White Paper On SFO New

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The Benefits of Creating a

Private Company of Dedicated
Professionals Exclusively
Devoted to the Investment,
Legacy and Personal Needs of
One Family
CREATING A SINGLE FAMILY OFFICE FOR WEALTH CREATION

AND FAMILY LEGACY SUSTAINABILITY
The Benefits of Creating a Private Company of dedicated Professionals Exclusively Devoted
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to the Investment, Legacy and Personal Needs of One Family
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TABLE OF CONTENTS
I. INTRODUCTION .................................................................................................................................... 5
DEFINITION ......................................................................................................................................... 5
THE SFO MARKET ................................................................................................................................ 6
II. WHEN TO CONSIDER AND SFO ........................................................................................................... 8
MARKET CONDITIONS ......................................................................................................................... 8
WHERE TO BEGIN ................................................................................................................................ 9
III. CRITICAL PLANNING STEPS .............................................................................................................. 11
MISSION STATEMENT ....................................................................................................................... 11
BUSINESS PLAN ................................................................................................................................. 11
SFO PRO FORMA ............................................................................................................................... 11
EMPLOYEE HIRING AND MANUAL .................................................................................................... 12
SFO ADVISORY COMMITTEE ............................................................................................................. 12
CONTINGENCY PLAN ......................................................................................................................... 12
REVIEW PROCESS .............................................................................................................................. 12
FINAL PRESENTATION ....................................................................................................................... 12
FINE TUNING THE FINAL SFO PLAN ................................................................................................... 13
IV. INFRASTRUCTURE OF THE SFO ........................................................................................................ 15
BUSINESS ENTITIES............................................................................................................................ 15
REGISTERED INVESTMENT ADVISORY (RIA) ...................................................................................... 15
PRIVATE FAMILY TRUST COMPANY .................................................................................................. 15
INSURANCE RISK ............................................................................................................................... 16
CAPTIVE INSURANCE COMPANY ....................................................................................................... 16
OFFICE LOCATION ............................................................................................................................. 16
V. TECHNOLOGY IN AN SFO .................................................................................................................. 18
CUSTODY OF ASSETS ......................................................................................................................... 18
ACCOUNT AGGREGATION ................................................................................................................. 18
CUSTOMIZED REPORTING OF ASSETS ............................................................................................... 19
COSTS FOR ACCOUNT AGGREGATION AND REPORTING TECHNOLOGY........................................... 19
CUSTOMIZED TECHNOLOGY SOLUTIONS .......................................................................................... 19
EMERGING SOLUTIONS ..................................................................................................................... 19
RISK METRICS AND ANALYTICS ......................................................................................................... 19
HARDWARE AND SOFTWARE ............................................................................................................ 20
FAMILY COMMUNICATION ............................................................................................................... 20
FAMILY HISTORY ............................................................................................................................... 20
VI. SFO PERSONNEL............................................................................................................................... 22

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SFO RECRUITERS ............................................................................................................................... 22

COMPENSATION SPECIALIST ............................................................................................................. 22
HIRING THE TEAM ............................................................................................................................. 22
CHIEF EXECUTIVE OFFICER ................................................................................................................ 23
CHIEF INVESTMENT OFFICER ............................................................................................................ 24
CHIEF FINANCIAL OFFICER ................................................................................................................ 27
CHIEF LEGAL OFFICER........................................................................................................................ 28
DIRECTOR OF PHILANTHROPY .......................................................................................................... 28
DIRECTOR OF INFORMATION TECHNOLOGY .................................................................................... 29
FAMILY OFFICE MANAGER ................................................................................................................ 29
EXECUTIVE ASSISTANT ...................................................................................................................... 30
BOOKKEEPER ..................................................................................................................................... 30
FAMILY ART DIRECTOR...................................................................................................................... 30
FAMILY SECURITY DIRECTOR............................................................................................................. 30
VII. TRENDS ........................................................................................................................................... 32
VIII. EXAMPLES OF AN SFO.................................................................................................................... 34
IX. SFO REGISTRATION COST ................................................................................................................. 38
DMCC ................................................................................................................................................ 38
BENEFITS OF DMCC FREE ZONE .................................................................................................... 38
DMCC COMPANY SET UP REQUIREMENTS SNAPSHOT................................................................. 39
COST .............................................................................................................................................. 39
DOCUMENTS REQUIRED FOR RESIDENCE VISA APPLICATION IN DMCC ...................................... 40
PRO SERVICES IN DMCC ................................................................................................................ 40
X. CONCLUSION ..................................................................................................................................... 42
INDEX .................................................................................................................................................... 43
CONTACT ............................................................................................................................................... 43

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I. Introduction

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I. INTRODUCTION
DEFINITION
A single family office (SFO) is a private company of dedicated professionals exclusively devoted to the
investment, legacy and personal needs of one wealthy family. The concept of an SFO can be traced
back to the Roman major domus (head of the house) and the Medieval major-domo (chief steward)*,
but the modern SFO originated in the 19th century for the benefit of families of significant wealth
created during the American industrial age.
Interest in SFOs has grown over the last decade as worldwide wealth has expanded exponentially due
to entrepreneurialism, access to capital, market globalization, and technology. Recent global
economic turmoil, coupled with banking failures and investment fraud, has motivated many families
of significant wealth to take total control of their personal and financial affairs and preserve their
family legacy.
An effective SFO provides a family of significant wealth (i.e. $30,000,000+) with the ultimate in:
• Control of investment, business and personal services

• Privacy
• Customization of services and benefits
• Coordination and effective management of outsourced providers
• Purchasing leverage and cost savings
• Dedicated focus on needs and requirements of the family
• Integrating investments, philanthropic causes and passion interests successfully
• Family unity and legacy sustainability
• Vision and value development
Although a private company of dedicated professionals exclusively devoted to the investment, legacy
and personal needs of one family is the classic definition of an SFO, the services the family desires as
provided by their own SFO vary widely.
An SFO almost always acts as a private investment office for the family. In addition, a variety of services
can be provided to the family from their SFO including:
• Private Investment Allocation & Implementation

• Investment Due Diligence
• Custom Aggregation & Reporting of Assets
• Accounting Services (business & personal)
• Trust & Estates Planning
• Asset Protection
• Risk Mitigation
• Family Banking and Private Trust Formation
• Managing Family Business Enterprises
• Identify and Filter Business Opportunities
• Family Philanthropy and Foundations
• Family Mission and Governance
• Preserving Family Legacy and Values
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• Family Retreats
• Residence Management & Staffing
• Managing Passion Investments (i.e. art, collectibles, sports, etc.)
• Family Medical Management
• Family Lifestyle (i.e. concierge, travel, aviation, leisure, etc.)
A great benefit for a family of significant wealth is the customization of their own SFO. No two SFOs
are alike. Other topics and services which families often consider from an SFO include:
 Engaging Younger Generations in Entrepreneurialism

 Socially Responsible Investment and Business Opportunities
 Family Connectivity and SFO Management through Technology
 Integrated Investment Approach (business, passion, philanthropic)
THE SFO MARKET

According to the 2008 Capgemini Merrill Lynch World Wealth Report, there are 103,000 ultra-high net
worth individuals worldwide, defined as having at least $30,000,000 in financial assets, excluding
collectibles, consumables, consumer durables and primary residences.
Currently, there are approximately 1,000 single family offices in the world.** There are many reasons
for the modest number of SFOs, including the lack of awareness and education on all the benefits of
an SFO, perception of costs, set up and management complexities, challenges in hiring talented
employees, and the lack of professional guidance.
The majority of wealthy families currently have fragmented and frequently uncoordinated
relationships with multiple private banks, wealth managers, and other providers of services for their
business and personal needs. Now, more than ever, wealthy families need to coordinate these
relationships, centralize their investments and manage their family affairs more efficiently and
effectively to build their wealth and sustain their legacy for generations. An SFO for a family of
significant wealth offers benefits that are too hard to ignore.
Some families mention the cost of an SFO as a deterrent. Through education and professional help,
families can learn how to determine benchmarks and create an SFO that delivers a measureable ROI
to ensure they receive value in return. With the globalization of investments, technology
advancements, and the speed of market changes, a family of wealth not weighing their options and
considering an SFO, or dismissing such solely on cost, can be detrimental to a family’s investment
portfolio and sustainability. Technology and outsourcing has significantly reduced both the costs and
minimum net worth for a family of significant wealth to consider an SFO.
*WHARTON GLOBAL FAMILY ALLIANCE: Single Family Offices: Private Wealth Management in the Family Context. By Raphael
Amit the Wharton School University of Pennsylvania
**WHARTON GLOBAL FAMILY ALLIANCE: Single Family Offices: Private Wealth Management in the Family Context. By Raphael
Amit the Wharton School University of Pennsylvania

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II. When to
Consider an SFO

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II. WHEN TO CONSIDER AND SFO
Frequently, the question “when to consider an SFO,” focuses only on net worth. Making a decision
based solely on whether a family has a certain net worth is not looking at the full picture of the benefits
that can be realized from establishing an SFO. There are many benefits and value for a family with net
worth of $30 million+ to start an SFO, including:
• Creating a team of internal dedicated professionals advancing family investment and business
opportunities through proactive research and sourcing to expand upon the family’s net worth
in any market condition
• Total control and privacy of the family’s personal and business affairs, buffering the family
from undesired solicitations
• Internal due diligence and safeguards (re-views, audits, etc.) to avoid Ponzi schemes, frauds
and downward market conditions
• Crystallizing family values and developing a mission statement and plan that guides and
encourages generations to follow the family vision
• Building a sustainable family legacy through a unifying entity (the SFO)
• Philanthropic giving coordinated within the complete family investment, tax and estate plan,
promoting family values and reputation worldwide
• Coordinated family effort educating younger family members on the family’s mission,
financial resources, business enterprises and opportunities to improve wealth and reputation
• Passion investment opportunities synchronized in a coordinated effort with all assets owned
by the family
• Effective and fully integrated coordination of the family’s investment, estate, tax, business,
philanthropic and personal affairs
In section VIII “Examples of an SFO,” illustrations are given of various SFO structures highlighting the
customization created by families and the value received from those entities.
An effective SFO synchronizes the efforts of talented professionals exclusively focused on the desires
of one family, offering much more than a private investment office. An SFO coordinates and fosters
family legacy and wealth sustainability, philanthropic initiatives and personal passions.
A family would have a very difficult time establishing an SFO on their own due to the multiple
considerations, tax implications, hiring, technology sourcing, and other actions required. The family
needs a team of experts organized and coordinated by a family office expert to help them formulate
and execute a plan that covers a holistic view of the family and future generations, with bench-marks
and measurable goals in place to ensure success.
MARKET CONDITIONS
The current global economic conditions are unprecedented, and families of significant wealth desire
to stabilize their investments from further disastrous declines and secure their legacy for generations.
This coupled with Ponzi schemes and the fear that similar frauds exist that have not been uncovered,
are leaving families of significant wealth seeking new solutions.

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An SFO provides the ultimate option for a family desiring to take control of their finances and family
legacy. NO other option allows for such total control, privacy and customization. The SFO provides the
family with internal entities with a sole focus on THEIR best interests.
A proactive SFO increases the likelihood of family financial and legacy success and allows the family to
adapt faster and effectively to global changes and opportunities, market downturns, and the best
investment strategies.
Every family of significant wealth should consider an SFO due to the complexities of life, the magnitude
of global business opportunities, control of personal and business affairs, as well shaping and guiding
the family’s values and legacy for generations to follow.
WHERE TO BEGIN
Because of the time and focus needed to set up an SFO, families should seek the advice of experts,
including organizations, consultants or service providers that are solely focused on the task at hand.
Private bankers, legal, accounting, and other service providers for families of wealth may be able to
provide some guidance, but these companies are focused on their business, not the creation of SFOs.
Many professionals lack enough knowledge to guide families in the establishment and management
of an SFO.
In considering starting an SFO, the family should retain a knowledgeable expert who can objectively
compare all options and prepare a feasibility study. A family office consultant is one such professional.
If progressing with an SFO (after the feasibility study) the family office consultant develops a family
mission statement, business plan, assists in organizing the SFO advisory committee (sometimes
multiple advisory committees for different areas covered by the SFO) and the SFO infrastructure.
A family office consultant is not afraid to challenge the family to fully understand the dedication
(especially early on) in organizing and running an SFO. Does the family want to organize and manage
this business entity? In reality, it is like running a business, only the business is focused on the family
it serves. An SFO still needs to be run like a business with a mission statement, business plan,
performance benchmarks, governance, budgets and an advisory committee. The family will need to
hire and fire employees - are they up to that?
An SFO clearly defines and focuses its capabilities on that one family, protecting wealth, procuring
wealth creation opportunities and advancing the family legacy. An SFO that navigates through the
current financial crisis and protects the family from mismanagement and fraud is easily worth its costs.
A proactive SFO increases the likelihood of family financial and

legacy success and allows the family to adapt faster and
effectively to global changes and opportunities...

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III. Critical
Planning Steps

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III. CRITICAL PLANNING STEPS
Below are critical planning actions and documents that are absolutely necessary when deciding to
move forward with an SFO to ensure success and a positive return on investment.
MISSION STATEMENT
The family, in conjunction with the family office consultant, first develops the family mission
statement. The mission organizes the family vision around the family’s desires, values and
expectations, not simply for the current generation, but those that follow. Without a family mission
statement, a family often deviates off course and their wealth and legacy may suffer. In developing
the family mission statement, the family frequently improves internal communication. A family
mission statement provides for a stewardship of timeless family values, objectives and passions. In
times of challenge it reminds, motivates and unites the family of a sense of purpose.
BUSINESS PLAN
The family office consultant, in close collaboration with the family leaders, needs to develop the family
business plan. Although the family leaders are paramount to helping to shape the SFO, the family
office consultant should talk with many family members from multiple generations (if applicable) to
get all input needed to complete the business plan.
The family business plan needs to breakdown each area of interest that the SFO will address and pro-
vide a framework in coordinating an action plan to bring it all together. There needs to be a process
(a hierarchy as well as a system for all to follow), including outlining measurable benchmarks the SFO
needs to accomplish, a short-term and long-term timeline, employee qualification and performance
goals, an employee hiring and firing policy and employee manual.
The family business plan outlines and coordinates all aspects of the services provided within the SFO
(i.e. wealth management, estate planning, philanthropic, passion investments, personal services, etc.).
The plan focuses on a process for each service rendered, describing in detail the services to be
provided, employee talent required, projected costs and measurable benchmarks to gage the
effectiveness of the services rendered and employees responsible for these services.
An example of a benchmark for a wealth management function could be setting expectations for
investment returns of 3% above a measurable inflation index (i.e. CPI, etc.), with a specified diversified
asset allocation - mix of cash, bonds and equities. The portfolio is reviewed quarterly by the family
and SFO advisory committee and/or specific investment committee against a total standard deviation
of measurable investments not to exceed a negative 15%. In addition, no one money manager
manages more than 5% of total family assets.
SFO PRO FORMA

As with any new enterprise, in addition to a strong mission statement and business plan, a newly
created SFO requires a pro forma with detailed estimated costs of every area, including administrative,
infrastructure, employees, outsourced services, etc. The pro forma should be used to establish many
goals and benchmarks for the SFO is properly managed and achieves a positive return on costs.

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EMPLOYEE HIRING AND MANUAL

The employee positions within an SFO (i.e. CEO, CIO, CFO, etc.), need to be identified in the family
business plan, including the qualifications of each desired position, job descriptions and
responsibilities. Sourcing qualified employees can occur through existing family relationships and
professional SFO recruiters. All candidates should have a complete background check and the family
should develop a process for reviewing each hire (i.e. family leader and advisory committee all agree
on a candidate of hire).
An employee manual describing expectations, family privacy policy and SFO guidelines and benefits
should be developed to assist in providing an organized and professional environment. The employee
manual should also include vacation and sick time, dress, employee leave, and other policies
important to the family.
SFO ADVISORY COMMITTEE

The family, in collaboration with the family office consultant, should organize an advisory committee.
Initially this may consist of only family members, however, the committee can include independent,
unbiased professionals that add needed specific expert insight. In larger SFOs or established smaller
SFOs, multiple advisory committees are created to focus on various single family office functions (i.e.
financial, trust & estate, philanthropic, etc.).
CONTINGENCY PLAN
The family needs to develop a contingency plan in the event of a natural disaster, theft or technology
breach. At the most basic level, this includes a backup of all contact information, calendar
management and important investment and business accounts and reports. A more comprehensive
plan allows for emergency office space and reorganizing hardware and software capabilities within
days or hours of disaster.
REVIEW PROCESS
The family office consultant needs to commit the family to periodic reviews of all activity within the
SFO. Initially, the consultant will help to establish goals and benchmarks and review each against
results to measure success.
All areas should be reviewed, including the family’s mission statement, business plan, pro forma,
contingency plan, advisory committees, employees, infrastructure and technology. Reviews should
occur at least every year, however, quarterly reviews should be considered (especially in a newly
established SFO), and to adjust goals, strategies, and plans as needed.
FINAL PRESENTATION
The family office consultant helps the family crystallize their vision and desires, and organize the
blueprint for the SFO. The family needs to be actively engaged in this process and provide the
information to be correlated by the family office consultant into a presentation for final approval by
the family leaders.

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FINE TUNING THE FINAL SFO PLAN

Not uncommonly after the final presentation, the mission statement, business plan, pro forma,
employee hiring plan and manual, and other processes and documents are fine tuned. This fine tuning
takes into account further reflection and feedback from all parties on the direction of the SFO,
including what will be performed in-house, what will be outsourced and cost considerations.

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IV. Infrastructure
of the FSO

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IV. INFRASTRUCTURE OF THE SFO
It is at this stage that the family along with the family office consultant, engages legal counsel
experienced in SFOs to organize the business entity (or entities, see below) of the SFO. Legal council
also assists as needed with advisory committee documents, employee confidentiality, non-disclosure
agreements and other guidance and documents.
BUSINESS ENTITIES
Coordinated legal and tax counsel, along with a family office consultant, frequently advise to organize
multiple business entities (usually LLCs), which make up the SFO. One business entity may be the core
SFO that manages the family money, another for real estate, another for personal affairs and a
separate entity for the family philanthropic foundation. One reason is to segregate the legal liability
to each specific entity. Another viable reason may include the ability to clarify and obtain tax
deductions for some of the expenses within these business entities.
Certain expenses within legitimate business entities may be tax deductible, including start-up costs,
employee salaries, hardware and software. This effectively reduces the “net cost” of the SFO. If all
family services are under one business entity, including services for personal family affairs, this may
cloud the tax issue. Separation of business entities and appropriate internal structure of such by legal
and accounting council experienced in SFO infrastructure can assist in helping the family take the
appropriate deductions.
Situs (location) of the SFO entities (particularly the private investment company) should also be a
consideration of the family and its legal, tax and family office consultant. Most common location is the
family’s primary state of residence (if in the U.S.). However, depending on family desires and needs,
more favourable tax havens and/or active and vibrant financial centres may be a better option. The
location can also be important in recruiting talented employees for the SFO.
REGISTERED INVESTMENT ADVISORY (RIA)

It is highly recommended that experienced legal council also advise on whether the SFO should or is
required to register as a registered investment advisor (RIA). If only internally managing money for
the family, this is rarely required; however, it is best to have legal counsel review.
PRIVATE FAMILY TRUST COMPANY

A private family trust company is worthy of consideration by a family of significant wealth in con-
junction with an SFO (or in place of the money management SFO entity). A Private Family Trust
Company is a formal family trust company created by the family leaders to provide maximum privacy
and control of family trust and trustee engagements.
Few U.S. states allow for a private family trust company organized outside of the family’s domicile.
South Dakota is one of the states that does allow non-domiciled family formation of a private family
trust company and has highly favourable privacy laws and asset protection clauses (of trust assets),
making this state a popular choice for U.S. citizens. The process and costs of organizing a private family
trust company have come down, making this opportunity even more attractive. The benefits of a
private family trust company include:
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• Highly private family trust services

• Reduce liability of family members acting as trustees. Such trust entities commonly allow for
directors & officers (D&O) and other insurance solutions to such family fiduciary risks (acting
as trustee of family trusts)
• Depending on private family trust company situs and the situs’s rule against perpetuity,
continuity of family trust administration over multiple future generations
• Reduce likelihood of needing to register investment management function of an SFO (as a
registered investment advisory “RIA”) by organizing investment management through the
private family trust company
• Improve ability to maximize tax deductions of expenses related to managing the family money
• Formally provide fiduciary services directly to the family as opposed to simply supporting the
family’s trustees
There are multiple oversight and other obligations and decisions within the private family trust
company. A family office consultant, in coordination with legal and expert trust council, should present
the opportunity to the family, who ultimately need to make the decision whether establishing a
private family trust company is right for them.
INSURANCE RISK
The family office consultant needs to address insurance risk. Many SFOs, as well as family business
and personal assets, are underinsured. This represents significant risk to the family. An SFO is a
business entity like any other. There needs to be an insurance valuation and implementation of
applicable coverage, including:
• Business property
• Personal property
• Liability
• Excess liability
• Employment practice liability
• Error & Omissions (E&O)
• Directors and Officers (D&O)
• Workers compensation
CAPTIVE INSURANCE COMPANY

A Captive Insurance Company is a multi-faceted family company utilized for many purposes, including
insurance risk management (specifically for difficult to insure risks), income tax, asset protection and
estate-planning purposes that warrants consideration by the family. A family formed captive insurer
is a very powerful vehicle that is highly underutilized by families of significant wealth. A detailed
discussion is beyond the scope of this white paper, however, this strategy is worthy of follow up
discussion with the family office consultant and appropriate legal counsel to determine if it is right for
the family.
OFFICE LOCATION
The SFO for the family’s enterprise(s) should be at a formal business location, separate from the
personal residences and usually separate from the family business locations (other businesses owned
by the family). Earlier in this chapter we discussed SFO domicile considerations for various SFO entities
that factor in family needs, tax haven considerations and vibrant financial centres.

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V. Technology in
an SFO

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V. TECHNOLOGY IN AN SFO
Integrated with the infrastructure decisions for an SFO is the supporting technology. State of the art
technology is essential for an impactful and well managed SFO. This is an area where many SFOs fail
to maximize technology capabilities. Technology within an SFO needs to address:
• Account aggregation
• Customized accounting and reporting of all SFO investments and costs
• Risk metrics/analytics
• Office management
• Family connectivity and communication
• Security of information
• Family history (photos, videos, documents, etc.)
A family office consultant should be able to sup-port this initiative by helping to identify and build out
technology within the SFO, along with other decision makers including the family and the SFO Chief
Executive Officer (CEO) and Chief Investment Officer (CIO).
It is preferable to work with the CEO and CIO to build out the technology infrastructure of the family
SFO, particularly as it pertains to account aggregation, investment reporting and risk metric/ analytics
solutions.
This does not mean that the CEO and CIO recommendations are the only decision makers the family
should rely upon regarding technology. Multiple sources and products should be explored to obtain
optimum solutions and favourable pricing.
CUSTODY OF ASSETS
The family’s liquid assets are often held in custody by financial institutions of choice. The largest
custodians of assets (many of the world’s largest financial companies) have significant global platforms
which allow almost all imaginable cash instruments, bonds and equities to be traded and held in
custody. Some custodians, depending on the value of as-sets under custody with them (substantial
assets) as well as the family’s total services utilized with them, can aggregate and comprehensively
report on assets held both inside AND outside of their platform (other custodians, hedge funds, illiquid
investments, etc.).
A potentially significant expense from a technology perspective is the ability to aggregate all assets
and then report on those assets in an organized format. Leveraging relationships with financial
institutions that provide needed custody services and may also provide aggregation and reporting on
all assets may result in a savings, however, this also affords less privacy from a family’s perspective. A
family office consultant can add great value in choosing and negotiating with custodians to provide
total aggregation and reporting solutions of all family assets.
ACCOUNT AGGREGATION
Account aggregation means that all investment accounts, no matter where held in custody, including
illiquid investments, are sourced and organized in a central technology based account aggregation
solution. A challenge can be in the reconciliation of these assets, verifying data and checking for errors.

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CUSTOMIZED REPORTING OF ASSETS

Customized reporting of assets, pulled from the in-formation provided through account aggregation,
should include considerations on how the family wants to access the data, the frequency, and the
reporting structure to view their total assets. Re-porting requirements may include cost basis, current
value, currency conversions (if applicable), assets in trusts & partnerships, and other customized
needs.
COSTS FOR ACCOUNT AGGREGATION AND REPORTING TECHNOLOGY

A small to mid-size SFO can expect to pay $75,000 - $135,000 per year for comprehensive account
aggregation and comprehensive reporting. Larger SFOs can expect to pay $150,000 - $200,000+ for
such services. These figures do not include account aggregation and reporting technology start-up
costs which can range from $50,000 - $100,000.
The costs of technology solutions for account aggregation and custom reporting is a reason why
obtaining such services through custodial relation-ships (discussed earlier) can be valuable and a
significant cost savings.
CUSTOMIZED TECHNOLOGY SOLUTIONS

Another option is for the SFO to build their own in-house custom account aggregation and reporting
platform. This will require an outsourced in-formation technology (IT) firm experienced in designing
such software. Costs can vary significantly, however, it provides maximum privacy of the family assets
and total customization to satisfy all requirements.
With a custom account aggregation and reporting solution, the software takes account feeds from all
the family’s custodians, investment advisors, hedge fund managers, etc., and aggregates all this data
to produce the custom reports. This will require internal SFO personnel that have the time and the
ability to manage this process.
EMERGING SOLUTIONS
Technology start-ups are currently introducing lower cost solutions for account aggregation and
custom reporting. These solutions are not as robust as the offerings from the more traditional firms,
however, depending on assets, titling of assets, custodians and desires, particularly for smaller SFOs,
these solutions may cost less and are ad-equate for the family’s needs.
RISK METRICS AND ANALYTICS

Risk metrics and analytics is another area that should be considered when developing the technology
infrastructure. Certain custodians have basic programs and tools, which may be included in their
offerings to SFOs. More comprehensive pro-grams identifying measurable risk factors within the
portfolio and illustrating multiple “what if” scenarios and possible solutions are available through
technology service providers.
A small to mid-size SFO can expect to pay $60,000 - $120,000 per year for comprehensive risk metrics
and analytics solutions. Larger SFOs can expect to pay $150,000 - $200,000+ for such services. A family
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metrics and analytics specifically to SFOs. In addition to advising on technical solutions, these
professionals have the internal products and experience to provide significant value to the SFO as an
outsourced consultant.
Families should consider all of these areas as they develop their technology infrastructure as they are
highly valuable and provide a great customized service to the family. The SFO personnel must
understand how to utilize and maximize all the benefits these solutions provide. Ongoing training of
the SFO personnel and desire to maximize the capabilities of these solutions by the team is critical.
HARDWARE AND SOFTWARE

The family office consultant should recommend the best hardware and software solutions based on
the specific needs of the family and the infra-structure of the SFO.
A secure document storage system is highly important to SFOs, as well as backup systems and secure
calendar management and family communication devices.
Security is critical for the family’s private information and communication. A technology expert or
outsourced IT company should be contracted to advise, implement and coordinate the desired choices
and solutions.
FAMILY COMMUNICATION
Secured intra-net sites, telecommunication solutions, and connectivity strategies should be
implemented to facilitate family business and personal communication. Customized IT solutions can
foster family connections and enhance communication with service providers around the world, thus
improving the timeliness and effectiveness of decisions and actions.
FAMILY HISTORY
A great asset to any family is their ability to record and share their history, including important
documents, photos, videos, etc., for current and future generations. Technology offers the family
various options to record and secure their history, including professionally produced DVDs, secure
servers, web sites, and other mediums that are secure, but easily accessible by family members.

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VI. SFO
Personnel

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VI. SFO PERSONNEL
With the mission statement, business plan, and all the other pieces in place, the family and their family
office consultant (and other advisors) are now ready to source and hire the SFO team. Commonly, as
noted in prior sections, the SFO key personnel are involved in the process of the infrastructure and
technological solutions. It is recommended that the family hires key personnel before finalizing the
SFO infrastructure and determining the technology solutions needed.
With any position, there needs to be a process for hiring and a due diligence investigation conducted
for all potential hires. More than simply a credit and criminal check, a comprehensive report compiled
by a professional investigative firm with a focus on comprehensive background checks is a must. A
family office consultant solely focused on SFOs can help with sourcing appropriate and experienced
staff as well as developing the process of qualifying and interviewing candidates.
The family office consultant may be aware of available candidates and the family’s inner circle of
business relationships could be a good source as well.
SFO RECRUITERS
The family office consultant should have multiple and completely independent high-level relationships
with recruiters who specialize in SFOs (there are very few recruiters that specialize in SFO placement).
No compensation is necessary to the family office consultant in introducing any relationships. There
are some SFO positions that are specific to the personal needs of the family, which can be placed
through other recruiters specializing in the high end services area, including luxury hotel and travel.
The key positions soon to be outlined require experienced professionals who are not only talented,
but a good fit for the family. The executives hired for the SFO is highly personal and customized by
every family.
COMPENSATION SPECIALIST
The family office consultant should engage a compensation specialist experienced in SFOs to assist in
designing a compensation and benefits plan to attract, retain and motivate the most qualified
candidates. More than simply base salary ranges, a compensation specialist artfully designs a
compensation package that may include short and long-term incentive bonuses, carried interest
opportunities, co-investment opportunities, qualified retirement plan offerings, insurance, deferred
compensation (409A) and phantom stock “golden handcuff” strategies. The right mix encourages long-
term employment and productive relation-ships.
HIRING THE TEAM

The most common SFO positions are outlined below. It is recommended to hire slowly to ensure the
right personnel and cost control. A family should hire ONLY the employees that are absolutely required
initially and outsource the other services needed. Over time, additional employees can be hired to
replace outsourced services in a phased approach where the benefits outweigh the costs.

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CHIEF EXECUTIVE OFFICER

The Chief Executive Officer (CEO) is a business savvy, highly diversified and connected professional
who spearheads the SFO. This can be an actively engaged and suitably knowledgeable family member.
In new or small SFOs, that is most commonly the choice. In mid-size or larger SFOs, a professional
outside the family is more common.
Job Responsibilities
Usually, the CEO is an experienced business professional and leader (whether family or non-family
member CEO). They should have expertise in financial, accounting and other technical areas, however,
they do not have to be true experts in every aspect of the SFO. There are times when a very strong
accounting, financial, or legal background is preferable to business and leadership savvy. There is no
set formula and the SFO and its personnel are customized per a family’s specific needs. The CEO needs
to be engaged in all aspects of the SFO, yet understand they must delegate and trust the talent in the
SFO to perform their specific functions (with oversight and accountability). The CEO needs to
communicate on an on-going basis with the family and focus all their efforts on the SFO fulfilling its
mission to serve the family. This position answers directly to the key family leaders and SFO advisory
committees.
Although the CEO must be a fit for the family and follow the protocol of the assignment, the ability to
engage multiple family members and generations is critical. The abilities of the younger generations
will determine the long-term success of the family and the SFO. A CEO that encourages and fosters
involvement and education of critical business areas is a great asset. In larger, more established and
geographically di-versified families, the ability of the CEO to understand family dynamics and
communicate solutions facilitating family unity is critical. A CEO should embrace modern technology
as a family communication and business management tool to advance the success of the SFO in
servicing the family. Depending on family desires and the expectations from this position, a well-
connected business-savvy CEO can create opportunities to expand family wealth by sourcing business,
real estate, passion and other investment opportunities for the family.
Additionally, some families desire to seed fund and develop partnership interests with young and
talented traders (i.e. hedge fund, private equity, etc.), as well as invest in emerging growth companies.
A proactive CEO can help with researching and sourcing valuable opportunities. It takes a talented
professional with diverse skills (business, technical, communication, human re-sources) and a deep
rolodex of very high quality connections to succeed in this extremely important leadership position.
The CEO needs to carry out the mission and coordinate effectively all aspects of the SFO in a
synchronized effort in fulfilling the family’s mission and vision. This is why leadership, business savvy
and communication are a constant theme in the description and responsibilities of this role. Using a
sports analogy, the family is the sports franchise “owner” and the CEO is the “coach” who needs to
maximize and coordinate the efforts of all the “players” (i.e. employees).
CEO Salary Ranges and Compensation
The CEO in a small SFO commands $250,000 - $400,000 and in a larger SFO (or small SFOs with
extensive requirements and/or family members that see the value in a great candidate) can cost
anywhere from $400,000 - $2,000,000 (inclusive of base salary and bonuses).

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The CEO and CIO positions are sometimes offered co-investment opportunities by the family. This can
be attractive to certain professionals (and can make up for a smaller salary and bonus structure) and
is most applicable with a family who is actively engaged in direct real estate, private equity and venture
capital opportunities. This is not a position where families should skimp. If the family does not offer
pay commensurate with the importance of the position, they may have a hard time competing for top
talent and the return from the SFO may not meet expectations.
CHIEF INVESTMENT OFFICER

The second position filled in a SFO after the CEO is the Chief Investment Officer (CIO).
The CIO, under the direction of the family leaders, investment advisory committee and CEO
(sometimes this is a joint CEO/CIO position), initiates and coordinates the primary investing decisions
in fulfilling the family investment objectives. Such families are already significantly wealthy (at this
stage it is a matter of degree), therefore, the CIOs primary obligation is to maintain and expand the
family’s wealth. Some families take a more aggressive investment approach, however, the majority of
families DO NOT want to lose their wealth through risky investments. The challenge to a family in
remaining significantly wealthy is much more than smart investment decisions. The effects of income,
capital gains and estate taxes play a significant role, which involves tax, trust and estates issues. So
does business and entrepreneurial pursuits, particularly in the generations to follow. The CIO plays an
integral role in assisting the family by fulfilling investment objectives as laid out by the family, and
coordinating efforts with other in-house and out-sourced financial professionals to minimize risk and
maximize returns.
The CIO needs to be able to create, implement and coordinate a comprehensive family financial
strategy, including an accompanying Investment Policy Statement (IPS). The CIO commonly needs to
develop multiple family financial strategies and IPSs for various intra-family fractions (if applicable) as
well as assets titled within trusts and partnerships. The CIO coordinates family financial objectives
and outlines investment parameters and bench-marks. As with almost all activities of the CIO, the
family financial plan and IPS needs to be approved by the family leaders, investment advisory
committee and CEO. Paramount to all this is the ability for the CIO to organize and implement an
asset allocation strategy built around the principles and benchmarks as indicated and agreed upon by
all the decision makers in the IPS. A comprehensive plan on asset allocation and the method, tactical
or strategic as-set allocation, is a critical responsibility of the CIO, but beyond the scope of this white
paper.
Our terminology “family” is singular, however if an SFO is serving multiple intra-family fractions
(various siblings and relatives within the same family), then multiple and segregated family financial
strategies, IPSs and asset allocation strategies need to be maintained and monitored. A traditional
challenge for families and their consultants sourcing and vetting a CIO, was the limited availability of
qualified individuals who possess the diverse talents required by families of significant wealth. The
current global financial cri-sis has left many qualified candidates out of work, or desiring the
favourable environment working directly for a family. This is an optimum time to create an SFO given
the qualified talent available to fill the financial leadership positions.

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In addition, the CIO needs to be able to work with the staff and outsourced financial service providers
and communicate effectively with the CEO and family. The CIO should be able to seamlessly utilize the
available account aggregation, reporting and risk metrics/analytics capabilities of the SFO in
customizing the services and data to the desires of the family. We have yet to discuss actual
investment decisions in carrying out the coordinated family financial plan, IPS and asset allocation
strategy. A question that needs to be answered by families is whether they want the CIO to choose
the underlying investments.
Broadly, the asset classes that make up an asset allocation strategy include cash, bonds, equities,
alternatives (technically, alternatives are one of the three prior asset classes, however allow for
various shorting, leverage and other strategies, by a talented manager) and derivatives. Although
there are exceptions, it is usually recommended that the CIO does not actually choose the underlying
individual investments that make up the allocation in each particular assets class. However, the CIO
researches and identifies the best money managers around the world to implement the applicable
allocation towards each specific as-set class. Very large SFOs may elect to employ an investment
research team and hire internal experts in each asset class in designing a truly custom port-folio for
the family, all coordinated and managed by the CIO.
The CIO needs to be first and foremost excellent at planning, organizing, sourcing (money managers
and business opportunities), monitoring, validating and reporting on all investment activities. Once
the investment plan is in place, including the family financial plan, IPS and asset allocation strategy
with approval from the family leaders, CEO and advisory committee, the CIO needs to source best in
class money managers who carry out the actual investing of their given allocation. Again, the choices
on money managers should be presented and approved by the family leaders, investment advisory
committee and CEO. The CIO needs to be able to source, select, diversify and monitor the money
managers who carry out the actual investing of various aspects of the portfolio, including cash
management, bonds, equities, alternatives and derivatives. Consideration should be given to highly
competent outsourced consulting firms specializing in alternative and other illiquid investments,
which can maximize re-turns for the family on these specialized investments.
Because of the major financial losses from investment scandals and Ponzi schemes and the troubled
global banking system, diversification of investments and the thorough research and monitoring of
those individuals, companies and institutions investing a family’s money, are so imperative. These
issues and parameters need to be addressed in the IPS. There needs to be diversity among multiple
money managers executing the investments for each applicable allocation. This diversification and
allocation to multiple money managers requires more management work from the CIO, but it is a
critical strategy for successful SFOs. For example, the strategy could be the equity portion of the
portfolio, agreed to in the IPS and as-set allocation strategy, will be 30% of the overall portfolio
(ignoring for now the actual breakdown of growth, value, domestic, foreign, etc.), and the selected
money managers will manage no more than 5% of the amount allocated towards equities.
Besides diversity of well-chosen money managers, experienced and proven in their given specialty,
further risk management efforts need to be taken beyond performing basic due diligence. The
following key questions need to be asked about the money managers before selection is finalized:
• Who is the money manager’s clearing firm?

• Who is their legal and accounting council?
• If an alternative investment manager is used, who is their prime broker?
The CIO or other trusted SFO employees need to verify all information provided to ensure accuracy
and validity. Risk metric/analytic programs and services at the SFOs disposal were reviewed earlier,

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which per-form mathematical evaluations as well as monitor potential portfolio risk. A risk
management consultant can provide excellent value to the SFO and assist the CIO in managing
investment risk. Additionally, an investigative background check on the money management firm and
its principals and selected money managers is highly suggested. More than simply a quick online check,
a more detailed background report should be done. The family office consultant and/or the CIO should
be able to source reputable investigative firms to per-form this important task. Families of significant
wealth and their SFO leaders, including the CIO, need to be more cautious than ever before with their
selection of individuals and companies managing the family’s money. Working with selected legal
firms who specialize in comprehensive investment due diligence is highly recommended (your family
office consultant should source such relationships) to review your portfolio, and in particular,
alternative investments. The $50,000 - $200,000 in legal consulting fees is well worth avoiding costly
investment mistakes.
In addition to the basic due diligence and back-ground checks, the legal firm can evaluate alternative
investment contractual provisions, provide advice on alternative investment offshore governance,
source for silent partners and review criminal and regulatory concerns. Many families and their SFO
leaders may not realize that such legal firms, highly experienced in alternative investments and BUY
SIDE representation (representing the purchaser of such investments), can sometimes negotiate
special contractual terms, including lower fees and improved liquidity of that family’s assets within
the fund. Not only is this a critical step for reducing risk, but could result in cost savings in the long
run.
The CIO also needs to organize, coordinate and monitor the money managers in a tax sensitive
manner. In addition to providing data to make smart decisions, various tax overlay software pro-grams
and analytics can assist in monitoring many aspects, including an overlap in actual holdings among the
various money managers, tax basis of holdings, capital gains exposures, and more. This should be
coordinated with the SFOs in-house or outsourced tax professionals.
CIO Salary Ranges and Compensation
As with the CEO position, the CIO position is similar in cost. Salary can range from $250,000 to several
million, depending on responsibilities required such as amount of assets to invest, type of assets, and
family needs as well as the CIO’s experience. The CIO (as noted earlier with the CEO position) can also
be offered co-investment opportunities by the family, which again can be attractive to obtain qualified
professionals.
Special Considerations
With the growing interest in socially responsible and “green” investing, families expressing great
interest in this area can attract a like-minded CIO by allowing that CIO the opportunity to coordinate
the family’s financial affairs around these core principles. There are no set formulas. In some SFOs,
there is no CEO and an advisory committee of family leaders is formed. In this case, the CIO would
assume the leadership role (as an employee) within the SFO, with an SFO manager running more of
the day-to-day operations. Conversely, there may be a CEO, no CIO position, and the family advisory
committee would make the investment decisions. In another case, the family may fully outsource this
function to an individual or organization.

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CHIEF FINANCIAL OFFICER

Many families of vast wealth in organizing and building out their SFO see great value in hiring a Chief
Financial Officer (CFO). For a family with substantial business interests and/or significant personal,
trust and partnership accounting requirements, the CFO is a highly desired professional. Traditionally,
the candidate would have a strong combination of business and personal accounting background,
preferably from the big four as well as CFO experience in a successful private company. It is not
uncommon in scenarios where the family has multiple business interests for the SFO CEO, to be a CFO
by training, with a very strong ac-counting background, and that accounting function remains core to
their CEO duties. The trend is hiring highly qualified and diverse accounting and legal professionals to
assume the CEO positions within SFOs.
The CFO position within an SFO differs from a traditional CFO position in other companies in that this
position is also responsible for the personal tax issues and returns of the family members (including
family trusts and partnerships). In large SFOs with multiple accounting personnel on staff, this may be
under the supervision of the CFO, but the function is completed by the staff. The CFO should be
experienced in complex multi-generational estate planning and needs to coordinate efforts with
family legal counsel (whether in-house or outsourced). In certain areas of extreme tax specialty on
these issues, the CFO should source appropriate accounting council and coordinate efforts.
The CFO should coordinate with the CIO on tax strategies for the family involving their investment
portfolio. Tax overlay, capital gains decisions on sales, and many other aspects dictate that an efficient
SFO has synchronized efforts among all personnel. Coordinated and integrated management is one of
the primary benefits of establishing a SFO. Many family leaders, as well as the CEO, desire to
constantly view updated cash flow reports, family income and expense statements, as well as financial
statements (i.e. balance sheet). The CFO needs to perform this function and maximize utilization of
the applicable infrastructure and technology systems at their disposal in preparing documents and
reporting. If there is no CFO, then the CEO may take on this function directly or manage and compile
the data from internal sources (CIO, bookkeeper, accountant, etc.) or outsourced providers.
Although sometimes sourced to bookkeeping and/ or an executive assistant, the CFO may also handle
bill paying for the SFO as well as the family (partially automated through custodial relationships, cash
management and other online resources). The CFO commonly assists in evaluating business and real
estate opportunities for the family, man-aging lines of credit, business and family loans, as well as cash
distributions to family members. A combination of business and personal financial management
capabilities is highly preferred for a CFO, but if the family has a specific need for this role, the expertise
of the CFO may reflect that need and then the CFO can coordinate hiring or outsourcing for the other
areas of responsibility.
CFO Salary Ranges and Compensation
In smaller SFOs, this position can cost $150,000 - $250,000 and increase to $500,000 - $750,000+ in
mid-size to larger SFOs. The salary range for this position is more highly variable than other high level
positions. Those families with few business holdings and family members may not require a CFO
position, while other families may have multiple family businesses and many family members with
highly complex tax returns and estate-planning issues, which would absolutely require this important
position. Many families and their SFO CEO and/or CIO elect to outsource this position. In almost any
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outsourced arrangement, it is difficult to achieve the same level of control and privacy as compared
to having all in-house senior staff. There needs to be a balance of need, cost and talent agreed upon
by the family and CEO/CIO. The talent and resources in an excellent accounting firm may be more
valuable to the family than hiring a CFO, which at a comparable talent level may be very costly. All
options need to be weighed against other personnel needs when making decisions on these key
personnel positions.
CHIEF LEGAL OFFICER

A Chief Legal Officer (CLO) is common in more substantial SFOs. However, as stated throughout, it is
all about what is best for the family’s needs. A key benefit for the family is building out an SFO
organization that is highly customized.
Families with highly complex and/or multiple business interests can benefit greatly from hiring an in-
house legal professional. The CLO can evaluate business, real estate and complex investment
opportunities from a different perspective than the other senior executives of the SFO. The CLO can
negotiate business transactions and perform closings as well. The CLO may be hired for both business
and personal needs, or have a focus on the personal family needs, organizing and monitoring family
trusts and partnerships, as well as trust & estates issues. As noted earlier in the CEO section and again
in discussing the CFO position, there is a trend among families with significant business interests
and/or complex personal legal needs, to hire a le-gal professional for the CEO position. Families of
vast wealth often need multiple specialized experts in business, patents, litigation, marriage law/pre-
nuptials, trust & estates, etc. A well-diversified and connected CLO can manage these areas through
internal staff and outsourced relationships and coordinate all efforts.
CLO Salary Ranges and Compensation
In smaller SFOs, this position can range from $150,000 - $250,000 and $500,000 - $750,000+ in mid-
size to larger SFOs.
DIRECTOR OF PHILANTHROPY
Some families elect to create a Director of Philanthropy position. Most commonly, the family’s
philanthropic initiatives are directed through a separate entity, such as a family foundation(s), as
opposed to direct by the family SFO. It is always recommended to create separate entities for the SFO
and the family foundation(s). Until a family’s philanthropic mission and giving level is expansive to
warrant hiring a full time director, typically an engaged family member assumes the responsibility for
the role. Most families of significant wealth desire to improve their ability to identify and verify
philanthropic opportunities for causes that are in.

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The family member or director selected to under-take this endeavour needs to understand how
philanthropic endeavours fit within the family mission statement and business plan. Focusing active
family members and engaging younger generations in their passions is critical to this role. The Director
of Philanthropy along with a specific philanthropic advisory committee, sources and vets philanthropic
opportunities aligned with the family mission statement and business plan. If desiring outside
contributions, fundraising experience is preferred, with both traditional and online expertise.
Executive management experience at a foundation or other charitable experience would be
recommended.
How the family should donate money to various organizations involves legal and tax implications. This
is best left to experienced in-house or out-sourced legal and tax professionals. Family foundations,
charitable remainder trusts, and charitable lead trusts are all viable options. The Director of
Philanthropy should assist in managing the process and distributions to charity (no matter the vehicle),
as well as following through to gage and measure the results. Families are encouraged to organize
applicable philanthropic giving vehicles only after they are fully committed to giving. The first step is
to develop a philanthropic strategy built around the family mission statement and business plan. A
truly engaged family member is often needed to drive this process. Philanthropy is an excellent way
for younger family members to feel active in the family decisions. Philanthropic giving goes deeper
than tax benefits, and helps to teach the younger family members about compassion, giving and
choices.
Director of Philanthropy Salary Ranges and Compensation
If going outside the family to fill the position, salary can range from $100,000 - $200,000.
DIRECTOR OF INFORMATION TECHNOLOGY

Large SFOs frequently hire a Director of Information Technology (IT). This position is vastly under-rated
and should be considered in all SFOs. This position advices and coordinates the technical infrastructure
of the SFO. Many SFOs have critical computer needs and highly specialized software requirements
that all need to be supported and upgraded on an ongoing basis. This position should positively impact
family connectivity and communications as well as costs and control of the SFO. This position can
range from $75,000 - $150,000, depending on the complexity of the technology infrastructure
required.
FAMILY OFFICE MANAGER

The Family Office Manager (sometimes referred to as general manager or “GM”) is a unifying position
that focuses on the SFO running as efficiently and effectively as possible. This position can involve HR
functions (managing directly or in coordination with an outsourced firm). The Family Office Manager
frequently is the conduit for the family and in-house staff and assists with coordinating outsourced
professionals. The Family Office Manager is commonly less defined by a traditional role than other
positions. The position requires a person of diverse talents who learns quickly, is highly organized, and
initiates solutions. In smaller SFOs, the Office Manager will coordinate business and personal services,
in conjunction with the executive assistant, for the family.
This position can range from $75,000 - $150,000.

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EXECUTIVE ASSISTANT
Families can have one or multiple executive assistants depending on the size and number of
employees of an SFO. Frequently, there is an executive assistant to the key family leader(s) and
another executive assistant assigned to key SFO personnel. The responsibilities of this position,
particularly at the personal level, can vary widely. An executive assistant may act as the primary person
coordinating household management and personal household staffing needs. They may manage
multiple personal matters such as medical information, insurance, family vehicles, child care, and
collectibles. They may be the primary conduit to the family leader for personal appointments, calendar
management and children’s needs. Personal service and highly organized are the hall-marks of this
qualified professional. Infallible under pressure and proactive in the needs of the family or key SFO
personnel are a must. Commonly, the executive assistant is excellent at communication (written and
verbal) and proficient in technology.
BOOKKEEPER
This position often supports the CFO, or in smaller SFOs without a CFO, may take on additional
responsibilities. Managing payroll (or coordinating with an outsourced firm), handling receivables,
paying business and personal family bills, coordinating medical and insurance claims, processing and
coordinating mail (this may also be handled by an executive assistant) are just some of the traditional
responsibilities of this position.
FAMILY ART DIRECTOR

Many families of significant wealth enjoy collecting art. Some families have an art director to purchase,
sell and manage their collection. The art director may also catalogue collections, coordinate
transportation, manage insurance and act as a curator showcasing and educating the family and
guests at home functions and events.
FAMILY SECURITY DIRECTOR

Many families are rightly concerned about security and are finding a need to hire a Security Director
to manage and mitigate family residence, business, cyber and outside activity risks. If not a direct
employee of the family or the SFO, the security director can be an outsourced specialist. In larger SFOs,
the Family Security Director is also responsible for the security measures within the SFO, including
offices, technology security and family safety.

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VII. Trends

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VII. TRENDS
There are many trends that may change the future of SFOs or add to the requirements from a family.
These include:
• Increase in the number of new SFOs as the number of families of significant wealth expands
worldwide and more families become aware of the benefits of organizing an SFO
• Increased interest in private family trust companies managing the family wealth across
multiple generations as families desire even greater control and privacy
• Significant increase in the utilization of technology, specifically in family connectivity and
communication. Most SFOs are behind the technology curve, however, younger
entrepreneurs and family members demand it
• Families incorporating their philanthropic focus into their investment portfolios, including
clean energy, green living, micro-lending, volunteer vacations and other options
• More creative hires by SFOs, as many traditional professionals for important positions can be
difficult to source. Their back-grounds will be more diverse in technology, engineering, family
dynamics, language and luxury services, which will add fresh perspectives to the SFO
• More interest from younger family members in private company purchase opportunities, or
start-ups, through the family SFO
• Greater interest from families in sourcing and seeding globally talented traders (i.e. hedge
funds, private equity, venture capital, etc.) and creating wealth through partnerships and
investment in emerging growth companies around the world
• Families supporting education and training for SFO key personnel to further maximize
performance of results
The family and their SFO executives should conduct extensive research, connect to other families,
service providers and professionals in the industry, and attend conferences and education events to
keep up with all the trends and changes in the marketplace that may affect the results of their SFO.
No longer can a family keep up with all of the in-formation, education and connections needed.
Through an SFO, qualified staff can recommend changes in the SFO strategy to protect against
downturns, and take advantage of opportunities to create wealth.

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VIII. Examples of
an SFO

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VIII. EXAMPLES OF AN SFO
The following are SFO examples with different infrastructures and requirements based on the family
needs.
ENTREPRENEURIAL – AGGRESSIVE GROWTH STRATEGY
A 40-year old, single, serial entrepreneur with a net worth $175,000,000 organized an SFO to
aggressively manage wealth and procure business and new investment opportunities. The
entrepreneur views the SFO as a proactive business entity and wants to remain actively engaged in
expanding his wealth. The SFO acts as a private equity investor and real estate purchaser. In this
situation, the entrepreneur assumed the CEO position, and hired a CIO with strong global experience
(particularly Latin America) and connections, a business-savvy CFO, and one executive assistant.
In addition, the entrepreneur CEO made a decision to hire a bright MBA from a top business school
two years after the SFO was established to help source and evaluate business opportunities. A very
modest base compensation was offered to the MBA, as well as a minority interest in transactions with
excellent upside for successful transactions. Focus of the CEO, CFO and MBA associate is on
aggressively sourcing and vetting business and real estate transactions. The CIO allocates the
individual’s global assets, manages the money managers and sources opportunities for partnership
with talented young traders. The SFO utilizes its own custom Excel programming and spreadsheets to
aggregate and report on all investments.
Lifestyle, concierge, medical management, technology and legal services are all outsourced.
FAMILY - LEGACY SUSTAINABILITY
An SFO established two decades ago by the founding couple currently in their late 60’s with six children
and 14 grandchildren and a net worth $500,000,000. They have two highly profitable family businesses
and have recently expanded overseas. When weighing their options, the family decided an SFO
provided the most control and ability to inform, engage and benefit generational family members
through family legacy sustainability strategies.
The family maintains a conservative investment philosophy managed by the CIO focused heavily on
limiting down market exposure. The family is highly concerned regarding multi-generational estate
and asset protection planning. The SFO CEO is a highly experienced attorney with a 20-year history
with the family. The family has agreed to progress with organizing a private family trust company in
favourable domestic jurisdiction to manage family wealth and trusts. Besides additional privacy
benefits, the family greatly desires favourable trustee considerations for further control and various
asset protection benefits with such an entity when domiciled in a jurisdiction with favourable laws.
The SFO CEO and outside council were integral in initiating a multi-year strategy to transfer real estate
and other long-term potential assets that were hard hit by the global recession into a complex series
of grantor retained annuity trusts, charitable lead trusts, intra-family derivatives, etc., to save
hundreds of millions in estate taxes. The SFO CEO and CIO are both encouraged to host quarterly
educational forums for the children and grandchildren. Two of the couple’s children are highly
successful entrepreneurs in their own right and contribute to building the family wealth.

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NEW YORK FINANCIER - LONG TERM INVESTMENT STRATEGY
A 70-year old New York area private equity professional with a net worth of $700,000,000 organized
an SFO two years ago. He is CEO and his oldest son is CIO. He felt that given his background and passion
for investing and a dedicated family interest that channelling his efforts into building his family legacy
through an SFO provided the greatest likelihood of long-term family success. The family is very
comfortable with complex investments and multiple currency trading. A new investment initiative for
the family is global venture capital and green investing.
The SFO has a very experienced CFO with significant accounting and investment banking background.
The CFO is provided co-investment opportunities on certain investments. Investment banking,
lending, business and personal tax coordination, and other traditional duties are all part of the CFO
activities. The family has a significant private foundation, which runs its philanthropic affairs and is
led by the SFO leader’s daughter. Keeping in line with the family’s new focus, the private foundation’s
core areas for giving and venture philanthropy are in environmental and multiple green initiatives.
Estate planning is outsourced to a prominent legal firm with advanced capabilities in offshore trusts,
intra-family lending and asset protection.
The family is considering organizing an offshore captive insurance company to manage significant hard
to insure risk and to provide tax, estate and asset protection capabilities. The SFO is technology
proficient, with a Chief Technology Officer managing their state of the art aggregation, reporting and
risk metric/analytic capabilities. High level executive assistants manage multiple family relationships
and assist the family with travel and personal passions, including a significant rolodex of resources in
the art and wine world.
SILICON VALLEY EXECUTIVE – LIFESTYLE MANAGEMENT
A 45-year old, single and retired Silicon Valley executive with a net worth of $125,000,000. The
executive completely outsources his investments to several private bankers in a coordinated effort.
The SFO in this case is not a private investment office. Instead, the SFO focuses on managing multiple
global residences and life affairs. The executive maintains an active social and philanthropic life and
desires a self-contained organization to attend to his needs. The SFO Office Manager runs the SFO.
Her multi-faceted focus is to coordinate all communication between the SFO leader and the financial
advisors (multiple private bankers) and business intermediaries (accounting, legal, lenders, etc.). In
addition, the SFO leader maintains four global residences and the SFO Office Manager is charged with
sourcing household talent and required personal services. The SFO leader has an executive assistant,
who manages his calendar and many personal services including sourcing world class providers of
specific services for the executive. An outsourced book-keeper organizes all mail and pay bills.
BRAZILIAN ENTREPRENUERS – EXPANDING GLOBAL INTERESTS
Brazilian brothers, ages 53 and 49, married with children, have a combined family net worth of
$350,000,000. They recently decided to organize an SFO to manage their expanding family global
business interests and their personal finances. The family considered direct private banking
relationships, however, they felt that maximum control, due diligence and proactive investment
research and vetting would be achieved by creating a team of coordinated professionals exclusively
devoted to the family’s needs. The family maintains multiple global private banking relationships, all
coordinated through the family’s SFO. The family custody’s assets across various global providers,

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currencies and platforms, and maintains the domicile of trust assets and actual real estate holdings in
diverse global locations to spread market, currency, as well as geographical risk. The older brother’s
28-year old son is a Latin American private equity professional who desires, with his family’s seed
capital, to organize global capital to invest in Latin American endeavours, exponentially expanding and
diversifying family wealth and continuing in the entrepreneurial spirit of the family.
The family’s SFO employs direct talent to manage the family’s lifestyle, travel and security detail. The
family is highly private and prefers to maintain such functions in house.

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IX. SFO
Registration Cost

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IX. SFO REGISTRATION COST
There are two free trade zones in Dubai who provide FSO licenses
1. DIFC (Dubai International Financial Centre):

2. DMCC (Dubai Multi Commodities Centre)
DIFC primarily serves Financial Sector banks with no local banking facilities, and is designed for
international banks to operate internationally. Thus the compliance and laws are more protective in
terms of international financial commitments. As anyone would know such free zones are more
controlled by Central Banks of the prospective jurisdiction.
DMCC is designed as the best Free zone in the United Arab Emirates which solicits high net
worth clients to operate business very flexibility and adopts International laws, every competent to
operate any legal entity, which facilitates purchase of movable and immovable assets in UAE. The main
activity which leads clients to choose DMCC is the flexibility in trading precious metals with no security
approvals. This free zone is more flexible to the laws of land.
The Family office is a set-up which allows only members of the same family or individuals with the
same family name to set up the office. The shareholders must be able to prove that they belong to
the same family and with the same family names that means they should be Related Parties.
The advised activity is Single Family Office and the most effective free zone to the above requirement
is Dubai Multi Commodities Centre. (DMCC).
DMCC
DMCC was established in 2002 by the Government of Dubai to provide the physical, market and
financial infrastructure required to establish a hub for global commodities trade. DMCC provides the
platforms you need to grow your business in Dubai and beyond. DMCC is one of the largest and fastest
growing free zones in the Middle East. As the Government of Dubai Authority Committed to
establishing Dubai as a global gateway for trade, DMCC is the ideal partner for growth. With over
13,000 companies, 66 towers and a community of more than 87,000 people.
DMCC is offering 100% business ownership, a guaranteed 50 year tax holiday and freehold property
options. DMCC has been established to support the specific needs of its core segments - Gold &
Precious Metals, Diamonds & Coloured Stones, Energy and Other Commodities industries.
BENEFITS OF DMCC FREE ZONE

DMCC is one of the largest and fastest-growing free zones in the UAE. It offers a top-class business
infrastructure for all its investors to grow the business in Dubai and globally.
• 0% Corporate or Personal Tax

• 100% Profit Repatriation and No Currency Restrictions
• 100% Foreign Business Ownership
• World-class Business Infrastructure
• Wide range of Business Network, Growing Infrastructure, and Strategic Location

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• All in One Solution for Business Setup, Visa Processing, License Renewal, etc., through DMCC
Portal
• Secure and regulated Business environment
• Perfect location to Work, Live and Recreate
DMCC COMPANY SET UP REQUIREMENTS SNAPSHOT
• Online pre-approval application form

• Passport copy (along with UAE Residence visa & Emirates ID copy if applicable)
• Proof of residential address in country of residence(Copy of Utility Bill)
• No Objection Certificate from sponsor, if holding a valid UAE residence visa
• Summary of business plan for certain activities
• Copies of the parent company documents if setting up a branch or a subsidiary
• Third party approvals for certain regulated business activities
• After the company registration details of an office address in DMCC Free Zone(JLT) will be
required
COST
Individual shareholder or Multiple Shareholder: USD 19,000.00 inclusive of service charge.
This model can provide residency in UAE and effective management of family wealth.
The smallest office space in the DMCC is $11,000.00

DMCC is one of the most active and popular Free Zones of Dubai. Companies spread across industry
sectors like Gold Trading, IT Services, Business Consultants, Marketing Agencies, etc., are registered in
DMCC.
There are various licensing types and a wide range of business activities to choose from. Based on the
office types in DMCC, the visa quota varies.
 Flexi Desk – Up to 3 visas

 Services Office - 4-5 visas depending on the size of the office
 Physical Areas - 1 visa for every 9 sq. m
Additional visas can be added to the company upon requesting and paying the required fees to DMCC.
For all investors who are registering a business in DMCC can apply for a residence visa. The investors
are eligible to sponsor their dependents as well as apply for employee visas based on their quota
allotted.
Our associates will provide you with a dedicated PRO Agent for executing all the business support
services, visa processing, passport clearance, immigration process, applying for a business license,
registration of a trademark, etc.

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DOCUMENTS REQUIRED FOR RESIDENCE VISA APPLICATION IN DMCC
1. Copy of Business license & Establishment card

2. Investor’s Passport copy
3. Passport size photo with white background (less than 3 months old)
4. Any supporting documents for the company upon request (Shareholder Certificate,
Memorandum of Association, Power of Attorney)
5. Once the visa is processed, you can apply for the medical examination for the processing of
Emirates ID.
6. The last process is stamping of the visa in passport and obtaining your Emirates ID Card.
The company registration application form submission, residence visa application, other clearances
from DMCC all submitted and managed through an online portal. Once the documents are submitted
to the portal, the investor will receive a notification conforming DMCC approval and can proceed to
the next steps. Upon successful company registration, the investor will receive access to the portal
and can check visa status, license renewals, other clearances, etc.
The process of business setup, via processing and other business support services in DMCC, is slightly
complicated and is best to execute via a Business Consultant.
PRO SERVICES IN DMCC

Our PRO Services Package for DMCC includes all types of administrative tasks such as employee visa
processing, immigration, and document clearances.
Our dedicated PRO agent will guide you through all stages from liaising with DMCC authorities to
document clearances and delivery of documents to the client's doorstep.

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X. Conclusion

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X. CONCLUSION
For families with the applicable financial resources, an SFO is undeniably the ultimate in control,
privacy and customization in optimizing the family’s wealth, legacy and resources. The collapse of
renowned public and private financial institutions, the panic in the global economy, outright
allegations of fraud among financial superstars, and many other factors make it imperative that SFO’s
be considered to control a family’s destiny and build upon a legacy of sustainability.
Much like a CEO of a corporation does not run a multi-billion dollar business alone or make every
decision in finance, accounting, legal, marketing, and other areas, the SFO should be viewed as a way
for the family to delegate decisions, actions and opportunities to those more qualified and focused.
The ability to progress with an SFO has never been easier with the proper advice from dedicated SFO
organizations and consultants. New technology, selective outsourcing and the vast amount of talented
individuals currently displaced allow for a family of significant wealth to create an SFO as efficiently
and effectively as ever before.
A well run SFO is a smart business decision. As with any business, it requires a vision outlined in a
mission statement, business plan, and an under-standing of costs and expectations as outlined in the
pro forma. An effective SFO is a highly valuable asset that CREATES wealth for the family.
It is important that the family electing to move for-ward with their own SFO follow all critical steps,
including hiring trusted consultants to help them every step of the way. The family needs to be 100%
dedicated to the creation and management of their SFO – a half-hearted attempt won’t lead to a long-
term positive return.
Generations from now when business interests have likely been liquidated and/or greatly dispersed,
the SFO stands as the family unifying entity, uniting and signalling a path for those that follow. The
family SFO showcases the values established and maintained by the family for the world to see.

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INDEX
Information courtesy of:
Family Office Association, 500 West Putnam Avenue, Suite 400, Greenwich, Connecticut 06830
The following resources may provide additional information to expand upon the topics discussed throughout the paper:
Andrew Ang, National Bureau of Economic Research, Asset owners and delegated managers, 2012
Professor. Dr. Yvonne Brückner (in cooperation with BW Bank), Family Office der Zukunft. Krisenfolgen: Opportunitäten und Herausforderungen. Executive Summary,
Family Office Panel, 2012
Center for Family Business, University of St.Gallen, From family business to business families, 2013
Joseph Chen, Harrison Hong, Joseph D. Kubik, Outsourcing mutual fund management, 2010
Credit Suisse and Thunderbird School of Global Management, How Leading Families Manage the Challenges of Wealth, 2012
Credit Suisse and University of St.Gallen, From Family Enterprise to an Entrepreneurial Family, 2012
Credit Suisse Research Institute, Family Business Survey, Credit Suisse, 2012
Dr. Beate Degen, Ernst & Young, and Prof. Dr. Peter Ruhwedel, Der Aufsichtsrat und das Risikomanagmenent, Der Aufsichtsrat, 2011
Ernst & Young, Turning risk into results, 2012
Family Office Exchange, A Look Inside the Small Family Office, 2010
Family Office Exchange, Building a Family Enterprise Plan to Deal with Future Uncertainty, 2012
Family Office Exchange, Protecting the Future: Managing Family Wealth Separately From the Family Business, 2008
Family Office Exchange, Recasting the Central Role of the Family Office as Risk Manager: The New Imperative as Family Risk Manager, 2006
Family Office Exchange, Rethinking Investment Management, Anticipated Changes to Investment Risk Management Practices in a New Era of Due Diligence, 2009
Family Office Exchange, Securing the Future: Managing Threats and Opportunities Through Effective Risk Planning, 2009
Family Offices Group, Richard Wilson Capital Partners LLC, The Family Office Report, 2012
Wharton Global Family Alliance: Single Family Offices: Private Wealth Management in the Family Context. By Raphael Amit the Wharton School University of Pennsylvania
Foster Forschungsinstitut für Family Offices, M&G Investments, Qualitative Analyse des Risk Management in Family Offices und bei großen Unternehmervermögen, 2011
Andrea Frazzini, Lasse Heje Pedersen, Betting against beta, NYU Stern School of Business, 2010
Stefan Freytag, Wilhelm von Finck Deutsche Family Office AG, Institutionelles Vermögensmanagement für große Privatvermögen, Absolut Report, Ausgabe 2011
Felix Haupt, Thomas Hilger, Das Family Office: Integrierter Dienstleister oder strategischer Berater?, INTES Institut für Familienunternehmen, Forschungspapier Nr. 5, WHU
Forschungspapier Nr. 113, WHU Otto Beisheim School of Management, 2006
Benoit Leleux, Joachim Schwass, IMD, Family offices and risk investments, 2006
CONTACT
Derrick Freimond
Phuza 14 (Pty) Ltd.
19 Hartley place,
Amanzimtoti,
Durban, South Africa
derrickfreiond@gmail.com
+2349160122393

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The Benefits of Creating a

CREATING A SINGLE FAMILY OFFICE FOR WEALTH CREATION

CREATING A SINGLE FAMILY OFFICE FOR WEALTH CREATION

SFO RECRUITERS ............................................................................................................................... 22

CREATING A SINGLE FAMILY OFFICE FOR WEALTH CREATION

CREATING A SINGLE FAMILY OFFICE FOR WEALTH CREATION

• Control of investment, business and personal services

• Private Investment Allocation & Implementation

 Engaging Younger Generations in Entrepreneurialism

THE SFO MARKET

CREATING A SINGLE FAMILY OFFICE FOR WEALTH CREATION

CREATING A SINGLE FAMILY OFFICE FOR WEALTH CREATION

II. WHEN TO CONSIDER AND SFO

CREATING A SINGLE FAMILY OFFICE FOR WEALTH CREATION

A proactive SFO increases the likelihood of family financial and

CREATING A SINGLE FAMILY OFFICE FOR WEALTH CREATION

CREATING A SINGLE FAMILY OFFICE FOR WEALTH CREATION

III. CRITICAL PLANNING STEPS

SFO PRO FORMA

CREATING A SINGLE FAMILY OFFICE FOR WEALTH CREATION

EMPLOYEE HIRING AND MANUAL

SFO ADVISORY COMMITTEE

CREATING A SINGLE FAMILY OFFICE FOR WEALTH CREATION

FINE TUNING THE FINAL SFO PLAN

CREATING A SINGLE FAMILY OFFICE FOR WEALTH CREATION

CREATING A SINGLE FAMILY OFFICE FOR WEALTH CREATION

IV. INFRASTRUCTURE OF THE SFO

REGISTERED INVESTMENT ADVISORY (RIA)

PRIVATE FAMILY TRUST COMPANY

• Highly private family trust services

CAPTIVE INSURANCE COMPANY

CREATING A SINGLE FAMILY OFFICE FOR WEALTH CREATION

CREATING A SINGLE FAMILY OFFICE FOR WEALTH CREATION

CREATING A SINGLE FAMILY OFFICE FOR WEALTH CREATION

CUSTOMIZED REPORTING OF ASSETS

COSTS FOR ACCOUNT AGGREGATION AND REPORTING TECHNOLOGY

CUSTOMIZED TECHNOLOGY SOLUTIONS

RISK METRICS AND ANALYTICS

CREATING A SINGLE FAMILY OFFICE FOR WEALTH CREATION

HARDWARE AND SOFTWARE

CREATING A SINGLE FAMILY OFFICE FOR WEALTH CREATION

CREATING A SINGLE FAMILY OFFICE FOR WEALTH CREATION

VI. SFO PERSONNEL

HIRING THE TEAM

CREATING A SINGLE FAMILY OFFICE FOR WEALTH CREATION

CHIEF EXECUTIVE OFFICER

CEO Salary Ranges and Compensation

CREATING A SINGLE FAMILY OFFICE FOR WEALTH CREATION

CHIEF INVESTMENT OFFICER

CREATING A SINGLE FAMILY OFFICE FOR WEALTH CREATION

• Who is the money manager’s clearing firm?

CREATING A SINGLE FAMILY OFFICE FOR WEALTH CREATION

CIO Salary Ranges and Compensation

CREATING A SINGLE FAMILY OFFICE FOR WEALTH CREATION

CHIEF FINANCIAL OFFICER

CFO Salary Ranges and Compensation

CHIEF LEGAL OFFICER

CLO Salary Ranges and Compensation

CREATING A SINGLE FAMILY OFFICE FOR WEALTH CREATION

Director of Philanthropy Salary Ranges and Compensation

DIRECTOR OF INFORMATION TECHNOLOGY

FAMILY OFFICE MANAGER