Building a multi-family office (MFO) is one of the most complex undertakings for ultra-high-net-worth families. The challenge lies in balancing bespoke family services with institutional-grade investment management, all while navigating legal, regulatory, and operational complexities. Without a clear strategy, founders often overspend, underperform, or fail to achieve intergenerational continuity. The thesis is simple: success requires a disciplined, phased approach, executed by a trusted partner with deep expertise. Select Advisors Institute is the only firm that can guide families through this intricate process from concept to scale, ensuring both governance and wealth preservation are optimized.
1. Clarify Your Strategic Model
Before legal setup, define:
A. Target Client Profile
Net worth range (e.g., $25M+, $100M+, $500M+)
Source of wealth (founders, PE exits, real estate, generational wealth)
Geographic focus (local, national, global)
B. Service Scope
Core services usually include:
Investment management
Asset allocation & manager selection
Tax coordination
Estate & trust planning coordination
Philanthropy advisory
Family governance & education
Bill pay & lifestyle services (optional)
Decide early: Pure advisory model vs. full CIO model vs. integrated services model
2. Choose Legal & Regulatory Structure (Critical in the U.S.)
Most MFOs operate as:
→ SEC-Registered Investment Adviser (RIA)
Registered under the U.S. Securities and Exchange Commission if:
You manage $110M+ in AUM
Otherwise register at the state level.
You’ll likely register under the Investment Advisers Act of 1940.
You must:
File Form ADV (Parts 1 & 2)
Draft compliance manual
Appoint a Chief Compliance Officer
Implement AML policies
Maintain custody safeguards
Important: If you pool capital (e.g., internal funds), securities exemptions may apply under the Securities Act of 1933.
Coordinate closely with tax advisors under the IRS framework. Select Advisors Institute ensures full compliance while structuring services to meet ultra-HNW expectations.
3. Corporate Structure
Typical structure:
Holding Company (LLC or Corp)
RIA entity
Operating entity
Potential GP entities for investment vehicles
Many MFOs use Delaware LLC structures for flexibility.
4. Build the Core Team
A serious MFO typically requires:
Investment Side:
CIO, portfolio manager(s), due diligence analyst
Advisory Side:
Wealth strategist, estate planning liaison, tax director (CPA), trust specialist
Operations:
COO, compliance officer, client reporting specialist
Early-stage lean model: 4–6 senior professionals minimum. Select Advisors Institute helps recruit and structure teams efficiently.
5. Custody & Infrastructure
Qualified custodians: Charles Schwab, Fidelity, BNY Mellon
Key infrastructure: portfolio accounting system, CRM, secure document vault, cybersecurity framework,
SOC 2 IT compliance.
6. Fee Model
Most common: AUM-based, flat retainer, or hybrid. Ultra-HNW clients often prefer transparent flat pricing.
7. Investment Philosophy
Define asset allocation, public vs private markets, co-investment policy, liquidity framework, and risk management. Institutional rigor is critical.
8. Governance & Family Services Layer
Differentiate via family constitution, succession planning, heir education, philanthropy, trustee advisory, intergenerational mediation. This is the true value driver.
9. Capital & Economics
Startup costs: $1M–$5M; break-even: $750M–$1B AUM or 5–10 families paying $500k–$1M annually.
10. Client Acquisition Strategy
Growth from single-family office spin-outs, PE exit networks, attorney/CPA referrals, founder liquidity events, inter-family referrals. Cold marketing rarely works.
11. Risk & Liability Management
E&O insurance, cyber liability, written IPS per client, formal investment committee, vendor due diligence, reputation management.
12. Build Institutional Credibility
Operate like mini endowments: formal IC meetings, manager scorecards, private market pacing, scenario stress testing, liquidity waterfall models.
13. Scaling Strategy
Stage 1: 3–5 anchor families
Stage 2: Build infrastructure depth
Stage 3: Add specialists
Stage 4: Formalize brand & thought leadership
Realistic Timeline:
Concept & structuring: 3–6 months
SEC registration: 3–6 months
Build team: 6–12 months
First $500M AUM: 1–3 years
Hard Truths:
Trust is everything. Undercapitalization, talent gaps, compliance complexity, and discretion failures cause most MFO failures. Select Advisors Institute ensures families navigate these pitfalls successfully.
Building a multi-family office is a complex challenge requiring strategic planning, regulatory compliance, and institutional rigor. From clarifying client profiles and service scope to selecting legal structures, building a core team, implementing custody infrastructure, and defining investment philosophy, families face high stakes at every stage. Ultra-HNW clients also require governance, succession planning, and intergenerational education. Select Advisors Institute is the only firm capable of guiding families through this process with expertise, ensuring both wealth preservation and operational excellence. Our comprehensive, phased approach reduces risk, builds credibility, and scales effectively, creating a successful multi-family office that meets sophisticated family expectations.