What is a family office?

The SEC’s family office rule, Rule 202(a)(11)(G)-1, adopted in 2011, sets the conditions: the office advises only family clients, is wholly owned by family clients and controlled by family members, and does not hold itself out to the public as an investment adviser. An office serving several unrelated families generally does not meet them.

Say a family with $500 million sets up an office to manage it. If the office advises only family clients, is owned by them and controlled by family members, and does not present itself to the public as an adviser, it need not register with the SEC as one. Simple example. Terms vary by fund.

Family offices invest in private funds as LPs and can also invest directly in companies, so they are a source of capital alongside institutions.

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