Do you need a family office?

You build your wealth or come into new money and don’t have the time or expertise to manage it. A family office will remove that burden. Or will it? Rob Agnew, partner and head of private office at Isio, considers the options

The Family Office Insights Report from Deloitte projects that the number of global family offices will grow from 6,130 in 2019 to 10,720 by 2030, an incredible 75 per cent
increase in just over a decade. But do you really need a family office, or know how to build one? Maybe there’s a better way.

The accidental family office

A major liquidity event, whether from a business sale, inheritance or investment windfall, brings new complexity to managing your wealth. The appeal of setting up your own family office is clear: it gives you control and a level of independence from low-quality, high-cost private banks and intermediaries.

If you were successful as a founder or business leader, you may feel you can create a model to manage your own wealth in-house. Before you know it, you have an accidental, but far from perfect, family office.

What families may get wrong

Founders who once excelled at long-term business planning often abandon that same discipline when managing their wealth. Without a clearly defined investment strategy, families may struggle to achieve consistent, risk-adjusted returns over the long term. Successful entrepreneurs might be tempted to apply their business
acumen to angel investing. They may end up spending 90 per cent of their time on 5 per cent of their portfolio – time that would be much better spent elsewhere.

Spiralling costs

Below a certain scale, the cost and complexity of running your own family office can outweigh its benefits. Hiring top-tier talent is expensive, and even a modest team
covering compliance, operations, investment oversight and accounting can exceed £1 million annually, responsible for a significant portion
of the total cost¹.

Comparatively, private banks’ all-in fees can exceed 2 per cent but are typically in the 1.5 per cent to 2 per cent range², with charges on alternative asset allocations in some
cases reaching as high as 7 per cent per annum for portfolios exceeding £200 million. Even at these levels, they offer limited scope to shape investment strategies around a
family’s objectives or existing asset base. We believe families can keep all costs below 1 per cent while retaining complete control of their investment strategy – a combination of value and autonomy that private banks simply cannot match.

Behavioural pitfalls

Without institutional structure and governance, behaviour drives decision making. The absence of a clearly defined strategy and the discipline to stick to it can lead to poor timing and subpar outcomes.

Long term success also relies on the continued commitment of those leading the family’s wealth. Younger family members may not always be aligned or even interested in taking on the responsibility of managing wealth long-term.

A better way

For most wealthy families there is a better way forward than building your own family office.

At Isio, families and individuals benefit from the same high-quality investment solutions, expertise and economies of scale enjoyed by our institutional clients.

We act as the family’s investment office – a ‘drag and drop’ team drawing on an institutional investment engine built over 25-years within KPMG and Deloitte.

We work with families to define what ‘good’ looks like for their long-term wealth, providing a clear framework that guides decisions with purpose rather than instinct or convenience. By helping families navigate complexity with structure and clarity, we support more consistent long-term outcomes.

1) Mr Family Office, The Brutal Cost of Running a Family Office

2) Top 10 Private Banks, Compare leading private banks and their services in UK