A family office is a private company that manages the wealth of a high-net-worth family. In addition to investment management, a family office may provide related services such as estate planning, business oversight, insurance oversight, tax preparation, real estate management, charitable giving and more.

Family offices tend to have several employees. The head of a family office is often called the chief investment officer (CIO).

Family offices manage very large amounts of wealth, making their asset choices, charitable giving plans and investment preferences the subject of significant curiosity, speculation and analysis.

There is no minimum wealth required to set up a family office^[0]

The median assets under supervision in a family office is $476 million^[0]

Family offices require office space, staffing, technology, and regulatory and compliance reporting, among other things, to operate. Families must therefore evaluate whether the amount of their assets and their interest in managing those assets makes the expense of a family office worth it.

There are three types of family offices.

Single-family offices serve only one family, although this could include several generations of the family and family members all over the world.

Multifamily offices are owned by and work for more than one family, which can reduce costs and still provide personalized services to each family.

• Cost per year: Generally, 0.40% to 0.70% of assets under management (for a family with $50 million, this could mean $200,000 to $350,000 per year).

• Recommended minimum net worth: A minimum of $30 million is recommended to justify the cost of a multifamily office^[0]

An outsourced family office is a group of people who work together on behalf of the family but are employees of third parties, such as law firms, banks or accounting practices. Typically one person coordinates the group’s work. This approach can make sense when the family’s asset size doesn’t justify the cost of creating a separate legal entity for a family office. However, the family may have less access to or control over the professionals in the network.

• Cost per year: Starts at about 1% of assets under management (for a family with $10 million, this could mean $100,000 per year).

• Recommended minimum net worth: A minimum of $10 million is recommended to justify the cost of an outsourced family office^[0]

Efficiency. A family office has a team of people who can handle a wide variety of financial issues and needs for the family, making it a one-stop-shop with integrated, comprehensive and personalized service capabilities.

Protection. A family office can provide comprehensive financial planning and care, including creating a structured decision-making process for financial conflicts. In addition, a family office may be able to identify and mitigate risks that might have been otherwise overlooked or underappreciated^[0]

Confidentiality. A family office can be relatively self-contained, which can help limit the number of people who have access to the family’s private information. This is especially true if family members are the employees of the family office.

Alignment. Family offices can help ensure that new generations are prepared for the responsibilities of managing wealth. They can facilitate financial education and discussion among family members, and help ensure that current and future generations of the family meet the family’s philanthropic goals.

Cost. Family offices can cost hundreds of thousands or millions of dollars per year to operate, so it is important to ensure that the asset size and value provided justify the expense.

Dynamics. Some family members may not always agree with the actions or decisions of the family office, which can create big conflicts. Also, family office needs might change over time as the family’s needs change, and family members may disagree about how to operate or staff the family office.

You don’t have to have billions of dollars to have a family office, but many family offices do manage that much. Here are the 10 largest family offices, according to the Sovereign Wealth Fund Institute.