Differentiating between single family and multi-family offices

Watch Harold Nickerson and Jeannine Domingues, Family Office advisors, describe some of the pros and cons of single family versus multiple family offices, and the role played by advisors and managers in helping business families identify their objectives and needs in terms of the portfolio of services to be provided by the Family Office.

<strong>Harold Nickerson</strong> A single family office usually serves just one family, it may be several generations of one family, but the family includes the spouses and all of the descendents from that family. A single family office has certainly focus, they are focused on one family. It has privacy, although even within a single family office if it is serving more than one generation you get privacy issues amongst family members. You get control over the budget; you get the services that you want. If you only have, I say only have, if you have a few million dollars and you would like to have a family office but you cannot afford the staff, a single family office is probably not a practical alternative. The general definition of a multiple family office is where they offer you a menu of services, you can pick from the services that you need and select only the ones that you can afford and that you want. The disadvantage of course is that you are not always the number one priority on their list, you do not control the process, and you do not necessarily control the quality. But you can get the services at a lower cost and you get the benefits of scale. <strong>Jeannine Domingues</strong> In the single family I think you have less of a potential for conflict of priority, conflicts of interest. However, in the multi-family office I think you can gain from the experience of others because you are looking at a bigger diversification in terms of needs to satisfy, that you can have a more complete team that would work inside the family office. <strong>Harold Nickerson</strong> There are two kinds of a multiple family office. There are some that are set up to serve whoever knocks on the door, and there are other situations where there are one or two families who get together because they have some synergy amongst themselves, they are friendly. So two or three families may get together and set up a multiple family office. And they may say because our objectives are the same, because we like each other, because we get along, let us do it together and get the benefits of scale and the benefits of each other’s knowledge. And they do not worry about the privacy issue because they all trust each other. <strong>Jeannine Domingues</strong> I think it really depends on what the family wants to do. What are their goals? And from that will come the needs. <strong>Harold Nickerson</strong> If they would sit down with a facilitator who has got experience in family office, I think the facilitator in a discussion with the family could help them define what it is exactly that the family office should do for this family within the budget that they think they can afford. <strong>Jeannine Domingues</strong> Help them establish a strategic plan, what is it that they want to do? And then, once you know what they want to accomplish, then you can go further into what are the services that they need? You could have a single family that comes to you for all their needs and you would end up with a bigger team than with a multi-family which comes to you for very specific things like only investment management.