What Is the Best Way to Compare Building an Office With Outsourcing Its Functions?

Compare internal staffing and outsourcing function by function. The right choice depends on how often the work arises, the expertise it requires, its sensitivity, and how closely it connects to the family's priorities. A family can choose different arrangements for different responsibilities, with a clear owner for each function.

Assess the Work Itself

List responsibilities and the level of judgment each requires. Note which tasks are ongoing, which occur sporadically, and which depend on detailed knowledge of the family. Identify areas where the family has a distinct capability or wants to retain close control. Then consider whether an employee can cover the work alongside other duties or whether a specialist is needed.

In my experience, families weigh their areas of competitive edge and what they consider too sensitive or proprietary to place with a third party. Back-office work may suit outside support, while family-specific judgment may call for closer internal involvement. The provider guide can help you consider vendor selection and oversight.

Compare the Full Operating Cost

For an internal role, account for compensation, benefits, systems, workspace, management, and backup coverage. For an outside provider, include fees, contract terms, transition work, supervision, and time spent coordinating information. A provider may reduce fixed staffing demands, though the family office still needs someone to explain the assignment, review the work, and resolve questions.

Compare options against the expected workload. A full-time portfolio or trust and estate professional may be unnecessary when demand is limited, while repeated or sensitive work may justify keeping expertise close to the family. The family office cost calculator and staff compensation estimator can help organize the cost comparison.

Test Control and Continuity

Consider how each model handles confidentiality, access to records, response time, and continuity if a person leaves or a provider relationship ends. For an internal team, document procedures so knowledge does not sit with one employee. For external providers, define who owns the relationship, what information can be shared, and how performance will be reviewed.

A virtual family office or mixed model can bring experienced outside support while keeping the family office structure focused. Provider selection and coordination then become ongoing responsibilities. If the office uses several providers, assign someone to connect their work and prevent gaps or duplication. The single family office fundamentals can help frame the operating design.

Record why each function is internal or external, who is accountable, and what would prompt a review. Revisit contracts and staffing as demand changes. Talk with your attorney or CPA when legal or tax specifics affect the arrangement. This process makes the comparison practical and gives the family a basis for adjusting the model while keeping its purpose in view.

Any new vendor or service provider brings along new responsibilities for coordinating between parties and, of course, new costs that will ultimately show up in the bottom line.

Sources: How to Start a Family Office, The Single Family Office. Informational only, not financial, legal or tax advice.