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Family Offices: The Pros and Cons of Personalized Private Wealth Management Thumbnail

Family Offices: The Pros and Cons of Personalized Private Wealth Management

Family Offices: The Pros and Cons of Personalized Private Wealth Management

A family office is a customized private wealth management and advisory firm that caters exclusively to a single high-net-worth family or individual. This approach is in stark contrast with traditional financial advisors or advisory firms, which must split their time and attention to balance ongoing professional relationships with a variety of clients. In the past few decades, as wealth has become more heavilyconcentrated, family offices have skyrocketed in popularity among high-net-worth families as a personalized and private financial planning and wealth management tool. However, creating a family office may not be accessible or ideal for every high-net-worth family. This article covers the initial questions to consider when contemplating whether a family office will be a good fit for your family, exploring family offices’ advantages, drawbacks, and the demographics that stand to gain the most from their establishment.

What Advantages Do Family Offices Offer?

Family offices typically provide bespoke services tailored exclusively to the family they were created to serve. Advisors in a family office can provide their undivided time and attention to cater to the financial needs and desires of your family and are able to operate with the utmost level of discretion to ensure your family’s privacy. Family offices will offer a wide suite of services based on the family’s unique needs and desires, but common areas of service include wealth preservation as well as investment, estate, tax, and philanthropic planning. A family office can manage complex financial situations with agility and competency, allowing your family members to direct their attention to other priorities with the security of knowing a dedicated team of professionals is working to help them achieve their financial goals and further their personal and financial interests. Furthermore, a family office can operate across generations and households in a way most other financial advisory firms, which primarily work with individuals or couples, do not. A family office is able to facilitate the intergenerational transfer of wealth in a streamlined and discreet manner so that the next generation can work with the same advisors who guided their parents and grandparents, enabling a higher degree of continuity, comfort, and personalization.

What Are Some Drawbacks to Setting Up a Family Office?

Despite their myriad benefits, family offices come with a unique set of disadvantages you should consider when determining whether a family office will be the best solution for your family. One of the primary drawbacks to setting up and maintaining a family office is the high operational cost. With high operational costs comes less money directed toward achieving your other financial goals, such as philanthropy, business expansion, and the continuation of generational wealth. These costs can be prohibitive, even for wealthy families. Another drawback is the insular nature of a family office. Although a dedicated private team provides numerous advantages, it may limit access to external perspectives, potentially hindering optimal decision-making. This is especially risky when most family members served by the family office do not have a strong interest in or knowledge of financial strategies and market trends. Thus, they may not be able to recognize financial red flags, missed opportunities, or suboptimal tactics until it is too late. 

Who Most Benefits from Creating a Family Office?

Family offices can be useful for families that have founded successful businesses or amassed considerable wealth and resources, especially those exceeding $100 million in liquid, investable assets. Because of their bespoke approach to wealth management, family offices are usually best suited to the ultra-wealthy and those with incredibly intricate financial portfolios who need the specialized wealth management services that a traditional advisory firm cannot provide. Families seeking a consolidated and consistent long-term approach to wealth preservation and management that includes complex estate management and intergenerational wealth transfer may find a family office particularly useful.


High-net-worth individuals and families often have unique financial needs, circumstances, and preferences that not every financial professional is equipped to cater to. This is especially true of successful business owners and the ultra-wealthy. Each family will have its own considerations that inform the most suitable strategies for its financial, investment, tax, and estate planning. For some wealthy families seeking unparalleled personalization, continuity, and privacy, creating a dedicated family office is an optimal solution. For many others, working with a traditional financial advisor who has experience working with high-net-worth and high-income individuals would better suit their lifestyle and financial goals.

If you want customized and comprehensive financial services without the high operating costs associated with running a family office, working with a financial advisor at Business and Financial Strategies (BFS) may be a great fit for you and your family. BFS’s financial advisors are experienced in creating and enacting personalized, multifaceted, and fully integrated financial plans that encompass retirement planning, wealth management, tax planning, investment management, estate planning, business development planning, risk management, and more based on each client’s unique goals and circumstances. BFS has offices in the Iowa City–Coralville area and in Fairfield, Iowa, and it serves clients throughout the United States. To learn more about how a BFS financial advisor can help you achieve your financial goals, call 319-358-7700 or visit www.BFSFinancialPlanning.com to schedule a complimentary 20- to 30-minute in-person or virtual initial conversation.

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