Published: November 2024
Family offices have become increasingly relevant for Australian business owners who've built substantial wealth and need more than traditional accounting services. If you've recently sold a business, grown beyond a single income source, or manage multiple family trusts and investments, understanding family offices could be critical to preserving and growing your wealth across generations.
In Australia, family offices manage an estimated $180 billion in assets for approximately 400 ultra-high-net-worth families. The average family office client has investable assets exceeding $50 million, though newer multi-family office models now serve families with $10 million or more.
This article explains what family offices actually do, how they differ from traditional advisors, when Australian families should consider this structure, and the real costs involved.
A family office is a dedicated team of professionals managing all aspects of a wealthy family's financial and non-financial affairs. Unlike traditional accountants or wealth managers who focus on specific transactions or investments, family offices take responsibility for the complete family enterprise.
The core difference is scope and integration. Your accountant handles tax compliance and financial reporting. Your financial planner manages your investment portfolio. Your solicitor deals with estate planning. A family office coordinates all these activities under one strategic framework, aligned with your family's long-term goals.
In Australia, family offices typically serve families with three characteristics: substantial liquid wealth following a business sale or successful exit, multiple generations requiring coordination, and complex structures including trusts, companies, property holdings, and investment portfolios.
Traditional accounting firms focus on compliance, reporting, and tax minimisation for specific entities. They prepare financial statements, lodge tax returns, manage BAS obligations, and provide strategic advice around business operations.
Family offices encompass these services but extend far beyond:
- Integrated wealth management: Coordinates all family assets including operating businesses, investment portfolios, property holdings, private equity positions, and philanthropic vehicles. A Melbourne family office client might have interests in manufacturing, commercial property, share portfolios, and a private ancillary fund, all requiring coordinated oversight.
- Next-generation preparation: Includes financial education for children and grandchildren, mentoring for family members entering the business, and structured programs teaching wealth stewardship. Australian families typically begin this education when children reach 16-18 years old.
- Family governance: Establishes formal structures for decision-making across generations, manages family meetings and communication, and documents shared values and purpose. This prevents the common statistic where 70% of family wealth dissipates by the third generation.
- Lifestyle management: Handles property maintenance, bill payment, staff coordination for household employees, travel arrangements, and administrative tasks that consume significant time for busy families.
- Philanthropic coordination: Manages charitable giving through private ancillary funds, coordinates volunteer activities, and aligns donations with family values. In 2024, Australian private ancillary funds distributed over $600 million to charities.
Family offices recognise that family wealth includes financial assets plus human capital, reputation, shared values, and cultural traditions. This holistic view differs fundamentally from traditional advisory relationships focused purely on financial metrics.
Consider a Sydney family that sold their logistics business for $85 million. Their family office manages the obvious financial elements like investment allocation, tax planning, and estate structures. But they also coordinate family education programs, manage the family's reputation in business circles, oversee a family foundation supporting education initiatives, and facilitate quarterly family meetings where three generations discuss shared goals.
Without integrated coordination, different family members might pursue conflicting strategies. One branch invests aggressively while another prioritises capital preservation. Younger generations feel disconnected from family wealth they'll eventually inherit. The family's public profile becomes inconsistent as members support different causes.
Family offices align these activities by establishing shared objectives, creating governance frameworks that respect individual autonomy while maintaining collective purpose, and ensuring all family members understand both their rights and responsibilities within the family enterprise.
One critical challenge for wealthy Australian families is balancing wealth preservation with current beneficiary needs. Families must maintain capital for future generations while allowing current members to enjoy opportunities that wealth provides.
Too conservative an approach frustrates younger generations and can lead to resentment or disengagement. Family members feel burdened by wealth they cannot access. Too liberal a distribution erodes capital, jeopardising long-term security.
Example: A Brisbane family with $60 million in assets established a family bank structure through their family office. Family members can access loans at commercial rates for housing deposits, education, or business ventures. The interest payments return to the family pool. This structure allows younger members to benefit from family wealth while preserving capital and teaching financial responsibility.
The family office manages loan applications, structures appropriate terms, monitors repayments, and ensures the system operates fairly across all family branches. Over five years, the family bank has funded three property purchases and two business startups, with all loans performing according to terms.
The transition from traditional accounting services to a family office typically occurs at specific inflection points in a family's wealth journey.
The most common trigger is selling an operating business. A manufacturing business owner who's focused on operations for 30 years suddenly has $50 million in cash requiring allocation. They need investment strategy, tax planning for the sale proceeds, estate planning for wealth transfer, and often support managing the psychological transition from business operator to wealth steward.
A Perth family sold their mining services business for $75 million in 2023. Previously, their accountant handled business financials and personal tax returns. Post-sale, they needed to establish investment structures, create a diversified portfolio, plan for three adult children with different financial needs, establish a charitable foundation, and manage ongoing living expenses across multiple properties. Their family office coordinated all these elements.
When the second or third generation becomes involved in family wealth, complexity increases dramatically. The founding generation typically has clear views on wealth management. Subsequent generations bring different perspectives, risk tolerances, and life goals.
A Melbourne family with $40 million across property and investments brought in family office services when the founder's four children reached their 30s and 40s. Each child had different needs: one wanted to start a business, another focused on property investment, a third prioritised charitable work, and the fourth sought passive income. The family office created structures allowing each path while maintaining overall family cohesion.
As families diversify beyond a single business into multiple entities, trusts, investment vehicles, and property holdings, coordination becomes critical. A typical wealthy Australian family might have a family trust, unit trusts for specific assets, a company operating investments, a self-managed super fund, a private ancillary fund, and various property ownership structures.
Managing tax obligations, cash flow between entities, compliance across multiple structures, and strategic allocation decisions requires sophisticated oversight that exceeds traditional accounting scope.
While no absolute threshold exists, family offices become economically viable when annual costs represent a reasonable percentage of total wealth. Single-family offices typically require $50 million plus in assets. Multi-family office models can serve families with $10 million to $20 million by sharing costs across multiple clients.
- Single-family offices: Dedicated exclusively to one family, providing complete control and customisation. Annual costs typically range from $800,000 to $2 million depending on complexity and service scope. A Sydney single-family office might employ a CEO, CFO, investment manager, tax specialist, and administrative staff.
- Multi-family offices: Serve multiple families, sharing infrastructure costs while maintaining separate client portfolios. Annual fees typically range from $150,000 to $500,000 depending on asset levels and service requirements. This model suits families with $10 million to $50 million in assets.
- Virtual family offices: Coordinate existing advisors without employing dedicated staff. The family office professional acts as quarterback, managing relationships with accountants, lawyers, investment advisors, and other specialists. Annual costs range from $80,000 to $200,000.
Understanding true costs requires looking beyond annual fees to total economic impact.
- Direct costs: Professional fees for family office services, whether internal staff for single-family offices or external fees for multi-family arrangements. These range from 0.5% to 2% of assets under management annually.
- Indirect costs: Investment management fees, legal and accounting fees for complex structures, insurance premiums for directors and trustees, and technology systems for reporting and communication.
- Opportunity costs: Time family members spend in governance activities, potential investment returns foregone for capital preservation strategies, and liquidity constraints from long-term wealth structures.
A practical example: A family with $30 million in assets using a multi-family office pays $250,000 annually in direct fees (approximately 0.8% of assets). Additional costs include $80,000 in investment management fees, $40,000 in legal and accounting fees, and $15,000 in insurance and technology. Total annual cost is approximately $385,000, or 1.3% of assets.
However, the family office identifies $180,000 in annual tax savings through optimised structures, negotiates fee reductions saving $60,000 annually, and coordinates investments generating an additional 1.2% return through better allocation. The net economic benefit exceeds the cost.
1. Investment management and allocation: Family offices develop investment strategies aligned with family goals, select and monitor investment managers, coordinate across multiple asset classes including Australian equities, international shares, property, private equity, and alternative investments. They also manage cash flow across family entities to minimise idle cash while ensuring liquidity.
2. Tax planning and compliance: This includes structuring ownership to minimise tax obligations while maintaining asset protection, coordinating with accountants to prepare returns across multiple entities, managing CGT events when restructuring or selling assets, and planning for intergenerational wealth transfer to minimise tax and duty costs.
3. Estate planning and succession: Family offices work with legal advisors to structure wills and testamentary trusts, establish powers of attorney and enduring guardianship documents, plan business succession when operating businesses remain in the family structure, and mediate family discussions about wealth transfer to prevent disputes.
4. Risk management and insurance: They assess risks across all family assets and activities, coordinate insurance across personal, business, and investment assets, manage trustee and director liability through appropriate coverage, and review policies regularly to ensure adequate protection as wealth grows.
5. Family governance and education: Family offices facilitate regular family meetings to discuss financial matters and shared goals, create family constitutions documenting values and decision-making processes, develop financial education programs for younger family members, and mediate disputes before they escalate to legal conflicts.
A Adelaide family built substantial wealth through a successful retail chain. In 2022, they sold to a national competitor for $90 million. The three siblings who inherited the business each had different priorities, and their seven children ranged from age 12 to 35.
The family established a multi-family office arrangement to manage their new situation. The family office coordinated the following:
- Year one priorities: Structured the sale proceeds into family trusts for each sibling, a pooled investment vehicle for shared assets, and a private ancillary fund for charitable giving. They managed $18 million in capital gains tax obligations through careful timing and offset strategies. They established banking and investment accounts across all new entities. They created a governance framework including quarterly family meetings and an investment committee with two family members and two independent advisors.
- Ongoing management: The family office prepares consolidated reporting across all family entities, showing each member their individual position and the overall family wealth. They coordinate annual compliance including tax returns for three family trusts, the investment company, the private ancillary fund, and seven individual returns. They manage a property portfolio including the family home in Adelaide, a holiday property in Noosa, and four investment properties. They administer the private ancillary fund, which distributed $180,000 to charities in 2024.
- Next-generation preparation: The family office established a financial education program for the seven grandchildren. Those aged 16 and over attend annual education sessions covering investment basics, family wealth responsibility, and charitable giving. Each grandchild receives a small investment allocation they manage with family office guidance, learning practical investment skills before inheriting substantial wealth.
- Results after two years: The family's wealth grew from $90 million to $104 million through strong investment performance. All family members report satisfaction with governance arrangements. The next generation shows increasing engagement with family wealth. Tax obligations have been minimised through effective structuring. Family relationships remain strong despite the complexity of shared wealth.
Not every wealthy family needs a full family office structure. Alternative arrangements may be more appropriate when:
- Wealth remains in a single operating business: If your wealth is primarily a business you're actively managing, traditional accounting and business advisory services typically suffice until you diversify or plan exit.
- Single generation: If you're the sole wealth holder without complex succession needs, coordinated financial advisors, accountants, and lawyers can manage your affairs without family office infrastructure.
- Simple structures: A family with wealth held in a straightforward trust and SMSF, with clear estate planning and no intergenerational complexity, may not justify family office costs.
- Limited wealth: Below $10 million, the cost-benefit equation typically doesn't support family office services. Traditional advisors provide better value.
What is the minimum wealth required for a family office in Australia?
Single-family offices typically require $50 million or more in assets to justify dedicated staff and infrastructure costs. Multi-family offices can serve families with $10 million to $20 million by sharing costs across multiple clients. Below $10 million, traditional accounting and wealth management services generally provide better value.
How does a family office differ from a private bank?
Private banks focus primarily on investment management and lending, providing standardised services to high-net-worth clients. Family offices provide customised, comprehensive management of all family affairs including governance, education, lifestyle management, and philanthropy. Family offices act as the family's representative, whereas private banks represent their institution's interests.
What professional qualifications do family office staff need in Australia?
Key roles typically require relevant credentials: CEOs often hold MBA or business backgrounds, CFOs require CA or CPA qualifications, investment managers need ASIC licensing and relevant experience, and tax specialists require accounting qualifications. Many family offices also employ lawyers for governance and estate planning matters.
Can a family office manage my operating business?
Family offices typically coordinate oversight of operating businesses rather than managing day-to-day operations. They monitor performance, coordinate with business management, ensure strategic alignment with overall family goals, and plan succession. Actual business management remains with professional operators or family members in operational roles.
How long does it take to establish a family office structure?
Initial setup typically takes 3 to 6 months, including selecting the appropriate model, engaging professionals, establishing legal structures and entities, developing governance frameworks, and implementing systems and reporting. Full integration of all family affairs can take 12 to 24 months as the team learns family dynamics and preferences.
What happens if family members disagree about family office decisions?
Well-structured family offices include governance frameworks addressing disagreement resolution. This typically includes documented decision-making processes, independent advisors who can provide objective perspectives, mediation processes before disputes escalate, and clearly defined authority levels for different decision types. Many families establish investment committees and governance boards to formalise decision-making.
Are family office expenses tax deductible in Australia?
Deductibility depends on the specific service and structure. Investment advice and management fees are generally deductible against investment income. Accounting and tax compliance costs are typically deductible. Personal services like lifestyle management and family education are generally not deductible. Your family office should structure fees to maximise legitimate deductions while maintaining ATO compliance.
How do family offices charge for their services?
Fee structures vary by model. Single-family offices have direct employment costs for staff plus infrastructure expenses. Multi-family offices typically charge annual retainers based on complexity, often 0.5% to 1.5% of assets under management. Some use hybrid models with base retainers plus additional fees for specific projects. Virtual family offices often charge hourly or monthly retainers for coordination services.
Should we establish a family office before or after selling our business?
Ideally, engage family office advisors 12 to 18 months before a planned business sale. This allows proper tax structuring for the sale, estate planning to optimise wealth transfer, investment strategy development before receiving proceeds, and family governance establishment while transition discussions are less emotionally charged. Post-sale establishment is common but may miss opportunities for tax optimisation.
How do we know if we need a family office or just better advisors?
Consider a family office when you're managing multiple complex entities requiring coordination, multiple family generations need alignment on wealth strategy, you're spending excessive time on wealth administration rather than meaningful activities, different advisors provide conflicting recommendations without coordination, or your wealth has diversified beyond a single business into multiple asset classes and structures. If you have straightforward wealth in one or two entities with simple succession plans, enhanced traditional advisory relationships likely suffice.
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