How to Start a Family Office

Most families start a family office after a liquidity event — a business sale, an IPO, an inheritance. The combination of sudden wealth, tax pressure, and the realization that DIY wealth management doesn't scale creates the urgency. It also creates the most common mistake: hiring a CIO first, before the office has the operational infrastructure for the CIO to actually function.

Here's a better sequence.

Phase 1: Decisions Before Hires (Months 1–3)

Before you hire anyone, lock down four structural decisions:

1. Single-family, multi-family, or virtual? This is the foundation. Re-read our piece on the comparison.
2. Where will the office be located? State income tax, proximity to the family, talent pool, and privacy regulations all matter. Florida, Texas, Wyoming, and Nevada lead for tax; New York, Boston, Greenwich, and Chicago lead for talent.
3. What is the governance structure? Investment committee composition, veto rights, spending authority, reporting requirements. Decide before you hire.
4. What is the annual budget? Set it. Commit to it. Review quarterly. Offices that launch without a hard budget consistently overspend.

Phase 2: The Quarterback (Months 3–6)

The first hire is not a CIO. It's a chief of staff, director of family office operations, or managing director of the office — whatever title fits. This person's job is to build the office: hire the team, set up vendor relationships, select the tech stack, coordinate external advisors.

Profile: someone with 10–15 years of family office or private-bank operations experience. Not an investment specialist. Not a pure accountant. Someone who can run a complex coordination job.

Phase 3: External Professional Stack (Months 4–9)

Before you hire investment staff, get your external ring right:

• Tax counsel (specialty firm, not a Big 4 automatically)
• Trust and estate attorney
• General counsel (or outside GC on retainer)
• Insurance broker for UHNW coverage
• Custody relationships (primary + specialist)
• OCIO or interim investment advisor (acts as your CIO while you decide on internal hiring)
• Accounting and bookkeeping (internal or outsourced)

The OCIO piece is underappreciated. Most new SFOs should run with an OCIO for the first 18–36 months. It buys you time to observe your needs, understand your risk tolerance in practice, and hire a full-time CIO based on actual operating knowledge rather than pitch-deck intuition.

Phase 4: Technology and Operations (Months 6–12)

Stand up the infrastructure. Portfolio management system. Consolidation platform. Accounting software. Document management. Client portal (if family members will have one). Security and cybersecurity protocols. Get this done before you hire an internal investment team — they need working plumbing to be productive.

Phase 5: Internal Investment Team (Year 2+)

If you've decided to run an in-house investment function, start small. One CIO. One analyst. Build from there as the need proves itself. Hiring three people because "that's what other offices look like" before you understand your own requirements is the fastest way to overspend on your office.

Interview broadly. The best CIOs for family offices are rarely the ones who market themselves most aggressively. Look for operators who've worked at an MFO, an endowment, or a family office for 10+ years. Check references beyond the list they give you.

Phase 6: Governance Activation (Year 2–3)

Now that the office is operational, formalize the governance layer. Family constitution. Annual family meeting cadence. Investment committee charters. Next-generation education programs. Spousal engagement protocols.

This work tends to get deferred because it's soft and the principals resist the bureaucracy. Resist the resistance. Offices without governance collapse during succession.

Five Mistakes That Kill New Family Offices

1. Hiring the CIO first. Without infrastructure, a star investment hire can't deliver. You're paying a premium for someone to sit idle until the ops catch up.
2. Under-budgeting technology. A family office running on spreadsheets is a family office with hidden operational risk. Budget $150K+ annually for tech even at smaller scale.
3. Skipping the OCIO bridge. Running bare for the first two years means the family's portfolio is under-managed at exactly the moment the tax and transition decisions matter most.
4. Locating for tax but ignoring talent. Florida and Texas are tax-efficient, but they also have smaller family-office talent pools. Weigh both.
5. Postponing governance. The one-year window after a liquidity event is when family governance is easiest to establish. Wait three years and the dynamic has calcified.

Timeline Summary

For the structural foundation: SFO vs MFO. For services depth: Family Office Services. For where the capital ends up going: Family Office Investing Strategies.