Over the last half-dozen years or so, we've been involved in structuring or restructuring single-family and multifamily offices. We've used empirical work in the field as the foundation of these engagements. The research provides state-of-the-art benchmark data. However, what's proved more essential to getting results is our hands-on experience, coupled with a highly consultative approach. Here, we'll talk about a couple of situations where we were engaged to structure single-family offices.
In a variety of ways, we're called into situations where exceptionally wealthy families are very interested in having their own single-family offices. They might be at the "thinking stage," where our role is to provide context and education on the topic. Most often they're at the "how do we do it?" stage. In effect, they want to know what it will take to put a single-family office together.

At its core, the act of putting a single-family office together is not complicated. There are five potential sets of expertise that family offices can provide: investment management, advanced planning, private investment banking, and administrative and lifestyle services. Then there is the talent required to deliver the selected sets of expertise and develop the compensation models to keep the talent motivated. Of course, we need to wrap it all in the appropriate legal structures with the requisite systems and processes.

The mechanics of a single-family office are actually pretty simple and straightforward. Structuring a single-family office is really about understanding what the wealthy want and helping them refine their thinking on the matter. It's more about brainstorming and optimization than financial products and legal structures. We find that we're acting more as information suppliers, sounding boards and facilitators helping the ultra-affluent make well-reasoned decisions.

A Family Office-At Least In Name
While most of the wealthy we counsel on this topic are looking for a conventional single-family office, there are exceptions. It's these exceptions that tend to strongly deviate from focusing on the nuts and bolts.

A third-generation heiress in her early 30s called us up and said she wanted her own family office. She requested a meeting to see if there was a way we could help her set up a family office for herself and her cousins-all third generation. She was very clear that her own fortune was in the neighborhood of a quarter of a billion dollars. Adding in her cousins, the amount of their private wealth hit about half a billion dollars. Then, she asked us if that was enough for a family office.

In a private room at a five-star restaurant in Midtown Manhattan, we sat down with her and her four cousins. After everyone was briefly introduced, she started the discussion by explaining her desire to be CEO and president of their family office. It was perfectly OK with us. We saw no problem provided her cousins found the decision acceptable. The idea seemed copacetic to them. She also wanted the family office to be named after her personally. Again, this was not a problem for her cousins or us.
It became quickly clear that they desired to work and this is the "business" they chose. She subsequently asked us to explain family offices, so we provided a very high-level overview of the field. As we did, the cousins jumped in now and again with questions. The entire overview took no longer than half an hour. All the time, the heiress was filing her nails and checking her iPhone.

Obviously bored with the conversation, she said, "Enough!" The heiress said there was one issue that made the family office viable or not. She looked at us and said it has to go from 3 to 5. "Would that work?" she asked. We had no idea what she was talking about so we asked her to explain. The hours of her family office had to go from 3 in the afternoon to 5 in the afternoon, the heiress said. This way they could leave to get ready to go out for the night. It had to open its doors at 3 because they don't get up before noon and would never make it in before 3. We told her this was all her decision as president and CEO.
They now have a single-family office and the heiress is the president and CEO. Her cousins also work at the family office. However, they don't seem to make it into the office all that often. While the COO and CIO are actually managing their money and related matters, the heiress and her cousins have a really gorgeous clubhouse to hang out in whenever they choose.

Half Sisters, Full Insanity
The two are half sisters. They have the same father but different mothers. Neither of the mothers was married to the father. They have eight other half-siblings, which is more common than not in their milieu. Their serious money is inherited from their father. However, there have been times they earned a few euros as runway models. They did try their hands at a number of careers, from artists to clothing and jewelry designers, but none of these endeavors panned out.

We've known the sisters for a number of years and they've always been a lot of fun-often, too much fun. They've been banned from more then a few hotels and clubs throughout the world. A couple of times they've been arrested (but never officially charged) with lewd and indecent behavior. One of them has a musical jewelry box. It opens to Brahms Piano Concerto No. 1 in D minor and expands like a bouquet of blooming roses, with each petal and flower able to hold small items. However, it doesn't hold earrings or rings or any jewelry. Instead, the gossip is that it's loaded with all manner of pills and powders. Considering the lady in question, we suspect there just might be some truth to the rumors.

We were introduced to them while working for their father's family office. Together they wanted to establish their own family office. They were no longer interested in working with "papa's people." They said their father's family office was too restrictive and that the staff "tattled on them."

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