Chapter 1 of Running a Family Office Under $100M
The term "family office" is loaded with unhelpful baggage. It sounds like something for billionaires with dynastic wealth—not for someone who just sold a business for $25 million.
It's also become fashionable. Plenty of advisors and wealth managers now call themselves "family offices" because it sounds sophisticated. They're providing the same services they always did, with better branding.
Strip that away and a family office is simply a wealth operating system—a coordinated approach to managing financial complexity. It's not about prestige. It's about having the right infrastructure for your situation.
The question isn't whether you need a "family office" in the traditional sense. It's whether you need coordinated wealth management that goes beyond what any single advisor provides.
The Main Distinction
Here's what separates a true family office from other wealth management arrangements: it manages the founder's and family's own money.
Not clients. Not outside investors. Just the family's wealth.
A wealth manager serves many clients. A family office serves one family. That's the core difference.
For most founders in the $5–50 million range, some version of this makes sense. What differs is how you implement it.
The Five Core Functions
Every family office—whether a billionaire's dedicated staff or a founder's coordinated network of advisers—performs the same five functions.
Scale and sophistication vary. The functions stay the same.
1. Investment Management and Oversight
This is what most people think of when they hear "wealth management." But it's only one piece of a larger system.
Investment management covers asset allocation, manager selection, performance monitoring, and rebalancing.
The key question isn't just "what should I invest in?" It's "who ensures all my investments work together as a coherent strategy?"
Example: a founder has a Vanguard IRA from their employed days, a Coinbase account with crypto they bought in 2017, three SPVs from angel deals, carry in a friend's fund, and public stock from when their startup got acquired. Maybe some rental property. A whole life insurance policy someone sold them years ago.
Each decision made sense at the time. But nobody's looking at this as one portfolio. Nobody's checking whether the angel deals are all in the same sector (they usually are). Nobody's tracking overall allocation or liquidity.
At the basic level, investment oversight might mean index funds reviewed annually. At the sophisticated level, it includes private equity, hedge funds, co-investments, and direct deals requiring genuine expertise to evaluate. But at any level, someone needs to see the whole picture.
2. Tax Planning and Compliance Coordination
This is where significant value is created or destroyed—often invisibly.
Tax planning covers tax-efficient structuring, multi-year planning, compliance across jurisdictions, and coordination between advisors.
Complexity escalates quickly. A founder with a UK holding company, US investments, Portuguese residency, and a trust for their children faces considerations no single generalist can handle. Without coordination, each advisor optimises their piece while the whole system leaks value.
Here's the math that matters:
A 10% return taxed at 45% leaves you with 5.5%. An 8% return taxed at 20% - you keep 6.4%.
The "lower return" investment actually delivers more money to you because of how it's taxed. Structure determines which scenario you're in.
Compound this over 20 years:
- $10M at 5.5% net = $29.2M
- $10M at 6.4% net = $34.5M
That's a $5.3 million difference—from structure alone. Not from picking better investments. Not from timing the market.
Tax planning matters as much as investment returns. Sometimes more.
3. Estate and Succession Planning
Estate planning addresses what happens when you're no longer around—or when you're alive but incapacitated.
This includes core documents (wills, powers of attorney, healthcare directives), trust structures, wealth transfer strategies, and succession planning.
Most founders delay this indefinitely. It feels morbid, abstract, less urgent than the next investment decision.
But the cost of poor estate planning can dwarf any investment loss.
Consider the UK alone: solicitors typically charge 1–5% of estate value for full probate administration, with complex estates costing £15,000 or more in legal fees. Add inheritance tax at 40% above £325,000, assets frozen for 6–12 months during probate, and potential family disputes—and the total cost of disorganisation becomes substantial. For a £5 million estate, we're talking about fees, delays, and tax inefficiencies that could easily reach six figures.
There's also the matter of preparing the next generation. Wealth that passes to heirs who aren't ready to handle it rarely survives to the third generation. Education, gradual involvement, and clear governance matter as much as legal documents.
4. Risk Management and Insurance
Risk management protects against catastrophic (or tail risk) events that could destroy wealth regardless of how well it's invested.
This covers insurance (liability, property, life, D&O), asset protection structures, cybersecurity, and contingency planning for incapacity or key advisor loss.
Risk management is chronically underweighted because it doesn't generate returns—it prevents losses. But preventing a £5 million loss is equivalent to generating a £5 million gain. And usually far easier.
The threats have evolved. Twenty years ago, asset protection meant liability insurance and perhaps a trust. Today, digital threats have become one of the leading causes of direct wealth loss for high-net-worth individuals.
The numbers are sobering. In 2024, the FBI's Internet Crime Complaint Center recorded $2.77 billion in losses from business email compromise alone—where criminals intercept wire transfers by impersonating executives or vendors. SIM swap fraud (where criminals hijack your phone number to intercept authentication codes) exploded 1,055% in the UK in 2024, with Cifas recording nearly 3,000 cases. Individual SIM swap attacks have resulted in losses exceeding $1 million. A single compromised email during a property transaction can mean six figures gone, usually unrecoverable.
Sudden liquidity puts you on display. You become a target.
The good news: basic protections are cheap. A hardware security key costs £40. A password manager costs £50/year. These protect millions in assets. The gap between "no protection" and "adequate protection" is surprisingly narrow. The gap between "adequate protection" and "target" is determined by your visibility.
5. Administration and Reporting
Administration is the unglamorous function that makes everything else work.
This includes consolidated reporting, entity maintenance, document management, cash management, and ensuring advisors actually communicate with each other.
At lower wealth levels, you handle this yourself with spreadsheets. As complexity grows, administrative burden can consume hours weekly. At some point, the value of your time exceeds the cost of outsourcing.
The reporting element deserves emphasis. Most founders cannot answer basic questions about their wealth:
- What's your total net worth across all entities?
- What are your all-in investment fees?
- What's your actual asset allocation right now?
Without consolidated reporting, you're flying blind.
Research from Owner.One's Penguin Analytics—a survey of 13,500 wealth owners with $3M–$99M across 18 countries—found that 74.6% of families lose a portion of their wealth during generational transitions, with average capital erosion of 31%.
The primary cause? Not market volatility. Missing or incomplete asset data. Information asymmetry. Critical details about holdings sitting with the founder, not transfer-ready for spouses or heirs.
Just pause and let it sink. Nearly a third of your assets can be lost simply because documents were disorganised and your family didn't have complete information about what you owned.
How These Functions Interconnect
The five functions aren't independent. They interact constantly. Decisions in one area ripple through the others.
Change your structure—establish a holding company in a new jurisdiction—and it affects your tax position, investment access (some funds only accept certain entity types), estate plan (which may need updating), and administration (new filings, new compliance).
Make an investment decision—commit to an illiquid private equity fund—and it affects your tax planning (different treatment of gains), risk management (concentration and liquidity risk), estate plan (how are illiquid assets valued and transferred?), and administration (tracking capital calls, distributions, valuations).
Most wealth advice treats these as separate conversations with separate advisors. Your investment person doesn't think about tax. Your tax person doesn't think about estate consequences. Your estate attorney doesn't consider investment constraints.
Each optimises their piece while the system underperforms.
The core value of family office infrastructure—at any scale—is ensuring someone thinks about how everything connects. Whether that's you, a hired coordinator, or a multi-family office, the function must exist.
When Each Function Becomes Necessary
Wealth level matters, but complexity triggers matter more. Two founders with identical net worth might need very different infrastructure.
Complexity indicators:
Multiple entities. More than 2-3 entities (holding companies, SPVs, trusts, operating businesses) significantly increases coordination burden.
Multiple jurisdictions. Cross-border complexity is disproportionately expensive. Advisors often only understand—or work in—one country.
Alternative investments. PE, VC, hedge funds, syndications, direct deals—each adds administrative and tax complexity.
Family complexity. Blended families, minor children, elderly parents, members in different jurisdictions.
Active business involvement. Still operating, serving on boards, angel investing, advising—blurs personal and business lines.
Philanthropic activity. Foundations, donor-advised funds, significant charitable giving.
The question to ask yourself: Is the total complexity of my situation exceeding my capacity to coordinate it effectively?
If you're spending hours weekly on financial administration, if things fall through cracks, if advisors give conflicting guidance, if you don't have a clear picture of your overall position—these are signals your infrastructure needs to evolve.
The Central Question
This chapter isn't here to convince you that you need a family office in the traditional sense. It's to help you understand the functions that must be performed and design the right approach for your situation.
Some founders will realise they need to formalise relationships with a few key advisors. Others will recognise the need for a dedicated coordinator. A few will conclude they need more significant infrastructure.
All will benefit from understanding how the pieces fit together—because even if you hire excellent people to run each function, someone needs to ensure the system works as a whole.
Often, that someone is you.
What Else to Consider
- Can you describe your total net worth—across all accounts, entities, and investments—in under five minutes?
- When did your tax advisor, estate attorney, and investment advisor last speak to each other?
- If something happened to you tomorrow, could your spouse or family access and understand your financial life within a week?
- Are you the only person who sees the complete picture?
If any of these gave you pause, you have a coordination problem. The next chapter covers how to solve it.
