A family office is a relatively small investment management firm, typically focused on one or a small group of wealthy households. Many high-earning medical professionals may consider handing off their investments to a family office, looking for better investment results and the convenience of having the administrative side of their investments—such as tax planning—handled by dedicated experts.
While doctors with high incomes may be tempted to move their finances to a family office, that’s typically not the best route for most. Here’s a closer look at how family offices work, the pros and cons of working with a family office, and insights into how you can decide if a family office is right for your money.
What Is a Family Office?
A family office is a business focused on managing the investments of a small group of households, or even a single family. In simpler terms, a family office is a small investment management firm, typically focused on the needs of just a few investors rather than the broad investment services offered by large firms like Charles Schwab or Fidelity.
Family office investment managers tend to take a more hands-on approach than many traditional investment advisors. And as they’re only working with households with a high net worth, they sometimes have access to more exclusive investment opportunities, such as hedge funds and invite-only private placements.
But on the flip side, family offices may charge a pretty penny for their services, which can include flat fees or charging based on total assets under management (AUM). The service you receive and the investments you can access typically work differently than when working with an independent financial advisor.
Why Family Offices Exist
Most of us can handle our investments on our own or with resources provided by our brokerage firm and sites like this one. But some people would rather pay someone else to deal with their investments and finances, even if that means paying many thousands of dollars per year for that peace of mind.
If you want to hire someone to help with your investments, the default place to look, after your favorite brokerage, would be a financial advisor—sometimes working independently and sometimes working with a larger firm. But the level of attention and service you get from either of those is somewhat limited. When you want to move up to the next tier of financial management, that’s where family offices come into the equation.
Family offices employ full-time teams to focus on all aspects of the family’s finances. That can include managing business entities, managing real estate transactions, investing across multiple accounts (or even countries), handling the complexities of family trusts, and helping clients meet their philanthropic goals.
For families with investable assets of seven figures (or more), having a single trusted contact for all their financial needs could be an attractive proposition.
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Types of Family Offices
Family offices range from those focused on a single family to those that operate as investment houses for a small group of wealthy households.
Single-Family Office
A single-family office is fully controlled by a single family, as the name suggests. Many families with eight-figure or more portfolios can likely afford to hire at least one part-time staff member to manage their money.
As needs and assets grow, that can turn into a full-time dedicated investment manager, effectively a one-person family office. If investments are complex or require additional full-time expertise, the office can grow to employ multiple full-time staff or outsource certain tasks to outside experts. While most of us never have to worry about it, households with assets of nine figures or more may effectively build their own investment management company and focus exclusively on the one family’s finances.
Multi-Family Office
Multi-family offices typically begin managing the funds of a single family, or maybe two, and grow slowly based on their investment performance, reputation, and networking.
When you share your investment manager with a few other households, you’ll spend less than hiring individuals to manage just your money. You get the economies of scale that come with sharing your service provider, along with much more focus and attention than you would with a traditional investment advisor.
Costs, availability, and investment performance vary widely. This is still a luxury service that costs much more than putting your cash into boring but predictable low-cost index funds.
Virtual Family Office
If a family office seems too costly but you want more hands-on care than a large-scale brokerage firm offers, a “virtual” family office could be the ideal solution.
Instead of having a family office, you can hire your own tax preparer (CPA), attorney, and fee-only financial advisor. You can connect with them or share the advice you get from each of them to ensure your needs are best met, and it would be with a lower budget than going all-in on a family office.
What a Family Office Actually Does
- Investment management and reporting: Oversees portfolio and asset allocations, fund selections, and performance reporting across all accounts, often consolidating everything into a single, easy-to-read view.
- Tax planning coordination: Works alongside your CPA to implement tax-efficient strategies, including asset location, tax-loss harvesting, entity structuring, and income and deduction timing.
- Estate planning implementation: Coordinates with your estate attorney to execute trusts, gifting strategies, and beneficiary planning, and then keeps everything updated as laws, assets, and family needs change.
- Cash flow, bill pay, and major purchases: Manages day-to-day financial administration—including bill pay, liquidity planning, lending decisions, and analysis of large purchases like homes, aircraft, or major angel investor commitments.
- Insurance and risk management review: Reviews life, disability, umbrella, property, and specialty insurance to identify gaps, overlaps, or overpriced policies and reduce overall risk exposure.
- Philanthropy support: Helps structure and manage charitable giving through Donor Advised Funds, private foundations, or direct gifts while aligning donations with tax and legacy goals.
- Entity and real estate oversight: Coordinates financial management for operating businesses, investment entities, and real estate holdings—including reporting, debt strategy, and transaction support.
- Family governance and education: Facilitates investment policy statements, family meetings, and next-generation financial education to align goals and reduce conflict over time.
Do Doctors Need a Family Office?
Most physicians don’t need a family office. A simple setup using low-cost index funds, a good CPA, and a solid estate planning attorney usually delivers excellent results at a far lower cost. Added complexity rarely improves outcomes for doctors with straightforward finances.
A family office may make sense after a major liquidity event—such as selling a practice—or for physicians with high seven- or eight-figure net worths, multiple entities, significant real estate holdings, or complex estate and philanthropic needs. The value isn’t better investing but better coordination and administration. If your finances resemble a standalone business, it’s worth considering. Otherwise, simpler is usually better.
How Family Offices Charge (and Common Conflicts)
Family offices may have full-time staff with salaries. If you hire a multi-family office, you’ll likely pay in one or more of these ways:
- Assets under management (AUM) fee: A percentage of assets managed, often around 0.5%-1%+, which can grow expensive as assets increase.
- Flat retainer: A fixed annual or quarterly fee for a defined scope of services, regardless of portfolio size.
- Hourly or project-based fees: Charges for specific planning, transactions, or one-time work, similar to legal or consulting billing.
- Embedded investment fees: Additional costs built into funds, private deals, or structured products used by the family office.
When selecting a financial advisor or family office, stay aware of potential conflicts of interest. Watch for proprietary products, heavy pushes into “exclusive” private investments, layered fees, commissions, or referral payments that benefit the family office more than you. Transparency matters. If fees or incentives are hard to explain, that’s usually a warning sign.
Pros and Cons of Family Offices for Doctors
Pros
- Single point of coordination: One “quarterback” overseeing investments, taxes, estate planning, and administration can reduce friction and missed details.
- Integrated reporting and planning: Consolidated reporting across accounts, entities, and assets makes it easier to understand your full financial picture.
- Time and mental bandwidth savings: Offloading complex financial administration frees up time and reduces decision fatigue.
Cons
- High cost: Family offices are expensive, and fees can materially impact long-term returns.
- Unnecessary complexity: Sophisticated structures and private investments may add risk without improving outcomes. After all, most active investment funds can’t beat the market.
- Potential conflicts of interest: Proprietary products, layered fees, and illiquid deals can benefit the provider more than the client.
Alternatives to Family Offices to Consider First
Most doctors should save their money and skip the cost of a family office. These alternatives could be a more cost-effective choice:
- “Quarterback” model: Use a CPA, estate planning attorney, and fee-only advisor (or DIY investing) coordinated through an annual planning meeting to cover most needs at a reasonable cost.
- Controller or bookkeeper: Hire an operational financial expert, likely a CPA or similar, to help if you have multiple entities or real estate—without the expense of a full family office.
- OCIO or limited-scope advisor: Delegate investment management while avoiding the cost and complexity of a full family office.
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How to Vet a Family Office: Questions to Ask a Family Office
If you think a family office is the right option for you, it’s a good idea to interview several to find the best fit for your unique needs and goals and to find someone you get along with and like to talk to about your money.
- Fiduciary status: Are you a fiduciary 100% of the time, across all services and accounts? Are there any situations where you are not?
- All-in fees: What is my true all-in cost when every fee layer is included? Are there any embedded, third-party, or performance-based fees I should know about?
- Asset custody: Where will my assets be held? Is custody handled by an independent, well-known custodian?
- Reporting and cadence: What reports will I receive on a monthly and quarterly basis? Can I see a sample of exactly what those reports look like?
- Private investments: What private or alternative investments do you use, and why? How liquid are they, and what risks should I understand?
- Investment process: How is the investment policy statement created and updated? What are your rebalancing rules, and how do you coordinate with my CPA on taxes?
- Red flags: How do you avoid conflicts of interest? How do you ensure fees are transparent and that investment recommendations are made in my best interest?
The Bottom Line on Family Offices
Family offices exist to handle complex financial needs, but they are unnecessary for most physicians, even those with high incomes and investment account balances. A simple, low-cost setup with low-fee index funds and the right professionals often delivers better results with fewer headaches. The real value of a family office is typically coordination, not superior investment performance.
Start by honestly assessing the complexity of your finances, not just your income or net worth. If things are straightforward, focus on tightening your existing plan with the right team of experts to supplement where you need help, such as from a CPA or estate planning attorney. If they’re really so complex that you need the help of a family office, research and interview a few top picks to help you find the best fit for your preferences and financial goals.
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