When managing a growing family business and significant wealth, the complexity can quickly become overwhelming. That’s where a family office steps in—a centralized hub designed to align wealth management with family goals across generations. At Magnified Consulting, we help you navigate the financial and emotional intricacies of running a family office with clarity and strategy.
Understanding the True Cost of a Family Office
Running a family office requires a thoughtful approach to budgeting, especially when it comes to accounting and financial oversight. But what does it really cost?
While every family office is unique, research shows that total operational expenses typically range around 1% of assets under management (AUM) annually. For ultra-high-net-worth families (over $1 billion), costs may fall closer to 0.3%, while smaller offices (under $100 million) can see expenses rise to 2% or more due to limited economies of scale.
Factors That Influence Family Office Costs:
- Size and Complexity of Assets
- Scope of Services Required
- Level of In-House Expertise vs. Outsourced Support
- Technology and Infrastructure Needs
Accounting is often one of the core departments in a family office and can include services such as tax planning, reporting, estate and philanthropy management, and compliance.
Creating a Smart Budget for Your Family Office
Budgeting effectively ensures your family office is sustainable, efficient, and aligned with your long-term goals. At Magnified Consulting, we recommend the following steps to develop a robust budget:
1. Define the Office’s Mission
Is your focus investment management, legacy planning, charitable giving, or all of the above? Clearly defining this helps prioritize resources.
2. Evaluate Available Wealth & Liquidity
Know what you’re working with. An accurate picture of wealth and available capital helps determine how much to allocate to operations.
3. Outline Setup & Operational Costs
Factor in everything—from staff salaries and legal/tax advisors to office technology and cybersecurity.
4. Estimate Recurring Expenses
Include costs like compliance, travel, professional fees, reporting tools, and continuing education for key personnel.
5. Establish Investment & Risk Guidelines
Develop a formal investment policy that aligns with your family’s risk tolerance and long-term vision. Include insurance and contingency strategies.
6. Plan for Philanthropy
If charitable giving is part of your family’s values, allocate a portion of the budget to foundations, donor-advised funds, or community investments.
Why Partner with Magnified Consulting?
Every family’s situation is different, and so is every family office. Budgeting isn’t just about numbers—it’s about long-term impact, values, and legacy. That’s where Magnified Consulting comes in.
We specialize in guiding families through every stage of the family office lifecycle, offering strategic advisory in:
- Customized budget and governance frameworks
- Operational cost optimization
- Cross-functional coordination with legal, tax, and investment professionals
- Succession planning and legacy building strategies
Whether you’re establishing your first family office or revisiting your current setup, Magnified Consulting provides the trusted partnership and forward-thinking insight you need to make every decision count.
