When does a multifamily office owe fiduciary duties to its client families?
A multifamily office may owe fiduciary duties when it provides investment advice as an investment adviser, accepts a trustee or similar fiduciary appointment, or assumes duties under applicable law or contract. The applicable standard depends on the services, agreements, registration status, and governing law. Review those documents before relying on the label.
Investment advice creates the clearest federal duty
When a multifamily office acts as an investment adviser under the Investment Advisers Act, the SEC describes a fiduciary duty to each advisory client. That duty includes care and loyalty. It applies across the advisory relationship and to the services the office has agreed to provide. The office should seek a reasonable understanding of the client’s circumstances and provide advice consistent with the client’s objectives and the agreed scope of work. [1]
The duty also covers conflicts. An adviser must make full and fair disclosure of material conflicts so the client can evaluate them. Disclosure does not automatically make every conflict acceptable. The office must still act loyally and avoid conduct that defeats the client’s reasonable expectations. [1]
A family office exclusion does not answer every duty question
The SEC family office rule excludes qualifying single-family offices from the Advisers Act definition of investment adviser. A multifamily office generally cannot rely on that exclusion because it serves multiple unrelated families. Registration and exemption analysis depends on the office’s structure, clients, and activities. [2]
Even when the Advisers Act does not apply, duties may arise from another source. A written engagement can define services and responsibilities. A trust agreement or appointment can make the office a trustee, co-trustee, investment manager, or agent. Applicable state law may govern questions involving loyalty, care, conflicts, records, and reporting. The governing documents and the office’s actual conduct matter more than the title “family office.”
I always say the same thing. I say it's integrity, not just in the definition of your morals aligning with your actions, it's integration of everything in your life.
How families should confirm the duty
Start with the engagement letter. Identify who the client is, which entities and family members are covered, and whether the office gives investment advice, controls assets, pays bills, manages entities, or performs only administrative work. Confirm whether the office or an affiliate is registered with the SEC or a state regulator, and review Form ADV when applicable. [1]
Ask for written conflict disclosures, fee schedules, custody arrangements, and delegation terms. If the office serves as trustee or another fiduciary, review the appointment document and governing jurisdiction. Families should obtain advice from their own lawyer before signing or changing an arrangement. This page is educational and does not provide legal, tax, or investment advice.
Related guides
- Access to Alternatives Through an MFO: A Practical Guide for Families
- Cross-Border Families and Multifamily Offices: A Practical Guide
- Family Governance With a Multifamily Office