The Perspective Blog
The Northwood Perspective

Chairman's Message: Chihuahuas and Blueberry Muffins

Tom McCullough

What is a ‘real’ family office?

When I started in the family office field almost 25 years ago, a lot of people didn’t know what a family office was. In those days, many people used to ask me if it had something to do with “birth control and family counselling”.

Times have changed! A generation later, not only do more and more people know what a family office is, but more and more advisors now claim to be one. The term “family office” seems to  attract larger clients, so many advisors and salespeople (investment managers, investment advisors, insurance brokers, accounting firms, etc.) have tacked on a few extra services and started to call themselves family offices. That can make it very confusing for families who are trying to find a real family office.

So, is there such a thing as a real family office?

Let’s start with single family offices (SFOs). These are family offices who work with one single family. There are many different types of SFOs and they each perform different functions. Some might just include the CFO of the operating business and the administrative assistant who help the family with their personal bookkeeping, administration, and travel arrangements. Other SFOs employ staff members who are distinct from the operating business and may look after investments, tax and estate planning, foundation activities, family education and administration. And still others are larger organizations who manage every aspect of the lives and financial affairs of multiple generations of one family. Every SFO can be tailored to the specific needs of the families they serve, and there are likely thousands of them (EY estimates around 10,000 globally).

When we turn to multi-family offices (MFOs) -- which, not surprisingly, look after multiple families -- the situation is a little different. First of all, there are fewer of them – maybe in the hundreds. Second, they are usually commercial enterprises that aren’t under the control of a single family. This means that clients have to evaluate several MFOs and select one that meets their needs versus setting up their own SFO specifically to suit them. It means that the client families must make an assessment of the type of organization they are engaging and the services they offer, or don’t offer.

That’s why it is important to understand what you are really getting when a firm holds themselves out as a family office. I recently came across a meme on the internet that appears to shows pictures of blueberry muffins, but if you look closely, some of them aren’t actually blueberry muffins – they are chihuahuas. And they probably don’t taste very good! In a similar vein, the rise in popularity of MFOs (or the desire in the industry for firms to use the family office term) means that there are many organizations that call themselves a family office, but unless you look closely and do your research, you may not end up getting what you were expecting. Or you may unknowingly end up working with a firm that doesn’t provide the services of a real MFO.

The Family Wealth Alliance (FWA)  - a membership organization that serves the family wealth management sector that comprises MFOs, SFOs, RIAs etc. - publishes a set of Multi-Family Office Standards to try to define the basic standards and definitions of an MFO. This is a US-based organization, but the standards are, for the most part, applicable in Canada and many other parts of the world.

The express purpose of this exercise was to help client families understand their choices and find a true family office that was likely to meet their needs. This was not an easy task because there are many different approaches to operating an MFO.

The FWA gathered a group of practitioners who debated and then settled on four standards or dimensions that define a real MFO. I have summarized them below, but the full description can be found on the FWA website at

1. Whom do they serve?

2. What services do they offer?

           o Integrated Financial Planning/Wealth Strategy

           o Portfolio Management

           o Consolidated Reporting & Technology

           o Estate & Wealth Transfer

           o Tax Planning, Preparation, & Compliance

           o Risk Management

           o Fiduciary/Trustee Services

           o Lifestyle Management

           o Family Consulting, Governance, Meetings, & Education

           o Strategic Philanthropy  and Administration.

3. How do they deliver services?

4. What experience do they have?

These standards are not perfect, and there are likely legitimate MFOs that do not meet all of the stated standards, but I still think they offer a great starting point to help client families identify what they should look for in an MFO. In my mind, a true multi-family office tailors services to meet client goals and objectives, plays the coordination role in the family’s advisor ecosystem by acting as the central and integrated advisor, and focuses on getting things done and execution, as opposed to just providing advice.  

For families who are in the process of looking for a family office, I’d suggest starting with a clear assessment of your family’s unique needs, and an understanding of the services that your family would require. Once you have these datapoints, the process consists of diligent research into the service offering of each MFO you are considering working with. Doing this work in advance should help significantly decrease your odds of “biting into a chihuahua” by mistake.


Tom McCullough

Tom McCullough is Chairman and CEO of Northwood Family Office. The combination of his background, along with his own family’s desire for a truly ‘comprehensive, customized and confidential service, led him on a search for a multi-family office. Tom is a frequent speaker on issues relevant to families of wealth and is the co-author of Wealth of Wisdom: The Top 50 Questions Wealthy Families Ask and Family Wealth Management: Imperatives for Successful Investing in the New World Order and the soon-to-be-released Wealth of Wisdom: Top Practices for Wealthy Families and Their Advisors. He is an adjunct professor and Executive-in-Residence at the University of Toronto’s Rotman School of Management MBA program. He is an Entrepreneur-in-Residence at Western University’s Ivey School of Business and a member of the Editorial Board of the Journal of Wealth Management. He was recently awarded ‘Best Individual Contribution to Thought Leadership in the Wealth Management Industry’ by the 2020 Family Wealth Report Awards.

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