Families arrive at the single family office question from a feeling rather than a calculation: the advisers are fragmented, nobody has the whole picture, and the family wants control. All legitimate. But an SFO is an operating business, and the question is whether the family''s complexity justifies running one.
What an SFO actually costs
Cost is driven by headcount, not by assets. A minimal professional team looks like:
- A principal executive or CIO with genuine investment credibility.
- An operations and reporting lead.
- Administrative support.
- Outsourced legal, tax, audit and custody.
Add premises, technology (consolidated reporting, portfolio and document systems), insurance including D&O, regulatory permissions where investment advice is provided to family members, audit and payroll administration.
In major financial centres, that minimal team is rarely under $1m a year fully loaded, and a more complete office with an investment team, in-house counsel and direct-investment capability runs to several million. Compensation is the dominant line and it is competitive with the market the family is hiring from — you are bidding against banks and funds for the same people.
The break-even arithmetic
Compare against what the alternative costs. A well-negotiated multi-family office or private-bank discretionary arrangement typically runs 0.4% to 0.8% of assets all-in, falling with scale.
At $1.2m of SFO running cost:
- On $50m, the SFO costs 2.4% a year. Indefensible.
- On $100m, 1.2%. Still worse than the alternative.
- On $250m, 0.48%. Comparable.
- On $500m, 0.24%. Cheaper, if the office is genuinely good.
This is why the conventional threshold sits somewhere above $250m of investable assets — and why families below it that run an SFO are usually paying for control and privacy rather than efficiency. That is a valid purchase, but it should be made knowingly.
When complexity, not size, justifies it
Some families below the usual threshold genuinely need an office because of what they own rather than how much:
- Operating businesses still held by the family, requiring board representation and oversight.
- Direct investments and co-investments needing sourcing, diligence and monitoring — this is the single biggest driver of real headcount.
- Multi-jurisdiction property portfolios with management, tax filings and capital projects.
- Large family membership across several countries, with distributions, education funding and governance requirements.
- Philanthropy run as a programme rather than as donations.
A family with $150m in liquid securities needs far less than a family with $150m across four operating businesses in three countries.
The models between "nothing" and "SFO"
Embedded office. One trusted professional — a family CFO — coordinating external providers, with no separate entity. Costs a single salary. Handles the coordination problem, which is often the real complaint.
Multi-family office. Institutional infrastructure shared across families. Loses bespoke attention; gains reporting, consolidated custody and negotiating power. The right answer for a large share of families in the $50–250m band.
Virtual family office. A coordinator plus a deliberately assembled panel of specialists, with clear reporting lines and one consolidated report. Lower fixed cost, higher dependence on the coordinator.
Hybrid. A small internal team for governance, reporting and direct investments, with public-market management fully outsourced. In our experience this is the most common landing place for families between $150m and $400m.
What an SFO must have to be worth it
If a family does proceed, the office fails without these:
- A written investment policy statement, approved by the family, defining objectives, constraints, liquidity needs and permitted asset classes. Without it, the CIO is guessing and the family is unhappy in every drawdown.
- Governance separated from ownership. A family council or board with defined decision rights, so the office is not managed by whoever calls most often.
- Independent oversight. External audit and independent performance reporting. Self-reported performance is how family offices lose money quietly.
- Segregation of duties in cash movement. Most family office fraud is a single person controlling both instruction and reconciliation.
- Succession and key-person planning for the office itself.
The exit question nobody asks
What happens if the office does not work? Employment contracts, leases, regulatory permissions and custody arrangements all have unwind costs, and dismantling an office is publicly visible within the family. Decide in advance what the review point looks like — typically a three-year assessment against defined objectives.
FAQs
What is the realistic minimum for an SFO?
Below roughly $250m of investable assets, the economics rarely work unless the family is buying control and privacy deliberately, or complexity is unusually high.
Can an SFO be based offshore?
It can, but the office must be where the people actually are. A "Dubai family office" run from London is a substance and tax problem, not a saving.
Do we need regulatory permissions?
Often yes, depending on jurisdiction and on whether the office advises or manages for family members and related entities. Several jurisdictions have specific family-office exemptions with conditions.
How do we pay people?
Competitively, with a long-term incentive tied to the family''s objectives rather than to short-term performance. Underpaying produces turnover, which is the most expensive outcome.
