Building your future-ready family office in 4 steps (2024)

At PwC we believe that a family office’s main purpose is that of supporting the strategy and legacy of your family, and ultimately provide peace of mind that all is being taken care of in a professional, systematic and efficient way.

Creating a successful family office requires strategic planning and design. With decades of experience, we can prepare you for each step of the way –from assessment and visioning to work plans and implementation. However, the sheer thought of setting up a family office could be a daunting one but it doesn’t need to be. This 4 steps guide to build your family office will provide you with a comprehensive yet easy to navigate methodology that breaks down the process for an easier understanding. It is aimed at building your confidence in undertaking the process and our global network of experts are at hand to help you build it.

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Building your future-ready family office in 4 steps (1)

4 steps to build your future-ready family office

  1. Step 1: Feasibility
  2. Step 2: Designing and structuring
  3. Step 3: Implementation
  4. Step 4: Operating and monitoring your family office

Step 1: Feasibility

Understanding your needs, expectations and models available

Start with a vision

Setting up a family office starts with defining your vision and purpose for your family and its wealth. Once we understand the purpose and needs of the family, we’ll help you build the foundations of a family office and design to ensure all components work together seamlessly. We conduct an extensive review through research and interviews with select family members to understand your past, current and future vision. These details will guide an overall plan that encompasses key areas, including operations, technology, staffing needs, advisers and governance that is truly built around you. This process will best serve your needs and make certain that your family office is future-ready and shock resilient.

Step 1 key activities

Capturing and understanding of the structure of the family, objectives, ambitions, strategy

Step 1 outcome

After this extensive initial assessment you will be in the position to decide if setting up a family office is the right step for you and your family. You’ll have the confidence to know your next steps and priority actions, as well as the type of structure is best suited for your family office and the costs associated.

Step 2: Designing and structuring

Laying the foundations of your future-ready family office

Now that you have made the informed decision to set up your family office, it is time for design. Now you will have the clarity to envision the necessary structures to fulfill your purpose and vision, as well as protecting and growing your legacy.

Step 2 key activities

  • Designing legal and tax structures

  • Planning for Governance

  • Allocating funding and cost

  • Design core services (in-house and outsourced)

  • Addressing operations and technology needs

  • Defining staffing requirements

  • Budgeting

  • Establishing reporting requirements an

  • Design process flows

  • Ensure proper controls are in place

  • Identifying technology needs

  • select and contract vendors and support

  • Identify facilities

  • Design communication and reporting protocols

  • Write job descriptions

  • Structure reporting processes

Step 2 outcome

At the end of this important step you will have a clear and detailed roadmap towards implementation. This step will also include further jurisdictional and legal analysis as well as additional transparency of your costs and the timeline.

Step 3: Implementation

Building your family office around you

Now, armed with a robust overall plan, you are ready to set up your family office. This step will include the implementation of all activities, from setting up policies and procedures, legal structures, hiring staff, refining financial models to the actual office set up, including IT infrastructure and cybersecurity.

Step 3 key activities

  • Hire staff

  • Set up policies and procedures

  • Test systems and processes

  • Assess disaster/business continuity preparedness

  • Refine financial models

  • Plan communication protocols

  • Consider and prepare for cyber threats

  • Technology launch

  • Phased launch of services

  • Continued monitoring and review

  • Refine reporting processes

  • Strategic planning

Step 3 outcome

At the end of this step, you will have a fully functioning and compliant family office. All of your key service agreements will be in place with outsource providers and robust legal, digital and reporting structures. We will also put special emphasis on communication among family stakeholders and office staff. This will ensure that your initial vision, values and ambitions are clearly embedded in the decision-making process.

Step 4: Operating and monitoring your family office

Ensuring optimal functioning and benchmarking against leading practice

Now that your family office is up and running it is important that it’s functions, processes and governance are reviewed regularly against leading practice and, most importantly, your objectives. It is also time to invest in further refining and building some of the functions and your digital capabilities. This is also the time to further refine your approach to your philanthropic activities and impact investing.

Step 4 key activities

  • Review of compliance process and outcomes

  • Review and monitoring of tax and legal requirements

  • Ensure optimal functioning and benchmarking against leading practices

  • Further develop digital capabilities

  • Review of cybersecurity protocols

  • Assess results with original family goals

  • Ensure communication effectiveness

  • ESG alignment

  • Additional services consideration

Step 4 outcome

This last step concludes the process of setting up your family office and ensures it is built on a solid foundation. Your family office will be agile and future-ready. It will also be an opportunity to include additional solutions for tasks that may have been discovered during implementation or newly changed circumstances. This step is not the end of the road. We will be available to assess future new family office changes and to provide the latest best practices.

Common challenges and mistakes in setting up a family office

Based on the cumulative experiences of some of our most seasoned family office experts, here are some of the most common challenges and mistakes we have identified. We believe that in addition to our 4 steps guide succes, it is important to share the top risks and challenges that you may encounter during the process.

Too much, too fast

A lack of focus on the core mission and key priorities for the office may cause a family to implement everything at once. This could lead to rushed decisions and a disjointed approach to structuring and implementation.

Lack of structural flexibility

When defining the vision and goals for your family office, it is important to think both in near term and long-term objectives. The decisions you make today and tomorrow to nurture your family office and support future generations will prepare you for longevity and evolution. Looking to the future will provide you the ability to evolve family and external objectives, including technology, market, and regulatory changes.

The family office is not treated as a business

All too often, families do not take the step of “operationalizing” the family office. With well documented policies and procedures, you will limit the risk for errors and financial losses. Also, establishing specific KPIs will provide the family insight to how the office is performing relative to its original goals and objectives.

Inadequate focus on data security and other risk management protocols

In the past, families often assumed that their privacy was protected if the office did not carry the name of the family or publicly discuss their affiliation. That has changed. Today, the family and the family office should take the time to develop and implement policies around information protection that include sensitive, private, and confidential data handling. Paying close attention to cyber security, social media, and systems access and security are a must.

Inadequate communication and transparency with family clients

Often, the decision to start a family office rests with one, or just a few family members. As a result, decision making and communications may be highly centralized and not socialized with the broader family. Lack of wide communications will make it difficult for the office to build rapport and trust with family members. Using clear communication with the family will ensure longevity of the family office, and its ability to grow the family legacy.

Casual hiring practices

Key drivers for establishing a family office are the need for confidentiality, privacy and centralizing the “business of family” with a team of trusted staff. However, some offices do not perform even basic background or reference checks on new staff. Lack of formalized job descriptions and performance reviews can be another challenge. Creating well defined hiring processes and staff performance management practices will be critical for a professional office.

Hesitancy to leverage advisor relationships

Families often silo their advisors by aligning them to specific topics or decisions and not leveraging their expertise and awareness of leading practice in other areas. They may also isolate advisors from one another, not allowing direct communication between their selected advisors. While separation is necessary in some cases, encouraging your advisors to work as a collaborative team can often result in the best thinking and implementation for families.

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Building your future-ready family office in 4 steps (2024)

FAQs

How to build out a family office? ›

Seven Key Considerations When Starting A Family Office
  1. Define the purpose. Why are you starting a family office in the first place? ...
  2. Be Brutally Honest. ...
  3. Establish Clear Governance. ...
  4. Define Roles and Responsibilities. ...
  5. Engage Professional Advisors. ...
  6. Hold Regular Family Meetings. ...
  7. Preserve Family Harmony.
Aug 21, 2023

How much money do you need to start a family office? ›

While there is no universally defined net worth threshold for establishing a family office, it is generally understood that a minimum net worth of $50 million is typically required to make it financially viable.

What is required to run a family office? ›

The Responsibilities of a Family Office

It requires a well-coordinated, collaborative effort by a team of professionals from the legal, insurance, investment, estate, business, and tax disciplines. Often, a family office provides high-level financial planning through an integrative approach.

What is the family office model? ›

A family office is a privately held company that handles investment management and wealth management for a wealthy family, generally one with at least $50–100 million in investable assets, with the goal being to effectively grow and transfer wealth across generations.

What is the minimum assets for a family office? ›

Most MFOs have a minimum assets under management (AUM), net worth, or fee level threshold—with most working for families with over $30 million in net worth. Some MFOs use an a la carte model, allowing you to pick and choose among their various services.

What does the CEO of a family office do? ›

The head of a family office, who is in charge of strategy and oversees all operations, also needs to be versatile. Alongside maintaining the trust of their employers and helping resolve interfamily issues, the CEO is in charge of investing and growing the family's wealth as well as distributing and protecting it.

What is the family office rule? ›

Wholly-Owned by Family Clients and. Controlled by Family Members. The second element of the Family Office Rule requires that a family office be: (1) wholly-owned by family clients; and (2) exclusively controlled by family members/family entities.

How many employees should a family office have? ›

A medium-sized family office often requires 15 people to best operate, with an annual operating budget of $3 to $4 million minimum. On the other hand, a large family office would require about 25 employees with an annual budget of $8 to $10 million.

What are the disadvantages of a family office? ›

Advantages and Disadvantages of Single Family Office

However, SFOs can be costly to establish and maintain, involving significant upfront expenses and ongoing operational costs. Additionally, they might lack the diverse expertise and investment opportunities that multi-family offices offer due to their focused scope.

What are the two types of family offices? ›

Shared resources: While single-family offices afford you an entire staff dedicated to you and your family, multi-family office advisors are typically shared across client families. Additionally, depending on the firm and the structure of the services and pricing model, you may end up paying for services you don't need.

What is the main purpose of a family office? ›

Family offices can provide support for the family's long-term vision and broader needs—generally in the areas of unity-building, talent-building, and social impact. For example, a family office can organize family retreats that build unity or family projects that foster teamwork and collaboration.

What is the principle of family office? ›

A family office allows for the management of family matters in a structure of near complete confidentiality. Knowledge of personal information can be restricted to trusted employees, who in turn can serve as a liaison with external service providers on the family's behalf.

Can I create my own family office? ›

In essence, creating a family office is in fact creating a new business, one that requires oversight, capital and leadership. With these factors in mind, a process-driven methodology best serves to guide a family's understanding of what a family office does and helps them determine whether it is right for them.

What is the minimum investment for a family office? ›

A family office is a private wealth management firm for UHNWIs and wealthy families that oversees and manages their financial needs. The objective is to oversee familial wealth for preservation across generations. You need at least US$30 million in investable assets to meet this criteria in Singapore.

What is the legal structure of a family office? ›

Depending on jurisdiction and purpose, a family office's legal structure can take various forms. The most popular legal structure for a family office in the US is an LLC, then an S Corp, and 3rd a C Corp. A Private Trust company is the least popular structure used.

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