By Frazer Rice
A family office is a small private company built to manage one family's money, legal affairs, and long-term plans. For families navigating significant financial complexity, setting up a family office can bring real structural clarity. But the decision deserves more than enthusiasm; it requires an honest assessment of whether the structure is actually the right fit.
Done well, it's a powerful solution. Done prematurely or for the wrong reasons, it's an expensive one.
Most conversations about family offices start with a number… but they probably shouldn't. Wealth matters (it has to, given the costs involved), but complexity is usually what pushes a family toward a dedicated structure. Families overseeing businesses across multiple jurisdictions, real estate in different markets, global investments, and layered tax structures often reach a point where a loose network of advisors simply can't hold it together. Add the natural growth of a family across generations and the administrative volume alone—tax returns, legal filings, entity management—can become genuinely unmanageable.
Coordinating between three attorneys, two accountants, and a handful of investment managers with no central point of accountability isn't a wealth management strategy; it's a fragmentation problem. Setting up a family office is, at its core, a structural solution to that problem.
A properly staffed family office—professionals, technology, operational infrastructure—typically costs in excess of $1 million a year. For families with financial footprints under $200 million, that overhead is rarely justified.
A useful benchmark is whether a well-run office projected to cost roughly $800,000 per year is a figure the family's wealth can comfortably absorb; if so, a dedicated structure starts to make sense. Below that threshold, a more targeted approach, a strengthened advisory model with a family office-style overlay, usually delivers more value for the cost.
This is a decision worth modeling properly. A straightforward analysis comparing long-term office costs against the current advisor spend can quickly clarify whether the economics support moving forward.
Before any entity gets formed, the family needs to agree on what the office is actually for. That conversation shapes everything that follows.
A family office can carry a wide mandate (investment management, tax and legal coordination, bill payment, financial reporting, next-generation education, philanthropy) or a narrower one. Neither is inherently better. What is costly is building something without a clear purpose, only to discover months later that the structure is solving the wrong problems.
The most durable family offices are built around a mission that reflects the family's actual values: privacy, multigenerational stewardship, entrepreneurial legacy, and charitable purpose. Those values determine what gets prioritized when decisions get difficult, which, in a multigenerational structure, they will.
Even with the right professionals and a sound investment strategy in place, a family office can still struggle if authority is undefined and decision-making is unclear.
Governance is the part that families most often underestimate when setting up a family office. Written governing documents, defined roles, a clear process for selecting leadership, and regular structured meetings aren't administrative formalities. They are what keep a well-resourced structure functional across generations and through inevitable transitions or conflicts. Families that think through how disagreements between family lines get resolved before one actually surfaces tend to fare significantly better than those who don't.
Good governance still requires someone capable of building and running the office. That typically means a family member or a trusted senior hire with the time, interest, and authority to lead, particularly in the early phase. Creating a family office from scratch demands considerable operational investment.
Beyond leadership, the office needs skilled professionals: a finance director, investment staff, and operations support. Whether those roles are filled internally or through outside partners depends on scale and preference, but the quality of the people running the office matters as much as the structure itself.
Geography matters too. Where the office is based affects the regulatory environment, the available talent pool, and the tax treatment of certain structures. For families with global interests, this decision often turns out to be more consequential than expected.
Not every family needs to build an office from the ground up. There are three realistic models: a fully dedicated single-family office, a shared structure with other families (a multi-family office), or a hybrid that draws on both.
Each involves different trade-offs on cost, privacy, control, and operational complexity. The right fit depends on how much independence the family requires, how distinctive their situation is, and whether the economics support standalone infrastructure.
Before committing to any model, it's worth comparing long-term costs across each option with what it would cost to simply upgrade the existing advisory arrangement. Some families find that a more coordinated advisory structure delivers most of the benefit at a fraction of the overhead.
Families that go through the process of setting up a family office tend to arrive at the same point: their financial lives have grown complex enough that the absence of a central structure feels more disorganized and more exposed than the effort of creating one. The office stops being a luxury and starts being a logical response to scale.
Getting to that decision is usually the straightforward part. Getting the structure right is where the real work begins. Next Vantage works with families navigating exactly this transition, bringing together the legal, tax, investment, and estate planning picture into one coordinated framework. To start the conversation, reach out to us at (212) 433-1108 or frice@nextcapitalmgmt.com.
In Part 2, we examine how to structure a family office efficiently from a tax perspective and why getting that structure right has become significantly more important following recent changes to tax law.
There is no universal threshold, but for most families, a dedicated family office becomes cost-effective when wealth exceeds $200 million. Running a properly staffed office typically costs over $1 million per year, so the family's financial position needs to comfortably support that overhead. Below that level, a strengthened advisory model often delivers similar coordination at a lower cost.
Not exactly. Complexity is usually the more important driver. Families managing businesses across multiple jurisdictions, global investments, layered legal structures, and multigenerational estate planning often find that a loose network of separate advisors creates more risk than it resolves. A family office brings those relationships under one coordinated framework.
The scope varies, but a family office can cover investment management, tax and legal coordination, financial reporting, bill payment, philanthropy, and next-generation financial education. The right mandate depends on what the family actually needs. A clearly defined purpose from the start tends to produce a more functional structure.
Families generally choose between three models: a single-family office built and staffed exclusively for one family, a multi-family office shared with other families, or a hybrid arrangement. Each involves different trade-offs on cost, privacy, control, and operational complexity. A straightforward cost comparison between models and against the existing advisory setup is a sensible first step before committing to any one path.
A family office can have excellent professionals and a well-designed investment strategy and still underperform if decision-making is unclear. Governance (i.e., written rules, defined roles, a process for resolving disagreements between family branches) is what keeps the structure functional across generations and through inevitable moments of transition or conflict. It's most valuable when it's designed before it's needed.
Frazer Rice is Director of Family Office Services and a Partner at Next Vantage, the Family Office Services group of Next Capital Management in New York City. With more than two decades of experience advising ultra-high-net-worth families, Frazer helps clients bring structure, clarity, and coordination to complex wealth. He specializes in intergenerational planning, fiduciary strategy, and family governance, helping clients manage both the financial and human sides of wealth. Known for his sharp, strategic thinking, Frazer provides a board of directors-level perspective, helping families identify risks, organize priorities, and align advisors around long-term goals.
Before joining Next Capital, he served as Regional Director at Pendleton Square Trust and spent 16 years at Wilmington Trust, where he rose to Managing Director in the New York office. He is the author of Wealth, Actually: Intelligent Decision-Making for the 1% and host of the Wealth Actually podcast, exploring the modern wealth ecosystem.
Frazer earned his BA in Political Science and History from Duke University and his JD from Emory University School of Law. He serves as President of the New York City Estate Planning Council and is a frequent speaker on wealth management and family dynamics. A Manhattan resident, his interests include golf, yoga, media production, politics, horror movies, and 1980s pop culture. To learn more about Frazer, connect with him on LinkedIn.