This glossary defines the key terms used across The Family Office Association’s research and the wider single family office world. Each entry gives a clear, plain-English definition for principals, advisors, and anyone learning how family offices work.
What is a family office?
A family office is a private organization that manages the investments, finances, and affairs of a single wealthy family or a small group of families. It typically oversees investment management, estate and tax planning, philanthropy, governance, and administrative services, allowing a family to centralize and professionalize the stewardship of its wealth across generations.
Single family office (SFO)
A single family office is a private entity dedicated to managing the wealth and affairs of one family. It usually serves families with substantial assets, and provides bespoke investment, tax, estate, and lifestyle services tailored entirely to that family’s needs.
Multi-family office (MFO)
A multi-family office is a firm that provides family-office services to several unrelated families, sharing infrastructure and expertise across clients. It offers many of the same investment, planning, and administrative services as a single family office, but at a lower cost per family by pooling resources.
Family office governance
Family office governance is the framework of policies, structures, and decision-making processes that guide how a family office operates and how the family makes collective decisions. Strong governance typically includes a family constitution, defined roles, an investment policy statement, and clear processes for succession and conflict resolution.
Family constitution
A family constitution is a written document that sets out a family’s shared values, mission, governance rules, and policies for managing wealth and resolving disputes. It is not usually legally binding, but it aligns family members across generations and provides a reference point for major decisions.
Direct investing
Direct investing is when a family office invests directly into operating companies or assets, rather than through funds managed by third parties. It gives families greater control, lower fees, and closer alignment, but requires significant in-house expertise to source, evaluate, and manage the investments.
Co-investment
Co-investment is when a family office invests alongside a lead investor or fund manager in a specific deal, typically with reduced or no fees. It lets families access larger or more selective opportunities while relying on the lead investor’s diligence and deal execution.
Consolidated reporting
Consolidated reporting is the aggregation of a family’s holdings across all accounts, asset classes, custodians, and entities into a single, unified view. It gives a family office accurate performance, exposure, and risk information to support better investment and planning decisions.
Outsourced CIO (OCIO)
An outsourced chief investment officer is a third-party firm or professional that a family delegates investment management responsibilities to, including asset allocation, manager selection, and portfolio oversight. Families use an OCIO when they lack the scale or desire to build a full in-house investment team.
Private equity
Private equity is investment in privately held companies that are not listed on public stock exchanges, usually through funds that buy, improve, and later sell businesses. Family offices use private equity to seek higher long-term returns and diversification beyond public markets.
Venture capital
Venture capital is a form of private equity that funds early-stage, high-growth companies in exchange for equity. It carries high risk and the potential for outsized returns, and family offices often access it through funds, direct deals, or co-investments.
Private debt (private credit)
Private debt, also called private credit, is lending to companies by non-bank investors rather than through public bond markets. It can offer family offices steady income, lower volatility, and an illiquidity premium, with strategies ranging from direct lending to distressed and special situations.
Secondaries
Secondaries are transactions in which existing investors sell their stakes in private funds or portfolios to other buyers before the fund’s natural end. They provide liquidity in otherwise illiquid private markets and can let buyers acquire mature assets at a discount.
Carried interest
Carried interest is the share of investment profits paid to a fund manager (the general partner) as performance compensation, commonly around 20% of gains above an agreed hurdle. It aligns the manager’s incentives with those of the investors.
Independent sponsor
An independent sponsor, also called a fund-less sponsor, is a dealmaker who sources and structures acquisitions of private companies on a deal-by-deal basis without a pre-committed blind-pool fund. They raise capital from investors, including family offices, once a specific deal is identified.
General partner (GP) and limited partner (LP)
In a private fund, the general partner is the manager who runs the fund, makes investment decisions, and bears management responsibility, while limited partners are the investors who provide capital and have limited liability. Family offices most often participate as limited partners.
Donor-advised fund (DAF)
A donor-advised fund is a charitable giving account that lets a donor contribute assets, receive an immediate tax deduction, and recommend grants to charities over time. Family offices use DAFs as a flexible, low-cost vehicle for organizing philanthropy.
Impact investing
Impact investing is investing with the intention of generating measurable positive social or environmental outcomes alongside a financial return. Family offices use it to align their portfolios with the family’s values while still pursuing investment performance.
Conscious capitalism
Conscious capitalism is a business philosophy that holds companies should serve all stakeholders, including customers, employees, communities, and the environment, not just shareholders. It emphasizes higher purpose, stakeholder orientation, conscious leadership, and a strong culture.
Alternative investments
Alternative investments are asset classes outside traditional stocks, bonds, and cash, including private equity, venture capital, private debt, real estate, hedge funds, and commodities. Family offices allocate heavily to alternatives to seek diversification and higher long-term returns.
Asset allocation
Asset allocation is the process of dividing a portfolio across asset classes such as equities, fixed income, real assets, and alternatives to balance risk and return. It is widely regarded as the most important driver of long-term portfolio performance.
Succession planning
Succession planning is the process of preparing the next generation and the family office itself for the transfer of wealth, leadership, and decision-making over time. It addresses governance, education, roles, and continuity to help wealth and values endure across generations.
Estate planning
Estate planning is the arrangement of how a person’s assets will be managed and transferred during life and after death, using tools such as wills, trusts, and gifting strategies. For wealthy families it also focuses on minimizing estate taxes and ensuring an orderly transfer of wealth.
NAV financing
NAV financing is a loan secured against the net asset value of a diversified investment portfolio, used to generate liquidity while retaining ownership and future upside. It is an increasingly common tool in private markets for funding distributions or new investments without selling assets.
Family office network
A family office network is a peer community that connects family office principals and executives for education, idea-sharing, best practices, and selective co-investment. Reputable networks emphasize confidentiality and non-solicitation, and exist to serve members rather than to market products to them.
Explore the full library of family office whitepapers and research, or learn about membership in our single family office peer network.
Assets under management (AUM)
The total market value of the investments a family office or manager oversees on behalf of the family.
Ultra-high-net-worth individual (UHNWI)
An individual with investable assets of at least US$30 million; the typical principal behind a single family office.
High-net-worth individual (HNWI)
An individual with investable assets of at least US$1 million.
Virtual family office (VFO)
A lean model that coordinates a network of outsourced professionals rather than employing a full in-house team.
Embedded family office
A family office run within a family operating business, sharing that company’s staff and infrastructure.
Investment policy statement (IPS)
A document that sets a family’s investment objectives, risk tolerance, target asset allocation, and governance rules.
Fiduciary
A person or entity legally obligated to act in the best interests of the family or its beneficiaries.
Chief Investment Officer (CIO)
The executive responsible for a family office’s investment strategy, manager selection, and portfolio.
Dynasty trust
A long-term trust designed to pass wealth across multiple generations while minimizing transfer taxes.
Private foundation
A charitable entity funded by a family to make grants and conduct its philanthropy.
Generational wealth transfer
The passing of assets from one generation to the next; the coming decades are often called the “great wealth transfer.”
Accredited investor and qualified purchaser
US regulatory thresholds that determine eligibility to invest in private funds and unregistered securities.
Capital call
A request from a fund manager for investors to contribute a portion of the capital they have committed.
Vintage year
The year a private fund makes its first investment, used to benchmark performance against peer funds.
J-curve
The tendency of private funds to post early negative returns from fees before generating gains later in their life.
Fund of funds
A fund that invests in a portfolio of other funds rather than directly in companies or assets.
Separately managed account (SMA)
A private portfolio owned by a single investor and run by a professional manager to a custom mandate.
Club deal
A private investment made jointly by a small, invitation-only group of families or investors.
Deal flow
The pipeline of investment opportunities a family office sources and evaluates.
Family bank
A pooled family-capital structure that lends to or invests in the ventures of individual family members.
