Which regulatory registrations and licenses should a multifamily office hold?
The right registrations depend on what the office does, where it operates, and whose assets it serves. A family office serving multiple unrelated families will usually review investment adviser registration, broker dealer rules, insurance producer licensing, and state requirements. Offices serving only qualifying family clients may fit the SEC family office exclusion.
Investment adviser registration
Start with the office’s client base and advisory activity. SEC Rule 202(a)(11)(G)-1 excludes a family office from the Investment Advisers Act when it advises only qualifying family clients, remains family owned and controlled, and does not hold itself out publicly as an investment adviser. The SEC rule and its conditions are the controlling reference. SEC family office rule
A multifamily office advising unrelated families generally cannot rely on that exclusion. It may need state investment adviser registration or SEC registration, depending on regulatory assets under management and other facts. Registration requirements, exemptions, thresholds, and state rules require a fact specific review. SEC adviser registration overview
Broker dealer and securities personnel rules
Registration as an investment adviser does not authorize every securities activity. If the office acts as a broker, solicits or negotiates securities transactions, or receives transaction based compensation, broker dealer rules may apply. The SEC states that brokers and dealers generally must register with the SEC, join a self regulatory organization such as FINRA, and meet applicable state requirements. SEC broker dealer guide
An office can engage an unaffiliated, registered broker dealer for execution and placement work. The office should document who performs each activity and how that party is paid.
It is important to decide early on what you do not want to do, what you are not good at, what you do not enjoy, and what you will for sure not be investing in or needing so you can ignore or politely say no to 95% of those that are asking you for your time.
Insurance and other state licenses
If the office sells, solicits, or negotiates insurance, the people performing that work generally need insurance producer licenses in the relevant states. The National Association of Insurance Commissioners explains that state insurance regulators license producers, including agents and brokers, and apply state specific requirements. NAIC producer licensing
Other licenses can arise from a specific operating model, such as a trust company charter, lending activity, money transmission, or custody services. We should identify those activities separately with counsel and the applicable state or federal regulator before launch. The practical rule is simple: map each revenue stream, client type, employee role, and state of operation to the regulator that oversees it.
Related guides
- Family Governance With a Multifamily Office
- MFO vs SFO vs RIA vs Private Bank: Which Fits Your Family?
- Access to Alternatives Through an MFO: A Practical Guide for Families