The Brutal Cost of Running a Family Office (Full Article)

The advantages of family offices are clear: Privacy. Customization. Control.

But these can come at a price. Salaries, tech, legal bills.

The dream of running your own shop often collides with the brutal economics of keeping it alive.

When many families realize their family office is actually eroding generational wealth, they often (quietly) shut them down or scale them back.

This week, we break down the real cost of running a family office, featuring the latest data from Goldman Sachs and Citi Private Bank.

This 1-2% number from the recent Citi 2025 Global Family Office Report is an all-in amount including external managers and advisors. Pure operating costs typically run 0.5%–1.5% of assets annually,

That means:

Even the wealthiest families have to ask if the control is worth that bill.

Here’s what Citi found when they asked families to reveal their cost base:

Operating Costs (Citi 2025)

Translation: about two-thirds of family offices are spending at least 0.5% a year. And one in four are pushing above 1%.

You might expect economies of scale, but Citi points out that larger offices experience scope creep as they expand their remit into philanthropy, next-gen education, and governance.

The scope of a family office is a key cost driver. Every new service (like a foundation, concierge, or complex reporting system) has a multiplier effect: extra legal work, new tech tools, ongoing monitoring. Without discipline, service creep can send costs spiraling.

The biggest line item is almost always people.

Staffing can eat 50–60% of the budget.

And yet, most family offices are small. Goldman Sachs and Citi agree that the average family office employs under 10 people.

Typical Staffing Levels (Goldman Sachs & Citi 2025)

So while the headlines feature sprawling offices with CIOs, CFOs, and in-house tax teams, the median office is lean: a handful of generalists, often supported by outsourced specialists.

But at the top end, staff lists can look like hedge funds:

Put that in London, New York, or Zurich, and salaries and bonuses alone can exceed $2M a year.

Complex portfolios add costs. Private equity, co-investments, and niche alternatives require more due diligence, more legal structuring, and pricier systems.

Basic ETFs can be tracked on Excel, but once you’re in direct deals, you usually need software to keep on top of it.

And there’s complexity around families too.

More members = more complexity: multiple ownership stakes, different reporting preferences, even conflict resolution and education programs. All of this adds to the budget.

Where you base the office matters a lot.

Family offices increasingly split functions: keeping investment teams in a global hub, while admin and accounting sit somewhere cheaper.

In our experience, European family offices frequently complain about higher regulatory and compliance costs.

Not all family offices are created equal.

The second model can cost 2x – 3x more to operate. And given its focus, often delivers less in pure investment return.

As one Citi respondent put it:

The real question is less “what should it cost?” and more “what do we want to pay for?” Effective families set explicit service scopes, fee budgets, and benchmarks.

Concierge, lifestyle and travel services often carry outsized costs. But for wealthy families, these expenses usually exist regardless of a family office, making it a question of where they’re best managed and controlled.

While cost is one thing, fragility is another.

These risks don’t show up in the cost tables, but they compound the expenses when things go wrong.

Budget: Smart offices cap fees per service line (e.g. no more than 30–50 bps for wealth advice). Setting benchmarks forces discipline and avoids fee creep.

AI: Early adopters are using tools for reporting, summaries, and portfolio commentary. The result: 10–20% savings on repetitive workflows and faster decision-making.

Systems: Complexity demands proper infrastructure. The right tech stack avoids operational bottlenecks, although overbuying software can drain budgets.

Good people: Hiring one or two strong generalists can keep headcount lean while still accessing specialist expertise as needed.

In-house vs. outsourced: In-house teams deliver alignment but come with high fixed costs. Outsourced CIOs, accountants, and legal counsel can reduce overhead, though there’s a strategic trade-off as it comes at the expense of customization and control.

Monitor & review: Costs should be treated like any other portfolio exposure: tracked, benchmarked, and renegotiated regularly. Families that review suppliers annually tend to spend less and get more value.

So the price tag of a family office can be high. Brutal even.

But there’s a reason so many families still opt for a Single-Family Office model.

Done right, the benefits are unmatched: absolute privacy, direct control over investments, and the ability to align governance, philanthropy, and legacy in a way that no bank or MFO can replicate.

For many families, the office is about building infrastructure for generations to come.

So yes, the costs can be brutal. But for those who can afford them, and who run them with discipline, a family office remains the most powerful tool for turning wealth into a lasting legacy.

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