The term "multi-family office" (MFO), a staple in wealth management discourse for decades, is facing a significant challenge, with prominent voices calling for its obsolescence. This debate centers on the very definition of a family office, particularly the distinction between a dedicated Single-Family Office (SFO) and the more ambiguously defined MFO. At its core, an SFO is a private entity solely devoted to managing the financial, legal, and lifestyle needs of one affluent family. MFOs, by contrast, have historically been understood as entities serving multiple families. However, industry insiders argue that this simple dichotomy masks a more complex reality, where many so-called MFOs function more like traditional wealth management firms than the exclusive service providers of SFOs.
The Erosion of Meaning: A Term Losing its Value
Michael Thrasher, founder and editor of the family office newsletter Modus News, has ignited a significant conversation within the industry by announcing his publication’s intention to "rarely or never again" use the term "MFO." Thrasher posits that the term has become diluted and is often leveraged for marketing purposes, obscuring the true nature of the services offered.
"If you’re charging clients fees for investment management and financial planning, etc., you are a private wealth management firm," Thrasher stated in a recent LinkedIn post. "If you’re a non-commercial organization doing that stuff for one or more families, you’re a family office." He further elaborated in comments that the term "MFO" has "lost meaning because of how it’s leveraged in marketing."
This perspective suggests a fundamental reclassification is needed. According to Thrasher, the key differentiator lies in the operational model: is it a commercial business selling services to clients for a fee, or a non-commercial endeavor funded by the families it serves as a personal expense? This distinction is crucial for discerning genuine family office structures from sophisticated wealth management operations that have adopted the "family office" label for its perceived prestige.
The Anatomy of a Family Office: SFO vs. the Evolving MFO Landscape
A Single-Family Office (SFO) is characterized by its exclusive dedication to a single family’s intricate financial, legal, and lifestyle requirements. The operational costs for an SFO typically hover between 0.5% and 1% of the assets under management (AuM). This model prioritizes a bespoke, deeply personalized approach, acting as an extension of the family itself.
Historically, the Multi-Family Office (MFO) emerged as a solution for families who desired the comprehensive services of a family office but lacked the scale or inclination to establish and manage their own SFO. MFOs offered a way to pool resources, share overheads, and access professional expertise across a range of disciplines, from investment management and estate planning to philanthropic endeavors and lifestyle concierge services. Mike Tan, global head of wealth planning and family advisory at Standard Chartered, previously noted that MFOs "allow the family to benefit from the services of a family office, without having to invest in the personnel and staff by themselves."
However, the landscape has shifted. Many entities that operate under the MFO banner are, in reality, sophisticated wealth management firms. They derive their revenue primarily from asset-based fees (basis points of AuM) rather than fixed operational costs. This model, critics argue, inherently creates a conflict of interest, as the firm’s primary incentive is to grow the assets under management, potentially at the expense of the client’s best interests.
Gilles Erulin, founder of family office consultancy Westwick Partners and a veteran of FinTech family office Financiére Pinault, emphasizes this point. "The minute you are on a percentage basis of AuM, you become an asset manager," he stated. "The difference between a family office and an asset manager, if you ask me, is: are you billing me a fixed cost? That’s a multi-family office. If you’re billing me in basis points of assets under management, you’re an asset manager."
The Case for Retirement: Marketing Over Substance?
The debate over the term "MFO" is not new. As far back as a decade ago, industry professionals were raising concerns about its imprecise application. Rupert Phelps, an advisor to single-family offices and a regular judge for the Spear’s Awards, recalls discussions at a Spear’s conference around 12 years prior, where the term "MFO" was already under scrutiny.
Phelps suggests alternative terminology to better delineate the services offered. For commercial entities providing bespoke, high-touch services to a select group of wealthy families, he favors the term "private investment office." This term accurately reflects a business model focused on wealth management for multiple clients.
For structures that genuinely aim to emulate the SFO model but share costs among a few families to preserve control, confidentiality, and facilitate peer-group learning, Phelps proposes "co-operative family office." These entities, he argues, do not possess the aggressive growth ambitions of external-facing commercial businesses.
The Allure of the "Family Office" Brand
The perceived cachet associated with the term "family office" has undoubtedly led many private banks and wealth managers to adopt it. John Russo, managing director of LS Private, the family office arm of law firm Lawrence Stephens, views this as an "overcorrection." He asserts that a genuine MFO is "not simply an investment manager with a more expensive website."
Russo highlights the common practice of banks and wealth managers marketing themselves as MFOs to sound more exclusive than "private client" services. "The banks will tell you ‘we do that, we have a dedicated family office team’. You don’t really. You find a banker who kind of fell into it and gave them a title," he explains. He likens this to a high-end hotel claiming to have a spa when it only offers basic gym facilities.
The appeal of the family office model for Ultra-High-Net-Worth (UHNW) families lies in its holistic approach, encompassing legal oversight, succession planning, political advisory, and philanthropic strategy. Russo believes that it is challenging to be a trusted advisor while simultaneously selling financial products. This perceived conflict is driving many families away from traditional banks and towards more bespoke, boutique solutions.
Evolution and Expansion: The Rockefeller and Vanderbilt Models
Examining prominent family enterprises provides context to this discussion. Consuelo Vanderbilt Costin, a descendant of Cornelius Vanderbilt, launched the House of Vanderbilt family office, positioning it as a financial and cultural nexus for over 800 living descendants. She drew inspiration from the Rockefeller model, noting its ability to expand and evolve over generations.
Rockefeller Capital Management, founded in 2018 by former Morgan Stanley executive Greg Fleming, has leveraged the Rockefeller name to build a substantial enterprise. As of June, the firm reported managing $224 billion in client assets, with the Rockefeller family’s wealth representing only a portion of this total. This demonstrates a significant scaling of the traditional family office concept into a much larger, more ambitious business.
The Commercial Imperative vs. True Family Office Ethos
Many firms adopting the "MFO" moniker are driven by commercial imperatives, according to Russo. Their primary objective, he suggests, is to acquire as much client capital as possible to manage through their systems. He cites an anonymous quote from a head of a large wealth management firm who admitted that the sole reason for engaging in family office work was "to get access to that money."
While this directness might be perceived as honest by some, it underscores the fundamental difference between wealth management firms that have rebranded and true family offices. Many entities described as MFOs are, in essence, investment management firms that have repositioned themselves, focusing primarily on investment wealth management.
Rethinking the Cost and Value Proposition
Gilles Erulin points out that while banks and asset managers have adapted to the needs of UHNW families, their costs remain a significant concern. For families with substantial assets, such as a billion under management, Erulin suggests that running a family office should be achievable at around 50 basis points. He highlights that hidden costs, including those from custodians, asset managers, and commitment fees, can escalate significantly, often exceeding initial estimates and not even accounting for carried interest.
Charlotte Thorne of Capital Generation Partners (CapGen) offers another perspective. She defines an MFO as an organization that remains "family owned" and aims to "defray the costs of a family office across multiple families." While acknowledging this as a legitimate approach, she raises concerns about potential conflicts and behavioral incentives arising from shared governance.
CapGen, established in 2006, has grown to serve 42 clients with $5 billion in AuM. Their website emphasizes a combination of "the attention to detail and personal service of a family office, with the rigour and capabilities of an institution." The firm’s origins lie in Said Holdings, a single-family office founded by billionaire Wafic Said. CapGen’s chairman, Michel de Carvalho, married to Heineken heiress Charlene de Carvalho-Heineken, brings a unique perspective on managing vast family wealth. In a 2021 interview, he mentioned placing family assets with five different banks and wealth managers, including CapGen, Goldman Sachs, Citi, and J.P. Morgan, illustrating a diversified approach to wealth management. Thorne highlights CapGen’s independence as a key differentiator, allowing for greater client liberation than might be possible in a family-owned business.
Consolidation and the Future of Large-Scale Wealth Management
The trend towards consolidation in the wealth management sector is evident. Stonehage Fleming, a prominent firm often labeled an MFO, was acquired by Corient earlier this year, alongside Stanhope Capital. Corient, a Miami-headquartered, Abu Dhabi-backed entity, declared itself "the world’s largest non-bank wealth manager and multi-family office focused on ultra-high- and high-net-worth clients," with assets exceeding $500 billion. This acquisition signals a move towards larger, institutionalized platforms catering to the UHNW segment.
The ongoing dialogue around the term "multi-family office" reflects a critical moment in the evolution of wealth management. As families and advisors grapple with clarity, transparency, and efficacy, the industry is being pushed to redefine its service models and nomenclature. The core question remains: is a firm a true partner in preserving and growing family legacy, or a sophisticated financial product vendor leveraging a prestigious label? The industry’s response to this question will shape the future of how the world’s wealthiest families manage their fortunes.
