in a multi-family office. The specialists are picked based on the needs of all the families. However, this might have a potential benefit. This approach to hiring often results in multi-family offices offering a broader range of services, which might come in handy if you decide to change your investment strategy or try out new opportunities.

A multi-family office is also less expensive, as the costs are distributed among all the families involved.

The Choice Between a Single-Family Office and a Multi-Family Office

The decision between starting up a single-family office vs. a multi-family office depends purely on your goals and expectations towards the services. If you seek a high level of customization and suppose that you will need extra, unusual services, it might be better to pick a single-family solution.

On the other hand, if you don’t seek high customization and want to optimize the financial side of wealth management, setting up a multi-family office might be a better choice. However, in this case, there is still one challenge you’ll need to overcome—finding the right family or families to work with.

Multi-Family vs. Single-Family Office in a Nutshell

The Takeaway

Knowing the differences between single- and multi-family offices, you are ready to choose. If you opt for the latter, remember to look for families that are at least partially aligned with your goals. In the end, setting up a family office with an individual who invests in completely different assets and has entirely different priorities might not be as beneficial financially and service-wise, so it is crucial to pick the right family to work with.

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