Understanding the Different Types of Family Office Structures & Deciding Which One is Right for You

What factors drive wealthy families and entrepreneurs to establish family offices? Is it simply viewed as a status symbol, social expectation, or a cultural rite of passage? For some, definitely. But for the majority, the family office is a necessity grown from important life events.

If you are experiencing any of the following situations, a family office may be the right move for you:

  • Solving conflicts: For those of significant wealth, family office services can be used as tools to manage the relationships between your family members. It acts as a substrate for family governance, unifying and protecting the family through multiple generations. Good family governance can strengthen your family’s value system and support the achievement of shared financial goals.
  • Growing wealth complexity: You feel as though your wealth has grown beyond what you can manage successfully on your own; or, you’re a business owner who manages your wealth inside of your company and want to eliminate the increased legal, personal, and privacy risks that could arise from this model. The volume of information and complexity of wealth requires centralized data, professional advice, and managed services for continued success.
  • Inheriting wealth or liquidity events: You will soon generate or inherit significant liquid wealth and don’t yet have the team of trusted advisors in place to ensure that wealth is managed, and ultimately preserved and grown, over time. 
  • Life events: You may be a retiree founder who has stepped down from your business and can no longer use your operating company to manage your personal finances. Or perhaps you’re newly married, are starting a family, or are recently separated, divorced, or widowed. Over time, you are shifting your focus from wealth building to wealth continuity.
  • Economic and geopolitical change: Today’s unstable economic and geopolitical circumstances mean you may need help managing your balance sheet—prudent advice, managed support, and consistent portfolio rebalancing to maintain and preserve your wealth.

Different types of family offices: Deciding which family office is right for you

Families and lead advisors must gain clarity on your family’s vision, values, goals, and risk tolerance before the selection process begins (and if you are wondering what even is a family office, and whether or not you need one, start here). Although establishing the appropriate organizational, legal, and governance structure is important, it starts by gaining intrafamilial clarity on the desires, goals, fears, and frustrations your family needs to address.

Before we dive in, here’s what our Chief Client Officer, Scott Bush, has to say about the matter.

In the remainder of this piece, we delve into the advantages and disadvantages of the most common structures in an effort to kickstart this conversation between family members.

The Embedded Family Office

This structure is the default for many business owners. An embedded family office is an informal/ad hoc entity that uses the existing resources of the family business to manage the administrative, accounting, and wealth management functions needed by the family. The ‘family office’ structure is embedded in the core business, and their employees are asked to serve both the company and the family. While this is the default option for many, it comes with considerable risk:  


Integrated services: Embedded within a larger business entity, these offices can provide seamless financial and personal services.

Cost efficiency: Embedded family offices can leverage the existing infrastructure of the business, reducing overhead costs.

Familiarity with assets: Because of the already-close-knit relationship with the family, this structure offers intimate knowledge of the family’s business operations and assets.


A lack of focus: Your employees can’t serve business and family effectively over the long term. When employees have a dual focus (serving both the business and family), performance can suffer.

Poor privacy controls: Employees may be tempted to tell their co-workers about your purchases, or forced into the awkward position of keeping a scrutinizing eye on one family member at the request of another (resulting in an inevitable intra-family conflict that the employee is dragged into).

Risk management: As family members make large acquisitions, they may need services beyond the capabilities of the embedded family office, such as property and casualty insurance, technology and cybersecurity support, and adequate legal protection ensuring that regulatory and compliance requirements are met. 

Poor family governance: Who’s responsible for administrative functions and background checks? What oversight mechanisms are in place to manage spending? Does the family office align with regulatory, tax, and legal requirements? Essential tasks that end up in limbo become problematic as accounting complexity and compliance requirements increase over time.

Investment Capabilities & Considerations of the embedded family office

Embedded family offices often navigate the challenge of extending their investment reach beyond the realms of their core businesses. This inherent limitation might render their investment portfolios significantly correlated with the performance and sectors of their privately held company. Despite this, their pronounced success within specific industries can afford them unique opportunities for direct investments within those same verticals, leveraging insider knowledge and networks to capitalize on niche markets with potentially high returns.

The Single-Family Office (SFO)

The single-family office is a private entity that manages a single family’s wealth, affairs, and tax planning requirements. Typically, it’s created by the founding family and offers a high degree of customization, but it can also grow into a multi-family office (MFO) structure. Often times, the family has a complex multi-generational structure and focuses on several long-term goals: (a) maintaining and growing familial wealth, (b) providing a blueprint and investment direction for the family as a whole and, (c) successfully wealth transfer from one generation to another while providing privacy.  


Control and privacy: Single-family offices offer the greatest amount of control and privacy. Investment and proprietary knowledge stay in the family.

Highest degree of customization: Technology and services can be tailored to your family’s exact needs. Additionally, staff can wear multiple (relevant) hats and develop skills tailored to the family’s needs.  


Talent challenges: Finding, acquiring, and retaining your own qualified personnel and technical infrastructure can be challenging and expensive. The limited pool of qualified talent can also lead to some single-family offices being operated by individuals who are not qualified to take on all requisites of the job.  

Shifting regulatory landscape and regulatory requirements: Formal requirements can alter quickly with changing taxes, investment landscape, and family circumstances. Your family office is responsible for staying abreast of these changes as they occur (for example, the highly-contentious Corporate Transparency Act). Further, single-family offices that focus on large-scale public or private investments could face the greatest level of responsibility and regulatory burden (such as state and local securities regulations).  

High degree of costs: These costs include the need for various professional services (both in-house and external), compliance with state and federal regulators, and administrative and operational overhead expenses (e.g., IT, security).  Family members must acquire and customize all components needed to run the family office: staff, location, technology, software, and systems.

Investment Capabilities and Considerations of the single-family office

SFO’s possess the distinct ability to craft highly personalized investment strategies that reflect the unique aspirations, risk tolerance, and values of the family. This bespoke approach allows SFOs to venture into direct investments, including private equity and real estate, utilizing the family’s deep industry insights and connections. Although this allows for a unique investment portfolio, the network of the family is limited to their employees and themselves. Therefore, it is of utter importance to hire a deeply connected and experienced Chief Investment Officer and/or management team.

The Multi-Family Office (MFO)

The multi-family office comes in two main varieties:

  1. A multi-family office entity that serves the needs of several families.
  2. A family-owned multi-family office that serves the needs of a select few founding families.


An abundance of talent: One of the largest prevailing benefits of working with a multi-family office is access to a large pool of highly skilled and talented professionals, and a reduction in key-person risk.

More flexibility: Having access to a suite of services and experts, the multi-family office structure allows you to easily add or remove services as your strategy dictates. You can also select or change professionals according to your needs and their performance.

Higher degree of safety and security with up-to-date technology: The rigor and protection of secure information by multi-family offices is rarely matched by single-family offices. The technology and security infrastructures that encompass several layers of checks and balances are a defining characteristic of multi-family offices. Reversely, some families continue to not have multi-factor authentication and keep passwords in a document that several key people have access to—things that would never pass muster at a multi-family office.

Increased access to investment opportunities: You can expect benefit from access to a wide variety of pre-vetted investment opportunities.

Lower costs and economies of scale: Multi-family offices are a less expensive alternative to single-family offices. Their structure and service options afford them the ability to deliver economies of scale.


Less autonomy: A single-family office allows the family to fully dictate the structure of the office. While less autonomy through a multi-family office means less control, the structure tends to result in more consistent and repeatable results over time.

Less control over staff hires: Multi-family offices offer an abundance of talent. This access comes at a price, though. Families can influence but do not have the same control over staffing decisions. The good news? Multi-family offices can attract A-player talent, something single-family offices struggle to do.

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. Be sure to get clarity about what’s included and how that compares to other family offices.

INvestment Capabilities and Considerations of the MultI-Family Office

MFOs capitalize on the collective strength of multiple families to access a broader spectrum of investment opportunities, including those typically reserved for institutional investors. By pooling resources, MFOs not only achieve significant diversification across various asset classes and geographies, but also tap into alternative investment ventures like hedge funds and private equity with greater ease. The collaborative nature of MFOs fosters a dynamic environment for shared learning and investment.

The Virtual Family Office (VFO)

Think of this as a multi-family office constructed by a family leader, lead advisor, or set of family members who choose to outsource its needs to an investment advisor, legal counsel, and tax compliance specialists rather than receive a full set of amenities “in-house.” These independent professionals are active in their own firms, but they coordinate with each other, working together on their client’s behalf, typically through a small group (or single) representative family member who acts as the lead communicator.


Greater control over hires/advisors on your team and direct control and flexibility: Because the virtual family office is a collaboration of multiple service providers, such as an investment manager, legal advisors, tax advisors, and personal CFO services, who are typically organized through one lead advisor, you have the flexibility to both voice specific requirements and make changes to service providers who aren’t meeting your expectations.  

Lower costs and overhead: Like multi-family offices, virtual family offices afford you the same benefit of a lower overall cost and overhead to your family. Without the need for a household security and technology infrastructure, the costs compared to that of single-family offices are greatly reduced. Additionally, selecting the precise services you require from specific providers can help ensure that you’re not paying for services you won’t use. Be sure to employ due diligence here—you also run the risk of paying more for something that might otherwise be bundled as a complete service offering elsewhere.  

A large pool of data and investment perspectives: Naturally, with the flexibility to employ a number of advisors and firms to work in concert, you expand your access to relevant data and investment perspectives.


Large amount of time and coordination required: Because a number of advisors are involved—and there isn’t a holistic, intermediary set of checks and balances between and amongst disparate providers, a virtual family office can require a significant time investment. One of the benefits of working with a single firm, like a multi-family office, is the inherent synchronicity between teams and functions. Directing, meeting with, coordinating between, and receiving reporting from several distinct providers on an ongoing basis can be a laborious task.  

Choosing the wrong professionals: It’s remarkably easy to choose a bad service provider, which can lead to frustration from other members of your service team. These service areas are inherently opaque: there’s no marketplace to easily compare hourly rates, historical performance, and quality of potential legal or tax advisors. Additionally, it’s important that you dictate your family’s vision, values, goals, and risk tolerance before the selection process begins. This ensures that everyone is singing from the same hymn sheet.    

Speed and inefficiency: You’d think speed wouldn’t be an issue since the virtual family office is digital/remote, but it is. Waiting for a response from your team or individual advisors when an important life/liquidity event or opportunity needs immediate attention can be frustrating. When working with a virtual office, look for advisors who are on the same page. If you’re looking for someone who’s totally dedicated to you (e.g., nights, weekends, holidays), state that up front.  

Confidentiality issues: Since the virtual family office is a collaboration of multiple service providers across different firms, there’s a chance that others may see your investment portfolio or sensitive tax details, and with that, the possibility the information could be used to benefit clients in their firm.

Investment Capabilities and Considerations of the Virtual Family Office

VFOs, with their nimble structure and reliance on a network of external advisors, can be adept at crafting dynamic and adaptable investment strategies. This flexibility enables VFOs to explore innovative investment themes, without the encumbrance of traditional operational overheads. The cost-efficiency and customization offered by VFOs allow families to concentrate investments in areas of personal expertise or interest, while still benefiting from the broad market access and diversified investment approaches managed by seasoned professionals. Through this modern approach, VFOs offer a pathway to sophisticated and responsive wealth management tailored to the evolving needs of affluent families. Nevertheless, the investment capabilities of VFOs are highly dependent on the competency of a primary advisor or lead family member. When it comes to the quality of service or portfolio returns, “the flight is only as good as the pilot.”

Making the best decision for your personal situation

As families confront the complexities of managing and preserving wealth in today’s dynamic world, the decision between traditional and more contemporary family office structures warrant careful consideration. The MFO structure provides a collaborative platform that can yield cost efficiencies and access to a broader range of expertise and investment opportunities, facilitated by the collective resources of multiple families. This model is conducive to families seeking a blend of personalized service with the added benefits of shared insights and economies of scale.

Conversely, the VFO approach caters to families prioritizing flexibility, direct oversight, and cost management. By outsourcing services to a network of independent professionals, VFOs allow for a highly customized approach to wealth management, offering families the agility to adapt services as their needs evolve, without the overhead associated with more traditional office structures.

While MFOs and VFOs present modern solutions to wealth management, emphasizing efficiency, adaptability, and access to expertise, it is crucial to acknowledge that no one structure universally fits all. The choice between different family office models should be informed by a thorough assessment of a family’s unique circumstances, goals, and values.

Ultimately, the selection process involves balancing the priorities of control, privacy, cost considerations, and the desire for bespoke services against the backdrop of an ever-evolving economic landscape. By engaging in informed discussions and consulting with experienced advisors, families can navigate the complexities of this decision, ensuring that their chosen family office structure robustly supports their wealth management objectives and legacy aspirations.

If you’re considering a family office, or are looking to build out supplementary services of your single- or virtual family office, we’d be happy to answer any of your questions.