Access To Talent

Talent is a challenge for both types of family offices. But generally, it is more challenging for SFOs to attract and retain top talent. 

MFOs have the advantage of being a for-profit business with the ability to offer equity opportunities, which can be a significant lure in attracting and retaining talent. Entrepreneurial, driven professionals would often prefer to own an MFO business rather than be employed by one family. 

That said, SFOs have been creative in compensating key SFOs professionals with high salaries, opportunities to co-invest with the family and carried interest structures based on the growth in the family’s assets. These creative compensation structures have helped SFO’s attract and retain talent.

Privacy

The role of a family office in protecting the privacy and saving the time of the family cannot be understated. Wealthy families are bombarded with requests, whether it is to invest in a private company, hire a vendor for services, or support a charitable cause.

The “gatekeeper” role of protecting the family from service providers and solicitations is often one of the main reasons families create SFOs. The amount of time it takes to handle these incoming requests is tremendous and the wealthy may want their family office to screen everything first. 

Traditionally this has been a role provided by SFOs rather than MFOs, however, this is an opportunity for MFOs. If an MFO can become a trusted advisor and act as a client’s gatekeeper, it can be tremendously valuable. Not only taking meetings with potential providers, but conducting due diligence and vendor management can be an invaluable service for families that helps lead to very loyal clients.

Service Needs

How the family intends to invest their wealth is also key to determining which type of family office is appropriate. There are dozens of services that can be performed by an SFO, an MFO or both:  aggregated reporting, general ledger accounting, bill pay, philanthropic planning, household management, household employee management, tax accounting, tax planning, estate planning, estate document drafting, alternative investment due diligence, private investment due diligence, family dynamics planning, family education, risk management, property and casualty insurance, lending, life insurance planning, and more.