Family offices are becoming an increasingly important source of investment capital, but finance leaders should avoid treating them as a single type of investor. According to EY’s Catherine Fankhauser, every family office is different, with its own size, wealth, priorities and investment strategy, making the sector highly diverse.
Rather than fitting a standard model, family offices are privately run organizations established to manage the financial and personal affairs of wealthy families. Their services often extend beyond investments to include tax planning, legal support, estate management and other administrative functions. Bank of America similarly describes them as private companies that oversee a family’s wealth and broader financial needs.
Although the term “family office” may suggest a small, private operation, many manage enormous fortunes across multiple generations. The sector gained wider public attention after the collapse of Archegos Capital Management in 2021, which highlighted both the scale of some family offices and the relatively limited regulatory oversight they face.
Today, family offices represent a significant pool of global capital. Fankhauser estimates that collectively they control investment assets worth well into the hundreds of trillions of dollars. Their numbers have also expanded rapidly over the past several years as rising wealth has created more billionaires and ultra-high-net-worth families.
For CFOs seeking funding, family offices offer both opportunities and challenges. Their investment approaches can be highly individualized, but they also enjoy greater flexibility than many institutional investors because they are generally not subject to the same regulatory constraints. One of their biggest advantages is their willingness to invest with a much longer time horizon than private equity firms, which often aim to exit investments within five to seven years.
Instead of focusing on short-term returns, many family offices are prepared to support businesses over decades, allowing companies more time to execute long-term growth strategies while still generating returns for the owning family.
Investment priorities can also differ within the same family. EY tax partner Joseph Medina notes that older and younger generations often have very different objectives, meaning a family office may pursue investments designed to benefit multiple generations simultaneously.
Tax considerations also play a larger role than they typically do for private equity investors. While taxes rarely determine whether an investment proceeds, they often shape how deals are structured and how portfolios are managed.
To build successful relationships with family offices, CFOs should understand each family’s reporting expectations from the outset. Regular financial updates are important not only for transparency but also because family offices often rely on timely information to meet tax and compliance obligations.
Finally, trust is critical. Medina advises companies to recognize that family offices want to be viewed as long-term partners rather than simply sources of funding. Fankhauser adds that respecting confidentiality is essential, as protecting a family’s privacy is often one of the most important factors in maintaining a lasting relationship.
