Family Offices Abound
By Scott D. Gardner, CFO
Nevada Management Services

Family offices have recently surged into mainstream America; each family office offers financial services and/or estate management services. But do all family offices offer the same variety of services? The obvious answer is no, but how does one differentiate the services of one family office from another?

Class A Family Office

  • Comprehensive financial oversight.
  • Comprehensive estate management.
  • Flat monthly fee.
  • Objective advice.

Class B Family Office

  • Investment advice for a fee.
  • May offer additional products or services.
  • Does not directly manage illiquid assets.

Class C Family Office

  • Staff consists of personal assistants and bookkeepers.
  • Directly run by family.

A classification system was recently developed to help consumers differentiate the various types of family offices. The three classification types are Class A, Class B, and Class C.

Class A Family Office
Class A Family Offices offer a combination of financial and estate management for a flat monthly fee.

These types of family offices are typically run by third party companies with direct oversight provided by a family trustee or administrator.

A typical Class A Family Office:

  1. Offers comprehensive financial oversight of all liquid financial assets. This includes the ability to offer objective investment advice and not peddle products.
  2. Offers daily management of all illiquid assets. This requires direct management of real estate, automobiles, and residences within the estate. A key indicator that you are dealing with a Class A family office is that the staff is willing to monitor and manage your real property.
  3. Can administer and manage the entire estate with little to no supervision.
  4. Charges a flat monthly fee for all family office services. Additional fees may only be charged for services rendered outside the scope of a family office.
  5. Offers advice free from conflicts of interest and will not sell products.
  6. Offers a comprehensive monthly report of all estate activity for no additional fee.

Class B Family Office
Class B Family Offices offer financial services. Law firms, accountants, and banks who form family offices typically fall within this definition of family office.

A typical Class B Family Office:

  1. Offers investment advice for a fee. This advice may or may not be free from conflicts of interest.
  2. Can offer products and services outside the scope of a family office.
  3. Does not directly manage or administer illiquid assets in the estate.

Class C Family Office
Class C Family Offices provide basic estate services. A Class C Family Office is typically set up by a family who employs an in-house staff of personal assistants and bookkeepers who work under the direction of a family trustee, patriarch, or matriarch.

A typical Class C Family Office:

  1. Has a staff that will monitor the estate and report into the family trustee with any irregularities.
  2. Provides basic administrative functions, such as bookkeeping and mail sorting.
  3. May have an office inside a family member's home.

It is clear by the increase of family offices around the country that modern-day wealth has become more demanding and complex, and that families are seeking for an ideal method of monitoring and safeguarding that wealth.

As individuals and families look for a family office to watch over their wealth, it is important that they do so with the knowledge that:

  • Each family office offers a unique version of the family office experience,
  • There is a wide variety of services offered by different family office structures,
  • And that there is a family office structure that will meet their needs.