Kiplinger: Do I Need a Family Office?

April 9, 2021

As a family office company, one question we hear frequently from our family and friends is: “Should I form a family office?” While this question may seem very straightforward, the answer is often a lot more complicated. Fortunately, Kiplinger recently published a paper with an accompanying questionnaire that is a great resource for wealthy families hoping to determine whether a family office is the right type of organization for them.

Before we explain the factors that come into play when making this important decision, it is important to understand exactly what a family office is. According to the article, some estimates report that there 6,000 family offices just in the U.S. All these family offices fall into one of three categories: the traditional family office, the multifamily office and the outsourced family office. However, regardless of the family office’s specific category, a family office is simply an organization that helps invest and protect a family’s wealth.

While every family needs to protect their wealth, not every family requires a family office. Despite what many financial advisors say, the answer to whether or not a family office is an appropriate choice for a family does not merely come down to a simple range of net worth. While a family’s balance sheet is important, there are numerous other factors that also come into play. Some of the factors mentioned by Kiplinger include income, diversification, staffing, overhead, geographic disparity, family dynamics, philanthropic interests and time commitments – all of which can fall into one of three categories: the size of wealth, the complexity of life, and family priorities.

To learn more about these concepts or to take Kiplinger’s family office questionnaire, click here. We understand that making the decision to form or join a family office takes plenty of thought and consideration. Please do not hesitate to contact us with any questions or comments you may have about this process.