The question is now as it has always been, which type of family office makes sense for us?

The tax, legal, business and regulatory horizon for entrepreneurial families and family offices is constantly changing and not always favorably, which presents both important obstacles and significant opportunities for families around the world. Because family offices are by definition unique— involving complex and often idiosyncratic structures—critical decisions reached in one area of importance for the family will invariably lead to consequences—intended or otherwise—in another.

With affluent families now facing an evergrowing array of complicated issues affecting every facet of their global business endeavors, it has become imperative for families to develop a comprehensive strategy deeply grounded in their stated values and fully aligned with their cross-generational vision.

While much has been lectured, written and endlessly parsed concerning the various models—ideal, neutral, outdated and otherwise—that families invariably adopt to preserve and grow their wealth, the hard truth is that each model has its inherent advantages and often overlooked disadvantages, which makes a one-size-fits-all approach an exercise in blind futility at best…and an egregious disservice to clients at worst.

For instance, a Single Family Office (SFO) makes sense primarily for those families willing and able to deploy significant financial, administrative and human resources to achieve privacy and versatility. While a standard issue Multi-Family Office (MFO) operating traditionally as a Registered Investment Advisor may offer flexibility, families will inevitably sacrifice a certain level of privacy, confidentiality and uniqueness in the process. A third alternative—a Virtual Family Office (VFO)—similarly offers flexibility although the scattershot and random approach may leave some feeling distinctly underwhelmed and profoundly underappreciated.

While no perfect solution or ideal prototype exists, there is a unique opportunity to take a novel tack. A Dynamic Family Office model offers a fresh set of flexible and highly customized solutions for families of both extraordinary and merely simple wealth.

What then is a Dynamic Family Office and how does it differ from the usual suspects?

The Dynamic Family Office (DFO) operates as an external “hard drive” for the affluent family combining a singularly objective and independent approach to the family’s investment portfolio utilizing best in class technology while at the same time offering a palette of family office services customized to the strategic goals and aspirations of successful entrepreneurs, families, family offices and privately held businesses around the world.

The DFO will ideally encompass many, if not all, of the following in its service offering to its client families:

Customized structure and family experience couples with DFO report card.

A DFO stands apart from other family office models principally based upon the customized structure for the individual families it serves and the overall client experience that it can deliver. The DFO exists to serve the family, not the other way around. Accordingly, the DFO should be evaluated on a periodic basis in writing not only in terms of the investment returns that it generates for families but also with respect to the breadth, quality and integration of its ancillary service offerings.

Multiple CIO function finely attuned to the character and culture of the individual family that it is meant to serve.

Given that families have diverse investment philosophies, a DFO will contour its investment platform around the individual character and culture of its client families. Accordingly, a DFO may consider adopting a multiple CIO model not only to support the various investment styles and objectives of its families — including the increasing trend amongst families to push investment dollars towards private equity, venture capital as well as direct and co-investment opportunities—but also to manage overall portfolio risk across any number of complex investment choices.

Seamless and rigorous integration via a dedicated DFO staff.

In order to prepare itself adequately for the highly significant wealth transfer that is expected to occur over the next decade, the DFO will deliver a carefully selected suite of core services and establish deep relationships at a level that fulfills the increasing needs of its client families. The DFO will…