Costs of Running a Family Office
Family offices are unique to the family that sets them up. As such, to define what an average family office should look like is not meaningful. Their size may vary from one employee to up to 70 or more, depending on the services provided, the number of family members served, and how the services are to be delivered.
Despite there being no standard definition of a family office, anecdotal evidence suggests that a full-service family office will cost a minimum of USD 1 million a year to run, and in many cases, much more. This would suggest that for a family office to be viable, a family should be worth between USD 100 million and USD 500 million. Of course, a family office can be set up with USD 100 million or even less, but the service range will probably be limited to administration, control of assets, consolidation and risk management. A fully integrated family office will likely require a great deal more wealth.
Family Office Types based on Assets and Costs
|Family Office Type||Assets||Overhead Cost per Year|
|Administrative||USD 50 million to USD 100 million||USD 0.1 million to USD 0.5 million|
|Hybrid||USD 100 million to USD 1 billion||USD 0.5 million to USD 2 million|
|Fully Integrated||> USD 1 billion||USD 1 million to USD 10 million|
Based on a survey representing 350+ family offices from 22 countries we found out that at least 60% of the total costs of a family office are allocated to staff compensation and benefits.
FO with staff of three:
- 28% Staff compensation
- 14% Office operations
- 10% External professional fees/ owner education
- 32% External investment management and custody fees
- 16% External investment consulting fees
FO with staff of 12 and internal CIO
- 27% Staff compensation with CIO
- 9% Office operations
- 25% External professional fees/ owner education
- 39% External investment fees
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