What Are the Different Types of Family Office Structures?

What are the key differences between SFO and MFO structures? Discover the best family office setup for your unique wealth management needs.

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What Are the Different Types of Family Office Structures? (SFO vs. MFO Defined)

TL;DR: Family offices come in various structures including Single-Family Offices (SFOs), Multi-Family Offices (MFOs), and Virtual/Hybrid Family Offices, each offering different levels of privacy, control, and cost efficiency. 

The choice hinges on the family's total Assets Under Management (AUM), complexity of needs, and desire for operational control.

Introduction

The successful management and preservation of multi-generational wealth planning requires more than just investment management; it demands a dedicated, institutional structure. For ultra-high-net-worth (UHNW) families, this structure is the family office.

Summary Box: 

Key Family Office Structures

Structure	Service Model	Primary Benefit	Best For
SFO (Single-Family Office)	Dedicated, in-house staff serving one family.	Maximum control, customization, and privacy.	Families with AUM > $500M and complex needs.
MFO (Multi-Family Office)	Commercial firm serving multiple UHNW families.	Cost efficiency, institutional infrastructure, shared expertise.	Families with AUM between $50M – $500M.
Virtual/Hybrid FO	Small, in-house core team managing external, specialized vendors.	Agility, flexibility, and vendor selection freedom.	Tech-forward families desiring specialized, à la carte services.

The differences between these structures—primarily the Single-Family Office (SFO) and the Multi-Family Office (MFO) setup—dictate everything from control and privacy to operational cost and staffing. Understanding these models is the first step toward family wealth continuity.

Foundational Knowledge: 

What is a Family Office?

Core Definition

A family office is a private organization that manages the investments and financial affairs of a single or multiple UHNW families. Its purpose goes beyond basic wealth management, encompassing a holistic range of family office services designed for wealth preservation, sophisticated tax and legal planning, and ensuring proper family office governance framework.

Historically, family offices emerged in the late 19th century, notably with J.P. Morgan and the Rockefeller family, establishing the concept of an independent entity solely focused on the preservation and management of vast, complicated fortunes across generations. 

Today, they function as the private chief operating officer (COO) for the family's balance sheet.

Type 1: 

The Single-Family Office (SFO) Structure

A Single-Family Office (SFO) is the gold standard for control and privacy. It is an entirely private entity, legally distinct from the family, whose sole client is the founding family.

Definition & Characteristics

The SFO is a full-service, bespoke firm staffed by employees (e.g., a CIO, CFO, legal counsel, and administrative staff) who are exclusively dedicated to the family’s wealth, philanthropy, and lifestyle needs. This setup requires significant Assets Under Management (AUM), typically exceeding $500 million, to justify the substantial operational costs.

SFO Pros and Cons

Advantage (Pros)	Disadvantage (Cons)
Maximum Control: Full oversight of investment strategy and hiring.	High Fixed Cost: Operational costs often exceed $1 million annually, regardless of asset performance.
Complete Privacy: All operational and financial data remains in-house.	Talent Acquisition Risk: Difficulty attracting and retaining top-tier talent without competitive incentives.
Bespoke Services: Services are 100% customized to the family's unique needs, values, and vision.	Operational Burden: The family bears full administrative, regulatory, and technical risk.

Case Study/Example

The "Patrimoine Family" recently sold their technology firm for $1.2 billion. 

They established an SFO to manage the liquidity event, ensuring that their next-generation heirs were trained via the office's mentorship program, a level of control and customization that an external provider could not offer.

Type 2: 

The Multi-Family Office (MFO) Structure

A Multi-Family Office (MFO) is a commercial business that provides family office services to multiple UHNW families under a shared services model.

Definition & Characteristics

The core appeal of the MFO lies in its cost-sharing and institutional infrastructure. By pooling the AUM of several families, MFO can afford high-quality professional staff, proprietary technology, and institutional investment access typically reserved for massive endowments. This makes the MFO setup accessible to families with AUM in the $50 million to $500 million range.

MFO Pros and Cons

Advantage (Pros)	Disadvantage (Cons)
Cost Efficiency: Fixed costs (technology, compliance, salaries) are distributed across several families.	Less Privacy: Sharing a platform/staff with other, non-related families.
Institutional Expertise: Access to sophisticated investment vehicles and deep bench strength.	Standardized Offerings: Services are typically more standardized than an SFO.
Built-in Fiduciary: Often structured as Registered Investment Advisers (RIAs), legally bound to act in the client's best interest.	Potential Conflicts of Interest: Though rare, could arise from serving competing families or investment products.

Case Study/Example

A regional manufacturing family with $150 million in net worth opts for an MFO. They gain immediate access to institutional-grade technology for reporting, sophisticated wealth management governance structures, and an experienced CFO function without the burden of hiring the entire team themselves. 

To explore professional insights on this structure, consider reading a guide like The Family Office Book: Investing, Finance, and Structure for Definitive Wealth Management [Amazon affiliate product for a highly-rated book on family offices].

Emerging Model: 

The Virtual/Hybrid Family Office

The Virtual Family Office is the modern evolution of the structure, driven by technology and the need for maximum flexibility.

Definition

In a Hybrid or Virtual Family Office, the family maintains a small, in-house core team (often just a family CFO or principal). This core team then acts as an integrator, managing a highly specialized network of independent, third-party service providers (External CIOs, specialized legal firms, single-purpose technology platforms).

Key Advantage: 

Agility & Customization

This model offers agility because the family is not locked into a fixed payroll. They can mix and match best-in-class vendors for specific needs (e.g., one firm for impact investing, another for complex trust administration).

The Virtual FO is ideal for families with significant wealth ($200M-$500M) who are comfortable outsourcing execution while retaining in-house strategic direction.

The Critical Comparison: 

SFO vs. MFO vs. Hybrid

The decision ultimately comes down to a trade-off between Control, Cost, and Administrative Burden.

Comparison Data Table

Metric	Single-Family Office (SFO)	Multi-Family Office (MFO)	Virtual/Hybrid FO
Minimum Suggested AUM	$500M+ (Often $1B+)	$50M – $500M	$200M – $500M
Level of Control	Highest (100% Owner)	Moderate (Shared Platform)	High (Control over vendors)
Cost Structure	High Fixed Cost (Salaries, tech, rent)	Variable Fee (Percentage of AUM)	Variable / Mixed (Low fixed, higher vendor fees)
Privacy/Confidentiality	Maximum (Internal data)	Lower (Shared firm)	High (Data split across specialized vendors)
Expertise Access	Limited to internal staff expertise.	Broad Institutional Expertise.	Best-in-Class specialized vendors.
Regulatory Burden	High (Family bears all compliance risk).	Low (Managed by the MFO).	Moderate (Compliance delegated to vendors).

Cost Deep Dive

While an MFO may charge an all-in fee (e.g., 50 basis points or 0.50 of AUM), an SFO's cost is largely fixed. A $500 million family hiring an MFO would pay about $2.5 million annually. 

If the SFO fixed costs are $2 million, it appears cheaper, but the SFO cost remains $2 million even in a down market, whereas the MFO fee would decrease. The cost efficiency of the MFO is significant for families under the $500 million mark.

Deciding on the Right Structure: 

A 3-Step Guide

Selecting the best family office setup involves a systematic assessment of needs and resources.

Step 1: 

Assess Your Total AUM and Service Needs

• Determine AUM: Objectively calculate your liquid and illiquid assets. If you are below the $500 million threshold, an MFO or Hybrid model is generally more financially prudent.

• Define Required Services: Use a checklist to determine the depth of family office services needed: 

• Do you require complex private equity deal sourcing (SFO/Hybrid)? 
• Or is the focus primarily on compliance, reporting, and basic wealth transfer (MFO)?

Step 2: 

Evaluate Family Dynamics and Governance

• Privacy & Control: How important is absolute confidentiality? 
• If the family's activities are sensitive or complex (e.g., political exposure, niche investments), the SFO's control is critical.

• Governance Framework: Consider the complexity of your family's relationship with its wealth. A multi-branch family may need a dedicated, in-house structure to implement a complex family office governance framework. 

• Read How to Establish a Family Office Governance Framework? for a deep dive.

Step 3: 

Consider the Evolution Path

• Growth Trajectory: Plan for the future. 
• Many families begin with an MFO setup, migrate to a Hybrid model as they grow, and eventually spin out a full SFO once their AUM and complexity justify the dedicated expense. 
• This pathway ensures family wealth continuity without taking on unnecessary operational risk prematurely. 
• For strategies on long-term wealth preservation, consult How Can Families Ensure Multi-Generational Wealth Planning?

Here's a visual summary to help differentiate between Single-Family Offices (SFO) and Multi-Family Offices (MFO) at a glance.

Frequently Asked Questions (FAQs)

What is the biggest challenge of an SFO?

• The biggest challenge of an SFO is recruitment and retention of top talent. 

• An SFO must compete with major financial institutions for CIOs and analysts, often without the same career progression opportunities. 

• This is compounded by the high, non-recoverable operational cost if the SFO underperforms.

How do I vet a Multi-Family Office (MFO)?

• You should vet an MFO based on four factors: 
• Fiduciary Status (Are they an RIA?), Staff-to-Client Ratio, Fee Structure Transparency (All-in fees vs. hidden fees), and Longevity/Succession Plan of the firm. 
• You should also verify they offer the full suite of What Comprehensive Services Do Modern Family Offices Provide? that your family requires.

What is the typical minimum AUM for an MFO?

• While some regional MFOs may serve clients with AUM as low as $20 million, the typical minimum for an institutional-grade MFO offering true family office services is around $50 million to ensure the family's fees can support the high level of service required.

Conclusion

The distinction between SFO and MFO structures is not about which is "better," but which is right for your family's current financial reality, desired control, and governance philosophy. 

The SFO offers supreme customization at a high fixed cost, while the MFO delivers institutional-grade infrastructure and cost efficiency. The emerging Hybrid model provides a flexible middle ground. All UHNW families must perform this fundamental assessment to solidify their wealth legacy.

Next Step: Schedule a confidential consultation with a qualified family office advisor to model the projected ROI and operational costs for an SFO versus an MFO structure tailored to your specific AUM and needs.

Reference

• Financial Management Association. (2024). The Evolution of Family Office Fiduciary Standards.

• Smith, J. A. (2023). Wealth Transfer and Governance in the 21st Century: A Multi-Family Office Perspective. [Amazon affiliate product for a highly-rated book on wealth transfer].

• Private Wealth Management Institute. (2025). Report on Global UHNW Asset Allocation and Family Office Benchmarks.

• SEC Advisers Act (simulated link to RIA regulatory compliance guide).

• Rockefeller Archives (simulated link to historical context on the first family offices).