Updated on
In Italy, according to data from AIPB and Bocconi Family Office Lab, the number of family offices has doubled over the past decade. The figure makes headlines. But the figure that does not make headlines — and that would count more — is another: most of these structures remain family offices in name only. They lack formalised governance, structured decision-making process, operational separation between family wealth and the operations of the originating business.
When wealth is measured in hundreds of millions, amateurism in management becomes very expensive. And Italian figures, compared with Swiss, German or British ones, tell a structural delay that is not about scale — it is about method.
Dysfunction 1 — The single family office that does not know what it is
A single family office (SFO) manages the wealth of one family. A multi-family office (MFO) serves several families under a regime of cost and capability sharing. The distinction, trivial on paper, is frequently blurred in Italy.
Many structures declare themselves single family offices when they are in fact family business holdings — companies that hold stakes in the family business but have neither a team dedicated to financial asset allocation, nor an investment policy process, nor separation between business decisions and wealth decisions.
The boundary matters. A family business holding optimises control of the originating business. A family office serves to diversify wealth outside the originating business — precisely to reduce concentration risk that, statistically, is the first destroyer of wealth in entrepreneurial families of the third generation.
Dysfunction 2 — The generation that enters unprepared
Bocconi documents that over sixty percent of Italian entrepreneurial families of the first and second generation do not have a formalised succession plan. The consequence is predictable: the third generation enters the family office with preparation very uneven compared to the competencies required.
In Anglo-Saxon ecosystems, the entry of the son, daughter or grandchild into the family office is a structured path: degree in finance or business administration, two to three years in an investment bank or in a third-party fund, entry into the FO with an entry-level role, accompanied senior advisory development path. It is an explicit curriculum.
In Italy the path is more often implicit: the new generation enters without a defined role, without an explicit learning curve, without authority to dissent from the historic advisors of the family. The result is opaque family governance where strategic error is never identified because nobody has the authority and competence to question it. When the person is missing, the way out is to assign the function: make the counter-scenario nobody has an interest in writing a mandatory step of the resolution. This is the cognitive contradictor applied to family governance.
Dysfunction 3 — Advisory diluted across too many providers
A mature family office concentrates the strategic relationship with a limited number of high-level advisors: a lead for investment policy, one for international taxation, one for governance, one for generational transition. Four deep, continuous relationships, where the advisor knows the history, the family equilibria, the hidden sensitivities.
The prevailing Italian model is the opposite: a dilution of consultants — the historic accountant, the trusted lawyer, the private banker, the friend who makes investments, the consultant the accountant recommends. Six, eight, ten low-level relationships where nobody has the overall view and nobody is incentivised to raise the alarm when wealth strategy disconnects from business strategy.
The cost is twofold: one pays more (fragmented fees are always more expensive than the retainer of a trusted advisor) and one decides worse (the absence of synthesis produces random decisions, dependent on the relationship of the moment).
Dysfunction 4 — Wealth and business remain fused
The fourth dysfunction, and the most expensive, is the operational fusion between family wealth and originating business. The company’s cash finances personal family expenses. The company guarantees loans the family uses for real estate investments. Family members receive compensation not aligned with the market value of their managerial contribution.
This fusion is structurally dangerous for three reasons.
- When an industrial crisis arrives, the family has no reserves truly separated from the business. Risk concentration is total.
- When an acquisition offer arrives, family management cannot distinguish between the economic value of the business and the identity role of the family, producing emotional, non-rational sale decisions.
- When the generational transition arrives, the absence of operational boundaries between wealth and business makes impossible the separation between heirs who want to enter the business and heirs who would prefer liquidity.
What characterises a mature family office
FO structures that function well — Italian or foreign — share five characteristics:
- Investment Policy Statement (IPS) written, updated annually, binding even on the head of the family’s decisions
- Investment committee with at least one independent member external to the family and endowed with real veto authority
- Quarterly reporting standardised with sector benchmarks — family wealth measured as a fund, not as a sum of promises
- Formal separation between business cash flow and family cash flow — withdrawal protocols, authorisation levels, internal or external audit
- Written generational transition plan with timing, milestones, criteria for evaluating successors’ competencies
None of these five characteristics is sophisticated. They are standard practices in Swiss, British, American FOs. In Italy they remain the exception.
Why the delay will be paid soon
Over the next decade, Italy will go through the largest generational transition of entrepreneurial wealth in its history. AIPB estimates that more than forty percent of heads of Italian mid-market family businesses are today older than sixty-five. The transition is not optional — it is demographic.
Family offices entering the transition with mature governance and formalised protocols will cross it preserving value. Those entering it in the current form — disguised family business holdings, diluted advisory, wealth-business fusion — will produce value destruction at scale. Not from bad faith of the protagonists. From absence of structure.
FAQ
What is the minimum wealth size to justify a single family office?
International benchmarks place the minimum threshold between EUR 250 and 500 million for an SFO with a dedicated team of three to five people. Below EUR 100-150 million, the multi-family office is structurally more efficient. Between EUR 150 and 250 million, the choice depends on complexity — number of family branches, active generation, presence of still-controlled operating stakes.
Who should sit on the family office investment committee?
Best practice provides three types: family representatives (head of family + one per branch), CIO or lead advisor, and at least one external independent member — typically a senior manager with asset management experience, a former investment banker, or a finance academic. The independent has no commercial incentive and has authority to raise unwelcome objections.
How much does a family office cost?
The costs of a mature SFO range between 75 and 150 basis points of managed wealth, depending on structure complexity and geography. A multi-family office costs between 25 and 75 basis points per family, depending on client size. It should always be compared against the hidden cost of fragmented advisory, generally higher — and less effective.
Why is a written investment policy statement needed?
The written IPS formalises return objectives, risk limits, strategic allocation per asset class, liquidity constraints, manager selection criteria, rebalancing frequency. It is the instrument that protects wealth from emotional decisions during market crises (selling at lows, buying at highs) and during generational conflicts (favouring one heir over others).
What to do in the next six months
A minimum maturation path for an Italian family office unfolds in five sequential steps:
- Independent audit of current governance — who decides what, with what formalised delegations, with what reporting frequency
- Mapping of consolidated wealth — including illiquid stakes, real estate, art, insurance policies, family debts
- Definition of target model (SFO, MFO, evolved family business holding) based on size, complexity, active generation
- Drafting of the Investment Policy Statement shared with all adult family members
- Implementation of the investment committee with at least one external independent member
To go deeper
To discuss a specific scenario, book a confidential preliminary conversation.
