What Is a Family Office? A Guide for Canadian Families of Significant Wealth

Family offices seem to be the rage from a marketing standpoint in the financial industry. Stockbrokers, who called themselves financial advisers for decades, now say they’re family offices. So, too, do insurance salespeople, once called financial and estate planners. Unfortunately, this waters down the term family office and begets caveat emptor.

If history is any guide, it is believed Judge Thomas Mellon in Pittsburgh established North America’s first true family office in 1868. John D. Rockefeller followed in 1882 with the Rockefeller Family Office. Their objective was to employ a team of professionals to provide the full complement of investment, accounting, legal, educational and concierge services required by complex families to preserve their legacies for future generations. It’s a key point of distinction that these employees were solely compensated by the family office and not externally though commissions or payment from a third party such as a bank, trust or insurer. As employees, they were held to the highest standard of care under the law, the fiduciary standard, which ensures that only the family’s needs and objectives were considered.

Creating a family office can make sense if a family has sizable assets that are external to their operating business. In many cases, a family office begins its life as a small operation with the objective to manage excess liquidity and cash. The people responsible may be the company founder or the current CEO along with a bookkeeper and/or accountant. At this stage, investment ideas come from external advisers who either manufacture or distribute products for the firms they work at. These may include private-equity deals or investment management services at one of the major banks or brokers.

There is nothing wrong with this model, but the lack of transparency and access to an open-architecture investment platform can result in excessive fees and fewer high-quality opportunities for a family to diversify their assets. Over time, that results in a portfolio of patchwork deals generally lacking an overall strategy, due diligence and risk management.

The first step for a family wishing to preserve wealth for the next century is to consider the family itself and not the family office. Where does the family want to go? What does the family want to do with their financial, human, cultural and social capital? Once some sense of direction is established, a mission statement is drafted for the family office that provides the roadmap to accomplish the family’s goals and objectives.

The first step for a family wishing to preserve wealth for the next century is to consider the family itself and not the family office.

The next step is to create a business plan, covering such issues as a legal structure, the services the family office will provide, and which functions will be handled internally and which will be outsourced. Part of the business plan relates to the financial budget, detailing matters such as the family office’s operating costs and how they will be allocated among the various family members and related entities such as trusts. Important issues like the location and type of office accommodations will also be determined, as well as the governance structure along with guidelines for financial and investment reporting. Finally, it should say which family members are to be supported and what the consequences are should a family member have a marital breakdown.

Services that are typically kept in-house include: direct investing, bookkeeping and reporting, philanthropy, education of younger generations and oversight of the family business. The most frequently outsourced services include: investment management (chief investment officer), asset custody, tax accounting, estate and trust planning and soft issues such as inter-generational conflict resolution where an objective viewpoint may be very useful. A family of significant wealth that wants ultimate privacy and total staff dedication may internalize many or all these functions. However, this can be an expensive endeavour given that a full-time chief investment officer alone will cost in the range of $250,000 to more than $1 million. A good rule of thumb is that a dedicated, full-service family office typically doesn’t make financial sense until the family’s net worth exceeds $500 million.

Why Use a Multi-Family Office?

The extensive overhead necessary to operate a successful stand-alone family office is a big reason why multi-family offices (MFOs) have been developed. These firms are independent and not associated with large financial services firms such as banks, investment dealers, trusts or insurance companies. MFOs operate as a fiduciary to the families they serve and provide great value since operating costs are shared across multiple families.

During a recent lunch in New York, Justin Rockefeller (a great-grandson of John D. Rockefeller) explained to me the advantages of dealing with an independent multi-family office, the most notable of which is having an open-architecture investment platform that offers a wide range of impact investing opportunities. It’s this appeal to the next generations’ heart and mind, as well as having a trusted fiduciary relationship, that may be the winning combination for the longevity of a family and the family office.

Long live the family office, long live the family.

The original published article in the Financial Post may be seen here.

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Single-Family Office vs. Multi-Family Office: Key Differences

The distinction between a single-family office (SFO) and a multi-family office (MFO) is one of the most important decisions for families of significant wealth in Canada. A single-family office employs a dedicated team exclusively for one family. The family controls all hiring, investment decisions, and strategic direction. Privacy is absolute. But the cost is substantial: a fully staffed SFO with a CIO, CFO, legal counsel, tax professionals, and administrative support typically costs $2–5 million annually in compensation alone, before office space, technology, and compliance. This is why the general threshold for an SFO is a net worth of $500 million or more.

A multi-family office provides the same range of services but shares the infrastructure across multiple families, dramatically reducing per-family costs. The best MFOs operate as independent fiduciaries, meaning they are not affiliated with banks, brokerages, or insurance companies and have no financial incentive to recommend one product over another. They offer an open-architecture investment platform, giving families access to the same institutional-quality managers and strategies (private equity, hedge funds, real estate, private credit) that pension funds and endowments use, but which are typically inaccessible through bank-owned advisory channels.

For Canadian families with $10 million to $500 million in investable assets, a well-run MFO can deliver the strategic depth and institutional access of an SFO at a fraction of the cost. The tradeoff is that the team is shared, privacy is slightly reduced (though still far greater than at a bank or brokerage), and the family has less control over staffing decisions.

What Services Does a Family Office Provide in Canada?

Canadian family offices, whether single or multi-family, typically provide services across five categories. Investment management encompasses asset allocation, manager selection and due diligence, portfolio construction, risk management, and access to alternative investments. Financial planning covers tax planning and compliance (including cross-border for families with US or international exposure), estate and trust planning, insurance review, and cash flow analysis. Family governance addresses succession planning for both the family business and financial assets, next-generation education, family meetings, and conflict resolution. Administrative and concierge services include consolidated reporting across all accounts and entities, bill payment, property management coordination, and personal services such as travel and security. Philanthropy support helps families structure charitable giving, establish private foundations, and evaluate impact investing opportunities.

The scope of services varies by family complexity. A family with a single operating business, one generation of wealth, and assets concentrated in Canada may need a relatively streamlined office. A multi-generational family with international assets, multiple trusts, real estate across provinces, and family members in different countries will require a much more comprehensive operation.

How to Choose a Multi-Family Office in Canada

Selecting an MFO is one of the most consequential financial decisions a Canadian family will make. The first and most important criterion is independence: the MFO should have no affiliation with a bank, brokerage, or insurance company, and its advisors should be compensated solely by client fees, not by commissions or product-related payments. This eliminates the structural conflicts of interest that pervade the Canadian wealth management industry, where advisors are often incentivized to recommend proprietary products.

The second criterion is fiduciary duty. Under Canadian securities regulation, a registered Portfolio Manager operates under a fiduciary obligation to act in the client’s best interest. This is a higher legal standard than the suitability standard that applies to most brokers and dealers. Families should confirm that their MFO is registered as a Portfolio Manager with the relevant provincial securities commission.

Additional factors include the breadth of the investment platform (does the MFO offer access to institutional-quality alternative investments, or is it limited to publicly traded securities?), the depth of financial planning capabilities (particularly cross-border tax and multi-jurisdictional estate planning), the team’s experience with families of similar complexity, and the quality of reporting and communication. The best MFOs consolidate all of a family’s financial information into a single view, regardless of how many custodians, managers, or entities are involved.

About the Author

Arthur C. Salzer, CFA, CIM is the founder, CEO, and Chief Investment Officer of Northland Wealth Management Inc., an independent multi-family office registered with the Ontario Securities Commission as a Portfolio Manager. Arthur has been recognized as the Top Ranked Advisor in Canada by Wealth Professional Magazine and has received Portfolio Manager of the Year and Advisor of the Year awards.

Under his leadership, Northland has been named Best Multi-Family Office in Canada three times at the Family Wealth Report Awards in New York. Arthur writes the Curve Appeal column in Financial Post Magazine and is a frequent speaker at family office and investment conferences across North America and Europe. He is a member of the CFA Society, the Family Firm Institute, and Family Enterprise Canada.