Key Takeaways
- • Virtual family offices operate remotely, relying on independent contractors and consultants rather than a centralized team sharing one physical location, according to U.S. Bank's Ascent Private Capital Management.
- • Lance Losey, senior vice president and managing director of client advisory at Ascent Private Capital Management, says digital technology has made the model "more practical and feasible today than it was just a couple of years ago."
- • Losey describes virtual family offices as best understood as a type of single-family office, positioned along a continuum of virtual resourcing rather than as a distinct model.
- • Key benefits include lower overhead, greater staffing flexibility, and access to specialists regardless of location; key drawbacks include contractor turnover risk and communication "silos."
- • Losey states that "strong leadership and communication by the president/CEO are critical to virtual family office success."
Summary
U.S. Bank's Ascent Private Capital Management has published guidance on the virtual family office, a model in which a president or CEO coordinates wealth management services, such as investment consulting, tax and legacy planning, and philanthropy, by outsourcing non-core functions to remote contractors and consultants. Lance Losey, senior vice president and managing director of client advisory at Ascent, says the model has grown since the pandemic, when remote work and virtual meetings became widespread.
According to Losey, the structure mirrors a traditional single-family office, with family members or a board setting broad guidelines and a CEO overseeing day-to-day operations. The principal distinction is physical: traditional family office employees work in one location, while virtual offices rely mainly on remote independent contractors. Losey distinguishes these from multi-family offices, which serve several families that share services and are more cost-efficient, and notes that multi-family offices are already largely virtual.
Losey argues that the choice depends on factors including control preferences, availability of local talent, required specialization, the importance of personal trust, and relative costs. He says the decision is "rarely an all-or-nothing equation," with some offices retaining most staff while outsourcing select functions, and others operating with a single full-time CEO in a hub-and-spoke arrangement.
The article identifies access to global expertise, cost savings from avoiding salaries, benefits and rent, and flexibility to respond to market or family changes as principal advantages. Challenges include contractor turnover, since contractors "aren't 100% dedicated" to a single family, and the risk of miscommunication across remote teams. The article concludes that a virtual model may suit some families and recommends consulting a wealth advisor.
According to Losey, the structure mirrors a traditional single-family office, with family members or a board setting broad guidelines and a CEO overseeing day-to-day operations. The principal distinction is physical: traditional family office employees work in one location, while virtual offices rely mainly on remote independent contractors. Losey distinguishes these from multi-family offices, which serve several families that share services and are more cost-efficient, and notes that multi-family offices are already largely virtual.
Losey argues that the choice depends on factors including control preferences, availability of local talent, required specialization, the importance of personal trust, and relative costs. He says the decision is "rarely an all-or-nothing equation," with some offices retaining most staff while outsourcing select functions, and others operating with a single full-time CEO in a hub-and-spoke arrangement.
The article identifies access to global expertise, cost savings from avoiding salaries, benefits and rent, and flexibility to respond to market or family changes as principal advantages. Challenges include contractor turnover, since contractors "aren't 100% dedicated" to a single family, and the risk of miscommunication across remote teams. The article concludes that a virtual model may suit some families and recommends consulting a wealth advisor.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.