How much investment discretion does a multifamily office receive from each family?
A multifamily office receives the authority a family grants in its written investment mandate. Some families approve each investment. Others delegate manager selection, trading, and rebalancing within agreed limits. The office may oversee reporting and risk without controlling trades. Discretion is negotiated, documented, and reviewed as family needs change.
There is no standard level of discretion
A multifamily office does not receive a fixed level of authority simply because it serves a family. The scope comes from the engagement agreement, investment policy statement, account documents, and family governance rules. The SEC’s family office rule addresses which entities may qualify as family offices and whom they may serve. It does not set one level of portfolio discretion. SEC
Each family can reserve some decisions and delegate others. A family may retain approval over private equity, direct real estate, concentrated company stock, or large cash movements while delegating public market implementation. Another family may ask the office to coordinate outside managers while leaving trading decisions with an investment committee.
Three common mandate styles
A family may use a discretionary mandate, a non-discretionary advisory mandate, or a combination of the two. Under a discretionary mandate, the office or appointed manager acts within the agreed investment policy. Under a non-discretionary mandate, the family or committee approves decisions before implementation. BNY Mellon
A discretionary mandate can cover asset allocation, manager selection, trading, and rebalancing within stated limits. An advisory mandate can limit the office to research, recommendations, monitoring, and implementation after approval. A family can grant discretion for liquid assets while reserving approval for illiquid or strategic holdings. Patrimonica describes both discretionary outsourcing and advisory implementation. Patrimonica
The structure is everything. People go around thinking, if I put high returns on my paper, I'm going to raise a lot of money. It's the best deal you've ever seen. And that doesn't really matter too much at all.
What families should put in writing
The mandate should identify who sets allocation, who selects and terminates managers, permitted investments, liquidity rules, concentration limits, borrowing authority, rebalancing ranges, reporting duties, and exceptions requiring approval. It should also state how the family can change or end the authority.
Discretion changes responsibility. Truist explains that discretionary providers can act under an investment policy without waiting for each committee meeting, while non-discretionary arrangements keep decision control with the committee. Truist
The practical answer is simple: give the office enough authority to carry out its assigned role, and keep decisions involving family values, operating businesses, or unusual risks with the people who understand them best. Review the arrangement when ownership, leadership, liquidity, or family priorities change.