When managing both a family business and growing family wealth becomes increasingly complex, a family office can offer a centralized solution. These offices serve as the bridge between responsible wealth management and healthy family dynamics, ensuring that personal and financial goals align across generations.
Understanding Family Office Costs
Operating a family office requires robust accounting services. But the cost of the in-house service can be highly variable based on the complexity of the office, the scale of investments, and specific needs. Because family office structures and services can dramatically differ, it’s challenging to pinpoint a commonly accepted benchmark on cost.
Research indicates that the average total expenses for a family office are typically around 1% of the total assets under management per annum, a portion of which is allocated to the accounting department.
However, this can vary widely, from 0.3% for extraordinarily wealthy families with more than $1 billion in net worth, to 2% or more for smaller family offices of less than $100 million in net worth. This range reflects efficiencies of scale, with larger offices able to spread fixed costs over a more significant asset base.
It’s essential to understand that these figures need to be adjusted according to several factors, especially the scope of services provided by the accounting department. At the more complex end, the accounting team might deal with tax planning, estate planning, financial reporting, philanthropy management, and more.
Budgeting For a Family Office
To ensure the smooth operation of the office and the management of family wealth, consider these steps to create a budget for a family office:
- Define the Purpose and Goals– Clarify whether the office’s focus will be investment management, legacy planning, philanthropy, or a combination.
- Assess Financial Resources– Review the family’s total wealth and liquidity to determine how much can be allocated toward operating the office.
- Allocate Funds for Setup and Operations– Include infrastructure, personnel, legal, tax, and technology needs.
- Establish Operating Expenses– Plan for ongoing costs, such as salaries, consulting fees, travel, and compliance.
- Create Investment Guidelines– Develop a formal investment policy statement (IPS) to align the family’s risk tolerance and financial objectives.
- Implement Risk Management Strategies– Include insurance, asset protection structures, and contingency planning.
- Develop a Tax Strategy– Incorporate both domestic and international considerations, especially for multijurisdictional families.
- Plan for Philanthropy– Allocate a portion of the budget for charitable giving, donor-advised funds, or foundation management if relevant.
Partnering with the Right Advisory Firm
Each family office is unique, and budgeting for one demands more than just financial know-how—it requires a strategic partner who understands the nuances of wealth stewardship, governance, and multigenerational planning.
At Quest, we specialize in helping families and business owners navigate the complexities of structuring and operating family offices. Our advisors work closely with you to:
- Build custom budgeting frameworks aligned with your values and goals
- Optimize operational efficiency without sacrificing oversight
- Coordinate seamlessly with legal, tax, and investment professionals
- Support legacy preservation through forward-looking strategy
Whether you’re establishing a family office from the ground up or reassessing your current structure, Quest provides the clarity and expertise needed to make confident, well-informed decisions.
