Roundtable Recaps

Family Offices and Family Office Formation

Presented by Tom Crotty, Sensiba
Tax considerations presented by Tim Tikalsky, Sensiba

Tom explored the evolution, structure and management of family offices, emphasizing the challenges of transitioning from a family business to managing multigenerational wealth. He explained that family offices are defined less by net worth than by the complexity of a family's financial, administrative, investment and operational needs.

Key Takeaways

• 70%: Approximately 70% of family wealth fails to survive through the third generation, according to research cited by Tom.
• 80% / 15% / 5%: Tom attributed wealth dissipation primarily to nonfinancial issues (80%), including governance, communication and preparing heirs; family enterprise management deficiencies (15%), including accounting, internal controls and hiring; and technical financial, legal and tax planning issues (5%).
• 30%: Approximately 30% of families successfully preserve wealth across generations, offering models for effective governance and stewardship.
• $100 million+: Net-worth threshold for families served by the multifamily office Tom helped establish at Ascent Private Capital Management.
• 60%: Share of Tom's recent consulting work involving families with significant real estate interests.
• $700–$800 million vs. $25–$100 million: Tom contrasted a wealthy family with a relatively simple investment structure against smaller families with significantly more complex holdings, demonstrating that complexity, not wealth alone, drives family office needs.
• 27% vs. 21%: Tom cited research indicating malfeasance in 27% of family offices versus 21% of family businesses, underscoring the importance of financial oversight and internal controls.

Types of Family Offices

Family offices vary according to the services required, and many combine several models:

• Embedded: Accounting, financial and administrative services provided through an operating family business, which may disappear when that business is sold.
• Concierge: Personal services, travel, scheduling and lifestyle management.
• Administrative: Bill payment, accounting, financial reporting, recordkeeping and technology.
• Investment: Investment oversight and coordination with wealth managers, real estate professionals and other advisors.
• Multifamily: Shared professional services for multiple families, often including investment management, accounting, reporting and administration.

Formation, Governance & Operational Challenges

• From family business to business of family: Transitioning wealth from an operating business requires new administrative systems, professional support and financial oversight, particularly when

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