Tyler Tysdal believes that the major difference between family offices and traditional private equity firms is that they do not raise capital from outside investors but instead from the assets of one single family or sometimes more than one family. There are large and small family offices some are institutional and operate very similarly to ordinary hedge fund offices. They have internship programs and training, stricture and compliance with a front and back office and so on. Then there are others which are much smaller offices and they invest in funds but do not do direct investing. They are funds of funds.
Multi-family offices operate more like funds of funds because each individual family is not large enough to open up on its own.
This is of course dependent upon how rich the family is. Some have also been established for over a decade and have thus grown in size and success.
So the cash flow of a private office is very often the family owned business, the annual cash flow of the business is invested. Other small deals and investments will and can be made by the company. They can also invest in other areas at the same time. The main reason that these types of business developed is that families were getting angry at the 2% charging structure. The more money you have the more this 2% would cost. Families also wanted more control over their money instead of paying others handsomely to do it and them being often left in the dark. The people who invest are very often successful business men or women who like to have control and are intelligent and wise enough to do so.
Working in a family office is good as there is no outbound or cold calling to generate business.
There is no need to hound industries or people to invest. You can work on the whole of the business process especially in a small office and this means that your work is varied and that you learn an awful lot fast. It means that the hours and conditions can be much better than traditional.
So, what could you expect on an average day at a family office, the work is nine until six most days, which is good for investment work. There will be meetings with clients to discuss the portfolio. Then there will be working to ensure that due diligence has been taken with any new investments. A lot of correspondence will happen online and there will be short team meetings which are usually very informal due to the size of the company and how well they all know one another.
The one downside is that promotion is rare the companies are so friendly that people rarely move on, thus there isn’t a gap for someone to get promoted to. Turnover is low as you get autonomy, a variety of work and a great lifestyle from it. So, if you want a secure and interesting job for life in the financial industry then maybe working for a family office is the answer.