The Role of a Private Office vs. a Family Office vs. a Private Bank

The private bank

A private bank is a financial institution that provides custody, transaction execution, lending and investment products to individuals who meet its minimum relationship thresholds. The bank holds the client's assets, executes instructions against those assets and, in most cases, charges fees proportionate to the assets under management or custody.

The relationship manager assigned to a private banking client serves a dual function: maintaining the client relationship and representing the bank's commercial interests. This is not a criticism — it is the structural reality of any institution that both custodies assets and earns revenue from them. The relationship manager's compensation, career progression and institutional incentives are aligned with the bank, not with the client.

Private banks provide essential infrastructure. Without a custodian, assets have no institutional home. Without a transaction platform, capital cannot be deployed. The question is not whether a client needs a private bank — nearly all do — but whether the bank should also serve as the client's primary coordinator and advisor.

In the experience of most practitioners, the answer is no. The bank's mandate is to serve the client within the boundaries of its own product set and jurisdictional licence. It has no visibility into the client's legal structures managed by external counsel, no mandate to coordinate with an accountant in another jurisdiction, and no structural incentive to recommend that the client move assets to a competitor institution — even when doing so would serve the client's interest.

The family office

A family office is an operating entity — typically a company or a dedicated team within a holding structure — that manages the day-to-day financial, administrative and sometimes personal affairs of a single family (a single family office, or SFO) or multiple families (a multi-family office, or MFO).

The single family office is the most comprehensive model. It employs staff directly: a chief investment officer, accountants, legal counsel, administrative assistants, sometimes property managers and personal staff. It may hold a discretionary investment mandate, manage real estate, oversee philanthropy and handle family governance. The SFO is, in effect, the family's own institution.

The cost of a well-run SFO typically begins at several hundred thousand euros per year in operating expenses — before investment management fees — and can exceed several million for complex, multi-jurisdictional families. This cost is justified when the family's wealth, complexity and operational demands are sufficient to warrant a dedicated institutional capability.

The multi-family office shares infrastructure across several families, reducing per-family cost. However, the MFO model introduces a structural tension: the office serves multiple principals with potentially divergent interests, and its revenue often depends on assets under management or administration — reintroducing the same incentive misalignment that characterises the private bank model.

Both SFO and MFO structures are appropriate for families whose operational complexity requires dedicated, ongoing institutional capacity. For families whose needs are primarily coordinative — bringing together existing advisors rather than replacing them — the family office model may introduce more infrastructure than the situation requires.

The private office

A private office is an independent coordination practice that sits between the client and the client's network of institutions and advisors. It does not hold assets, does not manage investments, does not provide legal or tax advice, and does not accept commissions or referral fees from any institution.

The private office is retained directly by the client — typically on a fixed-fee or retainer basis — and its sole function is to coordinate the work of the client's existing advisors, prepare documentation required by institutions, and manage the administrative processes that arise when wealth spans multiple banks, jurisdictions and professional relationships.

This model is distinguished by what it does not do. It does not custody assets, so it has no AUM-based revenue. It does not distribute products, so it has no placement incentive. It does not provide legal advice, so it does not compete with the client's lawyers. It does not manage investments, so it does not compete with the client's bank.

The private office model exists because modern wealth creates a coordination problem that none of the client's existing institutions are mandated — or structurally incentivised — to solve. The bank coordinates within its own platform. The lawyer coordinates within the scope of a legal mandate. The accountant coordinates within the scope of a reporting engagement. No one coordinates across all of them — unless someone is specifically retained to do so.

Where the models overlap — and where they diverge

All three models touch the same client, the same assets and, often, the same documents. A Source of Wealth file may be prepared by the private office, reviewed by the lawyer, and submitted to the private bank. A governance framework may be designed by the family office, documented by external counsel, and referenced in the bank's compliance file.

The overlap is operational. The divergence is structural.

A private bank earns revenue from the assets it custodies and the products it distributes. A family office earns revenue from the administrative and investment services it provides — often with an AUM component. A private office earns revenue from defined coordination work, with no asset-linked fee.

This difference in revenue model produces a difference in structural incentive. The private bank benefits when assets remain on its platform. The family office benefits when its scope of service expands. The private office benefits only when the defined work is performed to a standard that justifies continued engagement. There is no structural incentive to expand scope, increase complexity or retain assets in any particular location.

How to determine which model fits

The choice between these models is not exclusive. Most clients of significant wealth will maintain a private banking relationship — that is the custodial and transactional foundation. The question is what sits between the client and the bank.

A client whose wealth is concentrated in a single jurisdiction, managed by a small number of advisors, and whose administrative complexity is low may need no intermediary at all. The bank, the lawyer and the accountant may coordinate adequately among themselves.

A client whose wealth spans multiple jurisdictions, involves several banking relationships, requires ongoing compliance documentation and generates continuous administrative demands may benefit from a family office — particularly if the scale of wealth justifies the operating cost of dedicated staff.

A client whose primary need is coordination — bringing together existing advisors, managing documentation flows, preparing for banking onboarding, ensuring regulatory compliance across structures — may find that a private office delivers the required function without the overhead of a full family office and without the structural conflicts inherent in the banking model.

The decision often comes down to a practical question: does the client need an institution, or does the client need a coordinator? If the answer is an institution — with investment management, dedicated staff and operational infrastructure — the family office is appropriate. If the answer is coordination — structured integration of existing advisory relationships — the private office is the more precise instrument.

The case for combining models

The most effective structures often combine elements of all three. The private bank provides custody and product access. The family office — or elements of it — provides operational infrastructure where needed. The private office provides neutral coordination across the entire structure.

In this configuration, the private office functions as the client's single point of oversight: the entity that sees across all institutions, all jurisdictions and all advisory relationships, and whose mandate is to ensure that the structure as a whole serves the client's interest — not the interest of any individual institution within it.

This is not a hierarchy of superiority. Each model serves a distinct function. The private bank is essential. The family office, where warranted, is invaluable. The private office addresses a specific gap — the coordination function — that the other models are not designed to fill.