Compared to usual investment companies, single family offices have a unique organizational structure. Single family offices consist of various, large investment teams and only a few back office employees. We give a detailed overview of single family office organizational structures. Many European single family offices follow the introduced organizational structure.
Executive Team at our Single Family Office organizational chart
Usually, the core team of a single family office consists of a few partners in key positions. A Chief Executive Officer (CEO) who leads the whole investment firm, a Chief Investment Officer (CIO) who is responsible for investment decisions and a Chief Financial Officer (CFO) who is responsible for tax and financial topics and a Chief Operating Officer (COO) who is responsible for daily operations. The partners are directly in touch with family members or a representative family board. Smaller single family offices even only consist of the executive team, while larger SFOs with billions of asset under management have several sub-divisions. You can read more about the executives at single family offices in this article.
Investment Teams at Single Family Offices
As stated before, larger single family offices have for each asset class a specialized team. The teams source deals and investment opportunities, execute possible transactions and monitor their performance. The interesting thing in family offices is that investment professionals closely work together although their asset classes might be really different. While for a large investment firms it might be the case that the private equity and real estate teams are located in different buildings or even cities, in single family offices they might sit in the same room. Of course, the teams are smaller than in large investment firms: no in-house lawyers, less interns, less back-office staff. Therefore, family offices also often rely on trusted, professional advisors or partners.
Usually, the specialized investment teams are led by directors who already served many years in leading positions at investment firms. They are, in turn, working together with a few talented investment associates and analysts. The Chief Investment Officer (or CEO, depends on the size and structure of the SFO) supervises the investment teams and is in steady exchange with them. Investment decisions are either made or – when the deal size is larger – brought to the family investment committee / investment board.
Which investment teams exist and how they are structured heavily depends on the investment focus of the family office. Very often, the following teams exist:
- Financial Investments: Managing investments in financial markets, either through external asset managers or own professionals (or a mix of both forms). To determine the best asset managers, so-called „Beauty Contests“ are hosted. Often, the financial investment teams is working together with dozens of asset managers. Investments are made in stocks, bonds, resources or derivatives. A main function is also risk management (together with the accounting and risk management team), reporting and financial market research. Since the main function of the family office is wealth preservation, the investments have to be steadily watched and in case of too high volatility the SFO has to intervene directly.
- Real Estate: The real estate division of family offices are mainly dealing with the asset management of existing properties and the acquisition of new objects. The real estate team is working together with various external firms: estate agents, asset managers, property managers, lawyers. Some family offices also engage in real estate mezzanine capital financing or project development. Some family offices are – through their background – mainly focused on real estate investments and asset management.
- Private Equity and Venture Capital: Most investments of family offices in private companies are done through larger private equity and venture capital funds as so-called „Limited Partners“ (LPs). Lately, many single family offices also invest directly in funding rounds of startups and private equity deals. Many SFOs are working closely together with some PE & VC funds – and also engage in co-investments. The PE & VC team is also controlling and reporting the family office investments. Often, the team leads (or the Chief Investment Officer) are holding board positions at the portfolio companies. Sometimes, the PE & VC team is also responsible for the monitoring of the family business.
- Other Investment Teams: There are many more possible asset classes which have their own investment teams: renewables, arts, impact investing, etc.
Back Office Functions at Single Family Offices: Accounting, Public Relations, etc.
The back office supports the daily work and necessary operational functions of family offices. Smaller SFOs have a few employees (or external providers) who work on the tasks, larger SFOs have their own dedicated teams. Possible teams are:
- Accounting, Tax and Risk Management: This team closely works together with the CFO and is a core function of a SFO: tax statements, income statements and balance sheets have to be created, payouts made to the family members, the portfolio value has to be steadily monitored and family members have to be consulted in tax issues. Since often family members are located in different countries, tax issues can get very complicated. In smaller SFOs, accounting is sometimes completely done by external firms. This team also deals with payable bills and the internal finance operations.
- HR & Operations: This is usually a smaller team, concerned with hiring qualified employees (working together with headhunting firms) and running the daily operations. Some single family offices also have their own concierge services, dealing with flight bookings for family members, education topics for the kids, organizing family events and so on.
- Public Relations: Self-explanatory: dealing with press coverage about the family office, often the main focus is to reduce public coverage and to clarify wrong reports.
- Portfolio Management: As stated before, the main asset of many family offices is the holding of the family company (or companies). These holdings have to be closely tracked, board meetings prepared, sometimes own strategic planning has to be made. Sometimes this division is also incorporated in the private equity investment team.
- IT: Heavily depends on the size of the family office, but larger SFOs have their own IT specialists, working on IT security, the homepage, equipment of the investment teams. Often also outsourced.
This article is part of our single family office career section.
Picture Copyright: Feel free use our organizational chart, but please reference us as the source.
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