INSIGHT

8 tips for setting up a family office

Kris Marney • May 21, 2025

You’re ready to set up a family office. It’s a big step, but where do you start?

Setting up a family office isn’t just about protecting your wealth – it’s about creating a structure that aligns with your family’s values and goals. From assessing your readiness to navigating legal hurdles, the process can be complex.

Top tips for setting up a family office

Don’t worry, we’re here to guide you through the key steps. Let’s dive into what it really takes to bring your family office vision to life.

1. Assess your plans for the family office

Before diving into the family office setup, take a step back and evaluate your situation. Consider the complexity of your assets—are they spread across multiple industries or countries? This complexity can influence the structure and services your family office needs.

Next, examine your family dynamics and goals. Are all family members aligned on the purpose of the family office? Understanding these dynamics is crucial for smooth operations and decision-making down the line.

2. Pre-launch planning for your family office

Once you’ve assessed your situation, it’s time for some detailed planning. Start by conducting a thorough needs analysis. What specific services does your family require? This could range from investment management to philanthropy coordination to estate planning to business succession and more.

With your needs clear, set specific, measurable objectives for your family office. For example, you may say you’d like to:

Implement a succession plan for the family business within 18 months
Establish a family foundation and donate $X million to charitable causes annually
Create and maintain a comprehensive family archive within 12 months
Hold quarterly family meetings with 90% attendance rate
Provide financial literacy and succession programs for all family members under 30

Remember, your goals should be tailored to your family’s unique situation and aspirations. They should also be revisited and adjusted periodically as circumstances change. These goals will guide your decisions and help you measure success over time.

Lastly, create a realistic budget for both set-up and ongoing costs. Family offices are an investment to establish and run, so it’s important to have a clear financial picture from the start. consider both immediate expenses and long-term operational costs to avoid surprises down the road.

3. Choose the right family office structure

When setting up a family office, you’ll need to decide between different structures. Each has its own advantages and considerations:

Single family office (SFO): Dedicated to serving one family, offering maximum control and privacy. SFOs provide tailored solutions and complete alignment with family interests, but they can be costly to establish and maintain.
Multi-family office (MFO): Serves multiple families, potentially reducing costs through shared resources. MFOs offer economies of scale and access to a broader range of services but may provide less personalized attention. The cost for these services is typically a percentage of AUM.
Virtual family office (VFO): Leverages technology and outsourced services for a more flexible, lean structure. VFOs can be more cost-effective and adaptable but may lack the comprehensive integration of traditional models.

Factors influencing your decision might include:

Size of family assets
Desire for control vs. cost efficiency
Need for specialized services
Family’s geographic dispersion

Consider how each structure aligns with your family’s unique needs and circumstances. Remember, the right choice today may evolve as your family’s situation changes over time. It’s important to build in flexibility and regularly reassess your family office structure to ensure it continues to serve your family’s best interests.

4. Lay the proper legal and regulatory groundwork

Once you’ve chosen a family office structure, it’s time to navigate the complex landscape of legal and regulatory considerations.

Jurisdiction

That starts with jurisdiction. Where you establish your operations can significantly impact your:

Tax obligations
Regulations you’ll need to follow
Access to financial markets.

While domestic options might offer familiarity, don’t overlook international jurisdictions that could provide unique advantages.

As you set up your family office, you’ll also need to navigate compliance requirements. These often include filing specific forms and adhering to various regulations. For instance, you might need to submit Form ADV to the SEC if your family office manages investments above certain thresholds.

You’ll also likely need to implement a comprehensive anti-money laundering (AML) program, which includes filing Suspicious Activity Reports (SARs) when necessary.

Tax Compliance

Tax compliance is another crucial area. This could involve filing:

Form 990-PF if your family office includes a private foundation
Form 1065 for investment partnership structures.
You may also need to report foreign assets using forms like FBAR (FinCEN Form 114) or Form 8938.

Depending on your activities, you might need to comply with the Dodd-Frank Act, which could require registering as a commodity pool operator or commodity trading advisor. Regular audits and maintaining accurate books and records are also typically required.

Remember, these requirements can vary based on your jurisdiction and the specific activities of your family office. Staying on top of these obligations is crucial to avoid penalties and maintain smooth operations.

Privacy

Balancing these compliance needs with your family’s privacy is another key consideration. You’ll want to look for legal structures and jurisdictions that offer strong privacy protections.

However, it’s important to remember that complete secrecy is rarely an option in today’s regulatory environment. The goal is to find a sweet spot that respects your family’s privacy while meeting necessary transparency requirements.

5. Build your family office advisory team

As you set up your family office, assembling the right team is crucial.

Core roles to consider:

Chief Investment Officer (CIO): Oversees investment strategy and portfolio management
Chief Financial Officer (CFO): Manages financial planning, accounting, and reporting
Legal counsel: Handles legal matters and ensures compliance
Tax specialist: Optimizes efficient tax strategies and ensures compliance
Risk manager: Identifies and mitigates various risks
Investment manager: Manages the family assets and investments
Estate planning specialist: Focuses on long-term wealth transfer strategies
Back-office manager: Handles administrative tasks and operations
Personal asset manager: Oversees management of physical assets like cars, art, and real estate
Foundation manager or philanthropy coordinator: Manages charitable giving and social impact initiatives

Do you need all these roles in-house? Or should you outsource?

To answer those questions, consider the complexity of your family’s needs, budget constraints, desired level of control, and availability of talent in your area. For example, you might outsource CFO services for strategic financial oversight and reporting, while keeping day-to-day investment management in-house for more direct control.

6. Establish family office governance

Good governance is the backbone of a successful family office. It ensures smooth operations, clear decision-making, and alignment with family values.

Start by creating a “family constitution”. This document outlines your family’s values, mission, and long-term vision. It serves as a guidepost for all family office activities. Include your family history and values, decision-making processes, conflict resolution procedures, and policies on family member involvement.
Next, define roles and responsibilities. Clearly outline who does what in your family office. This might include board of directors’ duties, family council responsibilities, individual family member roles, and staff job descriptions.
Finally, set up effective communication channels. Consider regular family meetings, secure digital platforms for sharing information, newsletters or reports to keep family members informed, and protocols for urgent decision-making.

Remember, governance isn’t set in stone. Review and adjust your structures periodically to ensure they continue to serve your family’s evolving needs.

7. Set up your technology, software, and security

In today’s digital world, your family office needs robust technology and security measures. This isn’t just about efficiency—it’s about protecting your family’s assets and information.

Start by identifying essential software and systems. You’ll likely need a comprehensive financial management platform that can handle everything from investment tracking to tax planning. Look for solutions that offer real-time reporting and analytics.

Don’t forget about communication tools—secure video conferencing and document sharing platforms are crucial, especially if family members are geographically dispersed.

Cybersecurity should be a top priority. Implement multi-factor authentication for all systems and train your team on best practices for data protection. Consider working with a cybersecurity specialist to conduct regular audits and penetration testing, as well as family education. Remember, your family office is a potential target for cybercriminals, so stay vigilant and keep your defenses up to date.

8. Launch your family office operation

Launching your family office isn’t a flip-the-switch moment—it’s a process. Consider a phased approach to service implementation. You might start with core financial management and gradually add services like philanthropy coordination or personal asset management.

In the first year, closely monitor your operations and be ready to adjust. Keep open lines of communication with family members and staff. Are the services meeting everyone’s needs? Is the governance structure working as intended? Don’t be afraid to make changes if something isn’t working.

Regular reviews are key. Set up quarterly check-ins to assess progress against your initial objectives.

Common pitfalls to avoid when setting up a family office

Setting up a family office is a complex process, and it’s easy to stumble along the way. Here are some common pitfalls to watch out for:

Neglecting succession planning: It’s not just about managing assets today—you need to think about the next generation. Don’t put off discussions about leadership transition and knowledge transfer.
Overlooking family dynamics: Family offices can become battlegrounds for family conflicts. Address potential issues head-on and establish clear conflict resolution processes. Some often overlooked aspects in the set-up process include:

Data management and privacy policies
Disaster recovery and business continuity planning
Regular performance reviews for staff and service providers
Ongoing education for family members about the family office’s operations

Lessons learned from other family offices highlight the importance of:

Maintaining clear boundaries between family and business matters
Staying adaptable in the face of changing regulations and market conditions
Investing in technology and cybersecurity from the start
Fostering a culture of transparency and open communication

Remember, setting up a family office is a journey, not a destination. Stay open to learning, be willing to adapt, and keep your family’s long-term goals at the forefront of every decision.

Set up your family office with BPM

As you set up your family office, remember that you don’t have to do it alone.

BPM’s team of seasoned professionals can guide you through every step of the process, from initial planning to ongoing operations. With our tailored solutions and deep industry knowledge, we can help you create a family office that truly serves your family’s unique needs and aspirations. Reach out to BPM today to start your family office journey.