William Huston, AIF®, AIFA®

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

William Huston, AIF®, AIFA®

William Huston, AIF®, AIFA®

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

a family office team

Managing family wealth is often a complex matter as there are many aspects involved in family wealth such as family business, 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 an affluent family's assets, to grow their wealth and pass it on to the next generation. Many family offices are established by wealthy families as a way to consolidate and streamline the management of their wealth and assets, often through the use of dedicated teams of financial professionals.

Such family offices offer a range of services including investment management, tax and estate planning, philanthropic advising, risk management, and other specialized services tailored to the unique needs of each family.

If you wish to create your own family office or work with an outsourced family office or a dedicated family office, you should get help from our chief investment officer at Bay Street Capital Holdings.

Key Takeaways
  • 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, handling personal finance, insurance, budgeting, tax planning, philanthropy, among other services.
  • There are three main types of family offices: single-family offices, multi-family offices, and virtual family offices (VFOs).
  • UHNW families set up family offices to receive personalized services, ensure privacy and professionalism, and invest and create wealth for future generations.

The contents of this article are for educational purposes only. They are not intended to be a source of professional financial advice. You will find experts on financial planning, financial management, and real estate here. More on disclaimers here.

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.

Family offices exist not only to help affluent families with wealth management and advisory services, but also to handle such things as 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.

Which is the First Family Office Ever?

John D. Rockefeller's office at the family home

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.

However, affluent families less richer than this can find the services of a family office useful.

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 affluent 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 to 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. If you or your family seeks to set up one, speak with a trusted financial advisor today for expert guidance.

Here are important reasons to set up a family office:

Personalized Services

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

Privacy & Professionalism

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.

Moreover, 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.

Prosperity & Perpetuity

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.

Likewise, 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.

Major Functions of a Family Office

a family office CIO pondering about her tasks

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?

an ultra high net worth family celebrating

A 2022 estimate show 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.

Pros & Cons of Family Offices


  1. Working with a family office ensures that you have a dedicated team of professionals that manage your wealth and track your investments.
  2. A family office is usually operated with discretion and so a family is able to obtain the privacy and confidentiality that they need.
  3. 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.


  1. Hiring or structuring a family office based on your specific needs can be an expensive and time consuming process.
  2. Lack of organization may come up as different family members may have different visions with regard to potential investment opportunities.
  3. 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.

Choose the Right Experts

With specialized and tailor-made services for affluent families, family offices are definitely here to stay. To engage our qualified wealth management team for your family office needs, get in touch here.

Bay Street Capital Holdings

Bay Street Capital Holdings

Bay Street Capital Holdings is an independent investment advisory, wealth management, and financial planning firm headquartered in Palo Alto, CA, that is Black-owned and dedicated to managing portfolios with a focus on maintaining and increasing total assets and income while prioritizing total risk and volatility management.

Founder William Huston started the firm after 13 years of supporting the largest US retirement plan, and he has been recognized as one of Investopedia’s Top 100 Financial Advisors for 2022.

Bay Street is the only Black-owned firm among the twenty in California to receive this recognition, and Ekenna Anya-Gafu CFP, AAMS has been recognized in Scottsdale, Arizona, for his responsiveness, friendliness, helpfulness, and attention to detail as one of the Best Financial Advisors.

Bay Street was founded to advocate for diverse and emerging fund managers and entrepreneurs, and in 2021, it was selected as a finalist for Asset Manager for Corporate Social Responsibility (CSR) out of over 900 firms across the US.










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