Starting or creating a family office
Which Startup Costs Are One-Time Expenses and Which Recur Every Year?
Short answer. One-time costs usually cover establishing the office, including its policies, records, systems, and provider relationships. Recurring expenses include staff, software, professional support, plus ongoing office administration. Some items can fall into either category depending on the arrangement, so confirm billing terms and separate setup fees from maintenance or subscription costs.
One-time costs cover establishing the office; recurring costs keep it operating after launch. The distinction matters because a family can underestimate ongoing commitments by treating each startup invoice as a single event. I recommend listing every expense with its timing, billing terms, and owner before approving the plan.
Identify Setup Expenses
Setup costs may include creating the office's initial operating policies, organizing family and investment records, setting up reporting processes and accounting or technology systems, and engaging advisers to define the structure and responsibilities. Some providers charge an implementation or onboarding fee. These charges generally cover preparing a process or system, though the same provider may also charge for future service.
The amount depends on scope. A family seeking simple reporting and coordination may need less initial system work than one with complicated assets, multiple entities, or custom reporting needs. Ask vendors to separate implementation work from ongoing support, and clarify who will maintain the system once it is in place.
Plan for Recurring Expenses
Recurring costs can include employee compensation, software subscriptions, office occupancy, accounting and administrative work, legal or compliance retainers, insurance, and outsourced services. Technology is a common example: the family may pay annually or by subscription for accounting, reporting, trading, investment management, or communication tools. In my books, I describe technology costs as a meaningful annual expense for some offices. These systems, though, are not necessary in the same form for every family.
Recurring does not always mean fixed. A provider's fees can rise with the volume of accounts, entities, transactions, or work. Staff costs may change as roles and responsibilities expand. Ask whether each charge is fixed, hourly, usage based, or tied to a specific project. Include renewal dates and cancellation terms in the cash flow plan.
Build a Useful Comparison
Organize expenses under two headings: launch costs and recurring costs. Note which estimates may vary, and explain the assumption behind each one. For an outsourced function, include the cost of reviewing the work and coordinating with the provider. For an in-house position, include the ongoing compensation commitment, plus any tools or space needed to support the role.
Compare a lean model with a broader service plan using the family office cost calculator. The startup budget discussion covers common expenses outside salaries, while the service provider guide can help identify work that may be contracted. The operational processes guide connects recurring costs to the office's work. If setup choices involve legal or tax treatment, talk with your attorney and CPA before committing.
Many family offices spend $20,000-$100,000 on technology and software each year, but larger ones often spend over $200,000 annually on tech and software costs.
Sources: How to Start a Family Office, The Single Family Office. Informational only, not financial, legal or tax advice.