The true cost of a family office

People are the cost

Everything else is a rounding error next to salaries. A single family office with a chief executive, an investment lead, an accountant and an administrator will spend most of its budget on those people, together with whatever is required to retain them.

Add bonuses, which the market expects, and the figure rises again.

Remaining line items

• Premises: Basic accommodation unless the client specifies a particular address.
• Technology: The primary expenditure is on consolidated reporting, which tends to be more costly than anticipated and yields marginal satisfaction.
• Audit, legal, and compliance: Recurring, essential functions that are unremarkable and non-negotiable.
• External managers and custodial services: Fees are asset-based, thus scaling proportionally with the client's portfolio rather than with the office infrastructure.

The point at which it makes sense

Most families find that a properly staffed single family office costs a seven-figure sum each year before a single investment decision is made. Set that against what you currently pay in fees elsewhere. If the office replaces a meaningful part of that spend, the arithmetic starts to work. If it sits on top of it, you have added a cost and simply called it control. The cost is fixed, but the returns are not. That asymmetry is the whole argument.

Families often get this wrong by budgeting for salaries and forgetting that the office needs supervision, which consumes the time of the very person who built it.