The term Family Office encompasses any organizational structure that effectively builds and transfers wealth across generations. There are many reasons why setting up a family office makes sense, but at the root of these is the desire to ensure smooth intergenerational transfer of wealth without serious intrafamily disputes.

The Family Office Exchange (FOX), a membership organization of Family Offices, defines a Family Office as “a unique family business that is created to provide tailored wealth management solutions in an integrated fashion while promoting and preserving the identity and values of the family.”

A Family Office supplies a comprehensive solution to managing a family’s wealth and financial affairs. Some Family Offices are set up purely for administrative purposes, such as bookkeeping, financial reporting, and document management. Others provide a more comprehensive range of services, including administrative, legal, tax, risk management, and investment functions. Some Family Offices may be individual legal entities – which may be part of a sophisticated web of interrelated family entities – and others may consist of a weekend administration hub operated out of a home office. As far as investing, some Family Offices remain passive and simply allocate funds to outside managers. More aggressive and well-capitalized offices may be engaged in private equity and venture capital opportunities, as well as sponsoring hedge funds and owning large amounts of commercial real estate.

Ideally, a Family Office is uniquely tailored to meet the specific needs of the family it serves. The term “Family Office” can mean different things to different families, and to define what an “average family office” should look like is not meaningful. The size of human capital and infrastructure of a Family Office varies depending on the services provided, the number of family members to be served, and how the services are to be delivered.

The conventional Family Office services offered in the family wealth industry are marketed exclusively to “high net-worth” families – families worth above $40 million. However, a sharp increase in both the number of people assuming new family wealth management roles and the organizational challenges they face, are fueling a more widespread need for Family Office services from families in all tiers of wealth.