The Evolution of Family Offices

Family offices date back to the sixth century, when the

responsibility for managing royal wealth fell to the king’s steward. In the modern era, the stewardship concept evolved into the family office as we know it today. In 1882, John D. Rockefeller Sr. established the Rockefeller Family Office, which was the first family office in the US and still exists, now serving other families as well.

A family office generally provides servicestailored to the needs and objectives of the familyfor which it is established. While there aredifferent kinds of family offices, they tend to befamily-owned organizations that manage thefamily’s private wealth and affairs. With theprogressive growth of the family tree – upon thebirth of children and grandchildren, and the addition of in-laws – and an increase in thecomplexity of the family’s asset base, familiesusually professionalize their private wealthmanagement by setting up single family offices (SFOs).

As subsequent generations evolve, the numberof family members served by the SFO increases.This may lead to challenges in managing thebreadth of services required and the eventualcreation of yet another SFO for certain familymembers. By contrast, the multi-family office(MFO) typically originates as a commercial concept with the aim of supporting multiplefamilies who are likely unrelated. They tend tooffer bundled services to clients and operate as aprofit-oriented financial service provider. hile there is no exact figure that captures the prevalence of family offices in the world today, the number ofSFOs alone was estimated at more than 7,300 in 2019 1. The exponential growth of the past few yearscan be attributed to an explosion in global wealth, whichis increasingly concentrated among very wealthyfamilies who need to plan for the transfer of wealth to the next generation.