Family offices are closing. The families are richer than ever.

There are now over 8,030 single family offices worldwide managing at least $100 million each, up from 6,130 in 2019, according to Deloitte. Projections put that number at 10,720 by 2030.

And yet, some of them are shutting down.

That sounds contradictory, but it isn’t. The total number of family offices is growing because more families are wealthy enough to justify one. The offices that are closing are the ones where the costs have outpaced the value.

The cost problem

J.P. Morgan Private Bank estimates that the average annual cost of running a family office managing $1 billion in assets is $6.6 million. For smaller offices, the burden is proportionally heavier. One mid-sized office overseeing $450 million was spending nearly 70 per cent of its budget on regulatory, legal, accounting, and investment staff. Annual running costs can exceed 2 per cent of the wealth being managed, which starts to look expensive relative to what an external multi-family office charges for equivalent services.

Doris Meister, a former chair of Wilmington Trust, has described a pattern in which offices grow their headcount in line with the family’s expanding needs, compliance demands, and investment activity, only to find that the costs have crept above the level the family is willing to bear.

Real closures

Annamaria Koerling, managing partner of Delfin Private Office, has written about specific cases. One fourth-generation US family closed a 15-year-old office that had been managing $600 million. The office had served them well but the family concluded that the same work could be done externally, without the overhead.

Another family reduced an 18-person office to a three-person governance core, cutting costs by 60 per cent. The investment management, reporting, and compliance work was outsourced. The retained team focused on what only a family office can do: coordination, governance oversight, and the family-specific functions that external providers cannot replicate.

Next generation participation

Only 12 per cent of the next generation are expected to work in the family office. That creates a succession problem within the office itself. If the younger generation has no interest in running the infrastructure, the case for maintaining a full-service internal team weakens.

Andrew Apfelberg, a partner at Greenberg Glusker, has pointed to the governance challenge: 86 per cent of family office executives cite governance as their top concern, but building a governance framework that outlasts the founding generation requires buy-in from people who may not want to be involved.

What this means

The family office model is not dying. The numbers show that clearly enough. But the model is becoming more demanding, and the families that entered it when costs were lower or regulation was lighter are now re-evaluating.

The split is between offices that have professionalised and those that have not. The ones closing tend to be the ones that never built proper infrastructure: clear mandates, measurable performance metrics, succession plans for key staff. The ones surviving tend to be leaner, more focused, and clearer about what they keep in-house versus what they buy externally.

A family office is not a given. It is a choice, and it needs to keep justifying itself.