The roots of family offices lie in Europe, going back hundreds of years. But, of course, it was in the United States that the family office took on a new life, over the past few decades becoming professionally run organizations, often headed by a non-family member and aimed at everything from managing the family's investments to running philanthropic ventures.

Now, the spotlight is turning back to Europe. An increasing number of European high-net-worth families with at least $100 million in assets are moving away from the long-time practice of using private off-shore family banks to handle investments, creating their own professionally run family offices, instead. “They're looking at the U.S. for best practices, to become more like the family offices we have here,” says Kathryn McCarthy, a New York-based family office consultant. At the same time, however, there are a number of significant differences between the way European and U.S. offices are run — variations that aren't likely to change, even as the level of sophistication grows.

The first question is, “Why is this happening?” For one thing, there's the matter of sheer growth in global wealth that has skyrocketed recently. For example, the wealth of the world's high-net-worth individuals increased 9.4 percent in 2007, to $40.7 trillion, according to the 12th annual World Wealth Report, from Merrill Lynch and Capgemini.1 And, according to the report, the number of these people rose 6 percent, to 10.1 million.2 What's more, for the first time, the average assets held by such wealthy families exceeded $4 million.3

The increasing complexity of financial markets is another contributing factor. As markets have become more volatile and the pace of change has stepped up, wealthy families outside the United States have started to realize they need a more sophisticated approach to managing their money — and an expert to supervise the operation full-time. “You can't just have your favorite uncle run things,” says Raphael Amit, Robert B. Goergen professor of entrepreneurship at the Wharton School in Philadelphia. “You need professionals who have expertise in asset management, private banking, accounting, and a host of other areas.”

By far, the main focus for now is on creating new operating structures, according to Sarah Hamilton, chief executive officer of the Family Office Exchange (FOX), a Chicago-based family office consultancy. That includes everything from private trust companies owned by the family to a family-run holding company or a pooled investment partnership used to gain access to money managers. “There's a growing interest in using all sorts of different formations,” says Hamilton.

As you'd expect, the increase in global wealth and the rise of the more professional family office has attracted the attention of companies trying to take advantage of the trend. Take the law firm of Withers Bergman. The product of a 2002 merger between London-based Withers and Bergman Horowitz & Reynolds, a firm that was headquartered in New Haven, Conn., its target market is high-net-worth individuals and families. With offices located everywhere from Milan, Italy, to Hong Kong, the firm decided to rev up its work in the global family office arena, forming what Amelia Renkert-Thomas, a partner in the firm, calls a “family-office special interest group.” That effort ties together lawyers specializing in tax, commercial, estate planning, real estate and employment law into a team so, says Renkert-Thomas, “Clients get a seamless integrated structure.” The upshot: since launching the effort, according to Renkert-Thomas, the firm has significantly increased the number of family office clients it has around the world.

Consultants working with family offices, as well as academics, also have stepped up their work in the area. FOX, for example, is in the middle of an international benchmarking study to evaluate the staffing, services, investments and governance of family offices globally. And, recently, a group of researchers from the Wharton Global Family Alliance, which includes academics from the Wharton School, the University of Navarra's IESE Business School in Spain, SDA Bocconi School of Management in Milan, Italy, and Singapore Management University, studied 130 family offices around the world, looking at their management practices.

Interestingly, the Wharton Global Family Alliance study4 states: “There is a popular view that SFOs [single family offices] in the U.S. are generally more sophisticated than their European counterparts… However, we found no evidence for this belief.”5 Yet two foremost practitioners in family offices — family office consultant McCarthy and FOX CEO Hamilton — disagree with the acamedicians.

Putting the question of sophistication aside, however, there are a number of financial and cultural practices that differ between family offices in the United States and Europe. And they're unlikely to change. For example, take the matter of out-sourcing of financial responsibilities. In Europe there's a lot less of it. About 63 percent of family offices perform asset allocation in-house compared to 47 percent of offices in the Americas, according to the Wharton Global Family Alliance.6 And, 70 percent of European offices do financial administration on their own, while 41 percent of those in the Americas do so.7 The reason: according to Hamilton, it may be due to a simple financial variation — the higher fees charged by European financial institutions compared to those in the United States. Also, European and U.S. family offices tend to take different approaches to investments, reflecting regional biases. For example, families in the United States invest 44 percent of their portfolios in equities; families in Europe invest 27 percent of their portfolios in equities. “In the U.S., there's a stronger belief in the stock market,” says Amit.

Cultural variations also account for other striking differences, especially in the area of governance. In Europe, for example, fewer family members are involved in the affairs of the office. “The culture dictates that decision making passes from oldest son to oldest son,” says Hamilton. “That makes it less common that other family members have a right to know everything that's going on.” Also in European offices, there's typically a smaller group of shareholders who are allowed to participate in the decision-making process. In addition, family offices tend to eschew such areas as lifestyle management or family education because, says Hamilton, “The philosophy is to deal with those matters around the dining room table as opposed to the boardroom table.”

At the same time, family offices globally also differ according to their age and size, not just their geographic location. For example, new entities, no matter where they're located, tend to emphasize managing finances and place less importance on concierge services. On the other hand, established offices are more likely to offer those softer services, in addition to investment management. What's more, ultra-wealthy families generally use non-family professionals to head the operation, while others tend to be run by a family member. About 55 percent of millionaires have a family member head the office, compared to 27 percent of billionaires, according to the Wharton Global Family Alliance.8

Ultimately, the need for more professionally run family offices should grow over the next decade. As in this country, an increasing number of private businesses are expected to be sold during that time. The result: families will have more of a need to invest and preserve their newly liquid wealth. Hamilton expects that in the next 10 years, the number of European family offices that are members of FOX should grow from about 65 to more than 200. At the same time, the number of family offices throughout Asia is expected to skyrocket. “We'll see more families that want to keep their wealth for multiple generations,” says Renkert-Thomas. “They're trying to avoid the shirt-sleeves to shirt-sleeves in three generations trap.” With existing U.S. models to borrow from, perhaps they'll do a better job of it, too.


  1. See the World Wealth Report (2008),

  2. Ibid.

  3. Ibid.

  4. See the Wharton Global Family Alliance study,

  5. Ibid. at p. 21.

  6. Ibid. at p. 15.

  7. Ibid.

  8. Ibid. at p. 17.

Anne Field is a journalist based in Pelham, N.Y.