What is a Family Office and is Your Family in Need of One?

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What is a Family Office and is Your Family in Need of One?

Family wealth is often a complex matter as there are many financial aspects involved such as private equity investments, stock portfolio investments, debt structures and personal matters such as the day to day administration of family wealth.

A family office is a vehicle that is committed to supporting an affluent family/ families to grow their wealth and pass it on to the next generation.

What Is a Family Office?

A family office is a private wealth management advisory firm that offers end to end financial solutions for ultra high net worth (UHNW) individuals and their families.

A family office not only helps affluent families with wealth management and advisory services, but also with things like personal finance, insurance, budgeting, tax planning, philanthropy, among other services.

The major difference between a family office and a normal investment firm is that; a family office directly handles a family's wealth and invests directly on behalf of the unit. Investment firms on the other hand pool capital from various investors and then invest the pooled money in various profitable assets.

The Genesis

The very first family office is said to have been set up in 1882 by John D. Rockefeller Sr, an American industrialist, philanthropist and private entrepreneur to help organize his complex business operations and manage his family's investment needs. As the co-founder of the Standard Oil Company, he had control of approximately 85% of oil worldwide by the end of the 19th century. By the time of his death in 1937, he was worth $1.4 billion, thus accounting for 15+% of the U.S. economy at the time.

The Rockefeller family office is still functional to this day.

Who Needs a Family Office?

A family office best caters to extremely wealthy individuals and their families. These ultra-high net worth are those who generally have $100+ million in liquid assets.

Types of Family Offices

There are three main types of family offices and each of them serves a different purpose.

Single-Family Offices

Single family offices are firms that offer personalized wealth management services to just one UHNW family. Usually, a family will hand pick the personnel that they'd like to work with based on their specific wealth management needs. Aside from investment planning and management, a single family office can also offer additional services like accounting, tax planning, real estate investing, among others.

Something to note with this type of family office is that a higher investment is usually needed to set up and run the business, as the office only services a single family at a time.

Multi-Family Offices

Multi-family offices are firms that provide financial and wealth management services to multiple affluent families. Teams that operate multi-family offices are much bigger as they serve several families. Among the services provided by multi-family offices include tax and estate planning, risk management, philanthropic advice, among others.

A multi-family office services several clients and so it might be a more affordable option for UHNW clients as opposed to the single-family office.

Something to note with this type of family office as a client is that you might not get personalized and tailor made services as such firms service many clients simultaneously.

Virtual Family Offices (VFOs)

Virtual family offices are those where a family can outsource all the investment and wealth related services from external advisors.

An advantage with this type of model is that the family is able to minimize their operational costs.

A downside though is that; since there is information sharing between many external parties, privacy may become an issue of concern.

Why is Setting up a Family Office Important?

There are several reasons why UHNW families set up family offices to help them manage their finances:

Personalized Services

With a family office, the services that you receive are personalized based on your specific requirements. From wealth management to private travel management to concierge services private schooling, travel arrangements, and miscellaneous household arrangements, there are no personalized services that are out of reach for a family office.


Privacy is usually a big deal for affluent individuals and their families Therefore, having a family office is vital for such people as it ensures that personal information is secure and only accessible to a limited number of people.


For many families, the priority is not only to live a good life but to also invest and create wealth for future generations. Working with a family office will help you create a legacy for your family across different generations.


In a family unit, getting professional help to manage the family's wealth is crucial to avoid internal feuds and ensure responsibility and accountability. Working with a family office will enable you to achieve this.


As much as saving and wealth creation is important, living and enjoying a good life is equally important. Working with a family office will help you and your family strike a good balance.

Major Functions of a Family Office

A family office serves different functions for different families. Here are the main responsibilities of a family office:

Wealth Management and Legacy Planning

With UHNW families, wealth management and a wealth transfer plan are vital to ensure that compliance with government regulations is in check at all times and also that the family legacy is carried forward.

Working collaboratively with a family office will ensure proper family governance and an optimized wealth transfer plan.

Lifestyle Management

Among the functions of a family office is to help a family to manage their lifestyle needs. From providing personal security to concierge services to travel planning, a family office helps affluent families manage their personal affairs and streamline their business affairs.

Investment Management

For many affluent families, the goal is not only to preserve but also grow their wealth. Working with a family office provides efficiency when it comes to purchase of real estate, portfolio management and diversification, venture capital investments and property management.

Family Wealth Education

Among the responsibilities of a family office is to teach and empower younger family members on how to handle and grow the family wealth based on the principles and values of the family.

With proper education, money related feuds among family members can be prevented and family wealth can be preserved for future generations.

Philanthropic Investment

As a way to give back to society, some affluent families take part in philanthropic and impact investing for social change. A family office can facilitate philanthropic investment directly or through alternative channels like a family foundation or donor advised funding.

What has Caused a Rise in Family Offices?

In 2022, it is estimated that there are roughly 3,000-7,000 family offices operating in the U.S. Among the factors that have led to the increase in the number of family offices include:

Increase in the number of UHNW families

Over time, there has been a notable increase in the number of high net worth individuals and families. This is as a result of income inequality and the rapid increase in returns to capital as compared to labor. With the presence of more UHNW families, the demand for family offices has also gone up.

COVID-19 pandemic

The COVID-19 pandemic caused a lot of unpredictability which made wealthy families re-evaluate their wealth management processes, the purpose of their wealth and the legacy that they want to leave behind.

Operational costs

By working with family offices, affluent families have realized that they can get personalized and efficient services at affordable rates. This is in comparison to traditional individual wealth management consultants.


  • Working with a family office ensures that you have a dedicated team of professionals that manage your wealth and track your investments.
  • A family office is usually operated with discretion and so a family is able to obtain the privacy and confidentiality that they need.
  • With a family office, there is more flexibility and therefore it's easier to make quicker investment decisions without having to invest through hedge funds and private equity funds.


  • Hiring or structuring a family office based on your specific needs can be an expensive and time consuming process.
  • Lack of organization may come up as different family members may have different vision with regard to potential investment opportunities.
  • Being that family offices deal with affluent families, disagreements may come up with regard to investment opportunities as the family grows and this can eventually lead to a dragged out investment process that may lead to missing out on great opportunities.

What Does the Future Look Like for Family Offices?

It is projected that this industry will continue to grow due to changing economic conditions whereby the number of affluent people and families is increasing and a growing need for security of information and data among UHNW individuals and families.

With specialized and tailor-made services for affluent families, family offices are definitely here to stay. If you would like to engage our qualified wealth management team to help you with your family office needs, then get in touch with us here.

Bay Street Capital Holdings

Bay Street Capital Holdings is a Black-owned, independent investment advisory, wealth management, and financial planning firm headquartered in Palo Alto, CA. They manage portfolios with the goal of maintaining and increasing total assets and income with a high priority on managing total risk and volatility. Although many advisors may focus on maximizing returns, they place a higher priority on managing total risk and volatility.

Our founder, William Huston founded Bay Street after 13 years of supporting the United States' largest retirement plan ($650B) Thrift Savings Plan. He is recognized as Investopedia’s Top 100 Financial Advisors for 2022. In California, Bay Street Capital Holdings is the only Black-owned firm out of the twenty firms that received this recognition. In Scottsdale Arizona, Ekenna Anya-Gafu CFP, AAMS is recognized among the Best Financial Advisors for his responsiveness, friendliness, helpfulness, and detail. Bay Street was founded to advocate for diverse and emerging fund managers and entrepreneurs. In 2021, Bay Street was selected as a finalist out of over 900 firms across the US in the category of Asset Manager for Corporate Social Responsibility (CSR).









William Huston, AIF®, AIFA®
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