What are Family Offices: As the name implies, the original family offices were set up by ultra-wealthy families, such as the Vanderbilts, the Fricks and the Rockefellers. The family in question would hire top talent in disciplines such as investments, accounting and law to manage their vast financial interests on a fulltime basis. Other miscellaneous responsibilities also could fall to the family office, as diverse as real estate management, travel booking, entertainment planning, etc.
A single family office (SFO) is dedicated to just one family. A multi-family office (MFO) serves several. Some venerable family offices, notably the Phipps family's Bessemer Trust, have long since accepted clients from outside their founding families, thus converting from single family offices to multi-family offices. The primary motivation for doing so has been to spread the considerable operating costs of the family office over a wider base of clients and assets.
Meanwhile, some organizations categorized as family offices never had a connection to a specific wealthy family. These firms, by contrast, were established to serve, from day one, virtually all comers who could meet their eligibility criteria and pay their fees.
Unique services: To enhance their appeal to potential clients, family offices strive to be an all-contained, one-stop-shopping experience to a degree that goes far beyond what the typical integrated, full-service financial firm offers. A prime example is tax preparation, a line of business that major financial services firms typically avoid at all costs, fearful of the potential liabilities. Another is bill payment, in which the firm assumes this responsibility on behalf of the client.
Family offices also tend to offer an array of concierge services that are, strictly speaking, totally unrelated to their primary function as financial services providers. However, these activities vastly increase their value to wealthy clients who will pay to be relieved of these responsibilities. Some family offices will act as travel agents for their clients, or will secure hard to obtain event tickets. Others may, no exaggeration, post bail for unruly clients who land in jail. The list of these ancillary services is potentially limitless.
Business management firms: This variety of family office specializes in an entertainment clientele, such as top actors and musicians. Not surprisingly, many of these firms are headquartered in southern California. Sometimes these firms are controlled by entertainment agents, but more often they are independent entities that rely upon agents for referrals.
Sports management firms: This species of business management firm focuses primarily on serving professional athletes.
Family Office Statistics: Follow the link for pertinent data on the size of the family office sector, staffing therein, economies of scale, cost pressures and trends among their clients.
Positives: Working for a family office, business management or sports management firm will appeal to people who enjoy the notion of getting to know famous and/or influential people. For those less impressed with celebrity or power, this work environment will attract those who desire a fast pace and an opportunity to focus their talents on a small set of clients whom they get to know intimately. A 2008 Wharton study indicates that SFO investment professionals enjoy less stressful and more flexible work conditions than their counterparts elsewhere.
Negatives: The clientele can be much more demanding and eccentric than the general population. The broad nature of the services offered by the firm, reaching into the minutiae of clients' lives, can make you feel more like a personal servant than a professional, with little private space in your life. The Wharton study also indicates that SFO investment professionals earn less than what they can get elsewhere.