Operations guide
Fee models in a multi family office
Updated: · Leutrim Miftaraj, FLIORE · Editorial standards · Other languages: Deutsch · Français · Español
Short answer
Multi family offices usually charge under one of four models: a percentage of assets, a fixed annual fee, an hourly rate or a combination. For families, the model matters less than full cost transparency: which services are included, what is charged in addition, and do commissions from banks or product providers flow to the family office? A clear service agreement with a catalogue of services prevents later disputes.
The four basic models
| Model | Calculation | Advantage | Disadvantage |
|---|---|---|---|
| Asset-based | Percentage of the assets under care per year | Scales with the wealth, simple | Effort and fee diverge |
| Flat fee | Fixed annual amount for defined services | Predictable for both sides | Additional work must be renegotiated |
| Hourly rate | Recorded time multiplied by the hourly rate | Reflects effort precisely | Hard to budget, incentive to spend time |
| Combination | Flat fee for core services plus hours for projects | Balanced | The boundary must be clear |
What belongs in the comparison
Families often compare percentages, although the services differ widely. An offer with a lower rate can turn out more expensive if reporting, tax coordination or foundation administration are charged separately. It makes sense to compare the expected total annual cost for a clearly described scope of services – including bank charges, custody costs and the product costs of the products the family office selects.
- Which services are included in the basic fee, and which are not?
- How is additional work shown and approved?
- Does the family office receive commissions, retrocessions or discounts from third parties?
- How often, and in what form, are invoices issued?
- How are fees adjusted when the wealth changes?
Retrocessions and third-party payments
Commissions from banks, funds or insurers can create conflicts of interest. In Switzerland, according to the case law of the Federal Supreme Court, retrocessions in principle belong to the client unless the client has waived them after full disclosure; the Financial Services Act also requires transparency about compensation from third parties. In Germany, section 70 of the Securities Trading Act governs the acceptance of inducements for investment services. Many multi family offices therefore forgo third-party payments altogether or pass them on in full.
Do not forget VAT
Fees for advice and administration are generally subject to VAT: in Switzerland at the standard rate of 8.1 per cent, in Germany 19 per cent and in Austria 20 per cent, unless an exemption applies and provided the place of supply is domestic. For families without input tax deduction, this is a real cost component and belongs in every comparison.
Organising billing cleanly
For the multi family office itself, billing is an operational process: calculating fees per family and structure, recording services and time, issuing invoices with the correct VAT and monitoring receipts. A transparent invoice with a description of services builds the family's trust more than any brochure.
In FLIORE
FLIORE issues invoices per mandate or to one-off recipients, with VAT adjustable per invoice, the Swiss QR-bill for CHF, recurring invoices and dunning. Time tracking provides the basis for hourly and combined models.
At a glance
| Models | Asset-based, flat fee, hourly rate, combination |
|---|---|
| Decisive for families | Total cost for a clearly described scope of services |
| Critical point | Retrocessions and third-party payments |
Terms on this page
- Multi family office
- A service provider that looks after the wealth and affairs of several unrelated families.
Frequently asked questions
Which fee model is most common?
Asset-based fees and flat fees are common, increasingly combined with hourly rates for projects such as succession planning. Reliable, publicly available market statistics for German-speaking Europe hardly exist.
Are performance-related fees usual?
Rather rare in a multi family office, because the family office often does not invest itself but selects and monitors asset managers. Performance-related components can set the wrong incentives and should be carefully limited.
How often should the fee be reviewed?
At least every two to three years, or when wealth or the scope of services changes significantly. An annual service report makes the discussion easier.
What belongs in the service agreement?
The catalogue of services, fee and billing cycle, handling of third-party payments, confidentiality, data protection, liability, termination and the return of documents when the agreement ends.
Sources
- Swiss Federal Supreme Court – case law on retrocessions (including BGE 132 III 460, BGE 138 III 755)
- Swiss Financial Services Act (FinSA/FIDLEG, SR 950.1), Art. 26 – Fedlex
- German Securities Trading Act (WpHG), section 70 – inducements
This page provides orientation and does not replace legal or tax advice. The cited legal sources in their applicable version are authoritative.
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