Around the time a promoter family crosses the equivalent of $50 million in net worth, a question emerges. Should we set up our own family office?
It is a flattering question. The patriarch has built a successful business. They have hired and run teams. They are used to being the principal in their own organisation. The idea of recreating that arrangement around the family's wealth — a CIO, a tax head, an accountant or two, a small back office — feels natural. Several of their peers have done it. The brochures of the firms helping people do it are appealing.
Almost all of these single-family offices, in our experience, are mistakes. The cases where they make economic and operational sense start at around the equivalent of $250 million in net worth. Most of the families considering them are at $50–150 million. The gap is large enough that the conversation is almost never marginal.
Why $250 million is the rough threshold
A genuine in-house family office requires:
- A senior CIO-level investment professional, paid market.
- A senior tax-and-accounting head.
- A junior team of two-three.
- Office space, technology, audit, compliance, and infrastructure.
- A board structure and governance.
The annual cost, for an even moderately competent setup, is rarely below ₹3-5 crore once everything is loaded. On a $50 million balance sheet, that is 60-100 basis points — a fee that comfortably exceeds what a quality multi-family office would charge for the same work. On a $250 million balance sheet, the same cost is 12-20 basis points, which is competitive.
The arithmetic is simple. Below $250 million, you are paying retail for an internal team that was supposed to be more efficient than an external advisor. Above $250 million, the calculus shifts.
What the in-house argument misses
The cost is the visible problem. The hidden problems are larger.
Concentration of execution risk. A single CIO is one person. That person makes most of the family's investment decisions. If they are good, the family is well-served. If they are middling — and most are middling, because the very best are not available at the salary a $50 million family can pay — the family has bought concentrated execution risk in addition to concentrated wealth.
The talent ceiling. A multi-family office has a team of senior professionals, peer-reviewing each other's recommendations, with exposure to dozens of similar families. The single-family office has, typically, three or four people working in isolation, with one family's perspective. Over a decade, the breadth gap matters.
Governance and conflict. The in-house team is paid by the family. The family is the team's only client. The team's career is tied to the family's continued employment. This produces a particular kind of conflict — not corruption, but a soft unwillingness to deliver hard news. The CIO who tells the patriarch they are being too aggressive, or that their pet investment is unwise, takes career risk every time they do so. Over years, the conversations the family most needs to hear are the ones the in-house team is most reluctant to have.
Succession of the office itself. The in-house family office's senior people leave, retire, fall ill, are recruited away. The family must then run a senior search every five-seven years, with all the attendant disruption. The multi-family office has its own continuity layer.
When does in-house actually make sense
There are three scenarios where we counsel families to consider an in-house structure:
- Above $250 million net worth, where the cost economics favour it.
- In families with very specific operational complexity — a global business, several active investment lines, family members in multiple jurisdictions — that requires a dedicated, integrated team.
- In families where a specific senior family member intends to operate the office as their primary work — typically a retired patriarch or a particularly engaged next-generation principal — and is willing to professionalise it accordingly.
Outside these cases, the multi-family office model is, in our experience, simply better — cheaper for the family, broader in talent, more patient in governance, less concentrated in execution risk.
The honest answer
The honest answer to "should we set up our own family office?" is, almost always, "not yet". The cleaner alternative — work with a real, fee-only multi-family office for the next ten or fifteen years — preserves optionality. If the family's wealth grows past the threshold, the in-house structure can be added on top of, or in place of, the external relationship. If it does not grow that far, the family has avoided a costly mistake.
Most families, we have noticed, want to set up the in-house office because it feels like the next step — a marker of having arrived. The advisor's job is to gently re-frame: the marker of having arrived is not the structure. It is the absence of avoidable cost.
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