How New Wealth, Few Rules Fuel Family Office Boom

The descendants of oil tycoon John D. Rockefeller have them. So do Microsoft Corp. founder Bill Gates, Fidelity Investments Chief Executive Officer Abby Johnson and Hong Kong telecommunications tycoon Li Ka-Shing. They are family offices, the loosely regulated, privately owned companies that manage vast amounts of money for wealthy clans. They’re also among the most secretive firms in the world, and by all accounts they are expanding rapidly. Ask any expert on family offices to define them and the likely response will be: “If you’ve seen one family office, you’ve seen one family office.” Like families themselves, they vary widely.

They’re firms that serve a single family with so much wealth that its members require their own money managers, accountants, estate planners, lawyers and other specialists to manage it all. Families usually need at least $500 million to set up a full-service office with an investment staff. Many employ dozens of professionals to pick investments, file taxes, pay the bills, oversee philanthropic missions and manage assets like yachts and vacation homes. Multi-family offices, which serve more than one family, are accessible at lower levels of wealth.