How to Start a Family Office:

How to Start a Family Office

Between running and I have ran into a few dozen professionals who are interested in starting or currently are starting a family office.  This post is meant to help those professionals.  Below please find our top tips for establishing a family office.

Top 10 Family Office Startup Tips

  • I recently attended a private banking family office conference and most professionals there that I spoke to agreed that it takes 5-7 years for a private banking office or multi-family office startup to break-even or turn a profit.  Make sure you plan your cash flow/investments for at least a 5 year ramp up period
  • Your team, branding, office space, services, and relationship management skills must smell look and feel like a family office.  If you don't, you can call yourself a family office but you will attract few clients.
  • Meet with the first two to three families you will be serving, having them write up their own wish lists of services and form your marketing materials, benefits and service lists around those desired "wants" and combine them with what you know the families also "need."  
  • Your first 2-3 hire may decide the success or failure of your organization, hire slowly and carefully.  If it is your first time managing a team consult books written by experts on the topic others have been down this road  before.
  • Many wealth managers, HNW individuals and fund managers are looking for more information on family offices. Once you start your firm, speak at conferences and write articles on the topic to help attract clients.
  • Spend time with at least 2 attorneys and 2 CPAs to discuss the legal structure, taxation, and startup costs of running a family office. Often times the legal formation costs and considerations can delay family office institution launches.  
  • Draw process maps of how the sales pipeline will operate, how customer relationships will be managed, and how client inquiries or services will be delivered. Once you have these documented you will be able to improve upon them and use a few of the more clear process maps when explaining your services to potential clients.
  • Recognize that there is growing competition on both ends of the family office services spectrum. Medium sized wealth management firms are raising their minimums for clients and offering "family office services" while at the same time some successful multi-family offices are lowering their minimums to capture more market share within their region. Your family office must be positioned to be different from others in service, positioning, or relationship management.
  • Some stats show that $40-55M in AUM is typically needed to start a family office while others claim that $1B is needed to offer full fledged family office services.  Know that you may need to startup with one set of services and expand those as you grow past $100M and $500M in assets.
Learn more about Family Offices by downloading our Family Office Report or visiting Family Offices  

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Tags: Starting a family office, how to start a family office, family office startups, establish a new family office, how to start a multi-family office, single family office formation tips and strategies

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