A Family Office Isn’t a Castle—It’s a Compass

In the wake of sudden wealth, it’s tempting to over-engineer fast. You might feel compelled to build a sprawling, castle-like family office with in-house tax experts, estate attorneys, and philanthropic advisors. But here’s the truth: Forget the mahogany-paneled mystique and byzantine structure full of never-ending rooms. A family office isn’t about grandeur—it’s about guidance.

The Point of a Family Office

Think of a family office as a framework for aligning your wealth with your values, protecting your time, and preserving your legacy. It helps you manage not just assets, but relationships, responsibilities, and ongoing resilience. Rather than a rigid fortress preserving wealth, it’s more like a compass that helps families navigate change, complexity, and priorities across generations.

Focusing on fortress building could have unintended results. Insulation and isolation tend to thwart the chance to adapt, grow, and evolve. In contrast, a compass conjures up dynamic guidance that ensures key questions are asked and directions adjusted, resulting in tailored and agile decisions that meet the family’s needs.

Don’t Rush Decision-Making

As you adjust to your newfound financial circumstances, imagine building an entity that’s bound by a common purpose across generations. Instead of focusing on a physical office, identify what your needs are, starting with what you care about first. Spend the time. You may find that a team of outsourced trusted advisors with an in-house executive assistant may suffice.

Ultimately, a family office is nothing more than an organization tool that allows you to have an aggregated view of your financial picture, provide guidelines on how you want to live with your wealth, communicate as a family, and achieve your ambitions together—whether professionally or philanthropically.

Let the Structure Evolve

While family offices look quite different, if you polled the estimated number of 10,000 offices, you’d find they share some common needs. Your core compass could provide direction around any or all the following:

·         Comprehensive Investment Management

·         Trust and Estate Planning

·         Aggregate Reporting

·         Lifestyle Management

·         Family Governance and Communication

·         Education and Next-Generation Preparation

·         Philanthropy

Our research shows that family offices exist on a continuum—from lean, virtual models to fully staffed, in-house teams. The right model depends on your complexity, not net worth alone. A $50 million exit doesn’t require Downton Abbey. It requires clarity.

In our experience, specialized capabilities like intricate tax and legal advisory, along with technology, tend to be outsourced most often. Investment management usually is, too—especially if the office lacks expertise or pursues strategies beyond straightforward, passive exposure.

Regardless of whether you’re building a castle or setting a compass, start with your values. Outsource what you can and let the structure evolve.

Beyond the Balance Sheet

A family office should help you manage more than just money. It should help you manage meaning. While every family office should begin with value discovery—understanding your purpose, values, and goals—it’s especially important for those facing a sudden windfall. This clarity will guide every decision that follows.

Before you build anything, ask: What does wealth mean to us? What do we care about? What purpose does our wealth serve?

Where to Begin

If you’re considering a family office, here’s a simple road map:

1. Know your “why”—Define your mission and values. Do not rush this step and make sure to include every family member.
2. Set up governance—Clarify roles, decision-making, and communication. Governance should evolve with the family. It’s never one and done. Have you devised a system where you can communicate even through conflict?
3. Assess what you already have—Include financial and nonfinancial assets. This is critical in determining the level of complexity you’re facing and what is the appropriate structure.
4. Determine the right structure—Outsourced, hybrid, or in-house. Your family office must only make sense to you and go back to what you value. You may knowingly be able to afford a castle but still choose to outsource.
5. Build your dream team—Let your mission guide your hires.

What Does a Family Office Cost?

It varies. In-house teams can run into the millions. For smaller offices, expenses can start at around $1.2 million, while larger ones might spend up to $6.8 million, according to Campden Wealth. Our estimates show that midsize offices may cost up to $4 million annually. However, these numbers don’t tell the whole story. Larger family offices tend to be more cost-effective when you look at expenses as a percentage of the assets they manage. They average about 20 basis points, compared to 40 for midsize and 61 for small offices.^[1] One of the biggest expenses is hiring top talent, which is crucial for achieving high performance. Outsourcing can be a cheaper option.

Whichever direction you choose, remember what matters most. Not the structure, but whether it serves your goals and values. So ask yourself: Are you building a castle—or a compass?