Drawbacks to Starting a Family Office

There are drawbacks in starting up a family office.

Consider these challenges in setting up your family office.

The upfront and ongoing costs can be considerable.

These costs include the following:

Hiring professionals and operational people can cost a great deal in today’s market.

This includes not only salary, but also healthcare, payroll taxes, and more.

This typically accounts for over half the cost of running a family office.

Other costs include investment advisory fees, insurance and trust fees.

Setting up the legal entity with a partnership, trust, and other entity structure also comes at a cost.

Some family offices use a fund structure for funding investment opportunities.

Funds typically come with a fee structure.

There are tax considerations for the entity and how to minimize them.

There are regulatory issues which vary from state to another.

In setting up a family, consider if there’s enough money to cover the costs and associated legal, and tax issues.

Check to see if you can identify and hire the necessary team to run it.

Finally, ask if  you have an investment or operations program for generating a profit.

 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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Thank you for joining your host Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.

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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.