My Journey to Finding the Right Multi Family Office for $35 million – What AUM Fees Should I Expect?

If you’re a member of the FIRE (financial independence, retire early) community, the hope is that you have put enough away to retire earlier than the traditional 65 or 67 years of age. However, if you’re a member of the fat FIRE community, the hope is that you have millions of dollars ready for a comfy retirement well ahead of this age. 

This is the case with one Redditor posting in r/fatFIRE, who is ready to walk away from work as they think about what to do with approximately $35 million. As this Redditor looks at where to “park” their money at a family office, they want to know what kind of AUM range they are in. 

Aside from my hopes of having $35 million of my own money one day, this is a critical question, as AUM or “assets under management” fees can be hefty if you don’t shop around correctly. 

The Situation 

This Redditor is looking to take around $35 million out of their asset pool and “park” it with a Multifamily Office provider. They also interviewed private banks to understand the marketplace for managing high-net-worth clients and compare their options. 

The hope is that an MFO works best as their total net worth is in the $50 million range. Having taken the reins and built up this net independently worth, the original poster is ready to pass over control of their assets to someone else. 

In addition, the original poster believes that the “common man” investment advice they have learned and helped build them to this point is “useless” now. While this creates a firestorm in this thread’s comments, the Redditor rightfully knows they are in a different financial world at this point. 

Of course, the big question is what it will cost them to put $35 million in assets under management for an MFO. They have seen up to 0.8% or 80 basis points, which they (rightfully) believe is a little outrageous. The big question is asking what numbers are reasonable and practical without feeling like they are being hosed. 

The Fee Structure

Interestingly enough, this is one more Reddit thread where most comments agree on what the AUM fees should look like. The challenge is that not everyone here believes going with a private bank or a multi-family office is the right move, but more on this later. 

For those who belong to an MFO in this thread, the easy answer to this Redditor’s question as to what others are paying is anywhere between 30 and 50 basis points, or 0.30% to 0.50% in AUM fees. There is near-universal agreement that the 0.80% fee the original poster has already been quoted is far too high, and they shouldn’t even consider doing business with such a place. 

One Redditor even chimes in that they have a net worth of around $60 million and recently received a quote from Schwab that offered 0.23% in annual fees. They would be looking to park around $20 to $30 million at Schwab, so it’s not so far off that the Redditor could expect something similar. 

The challenge is that Schwab might not create a detailed plan as detailed as an MFO office that digs deeper into your portfolio and looks to create something that generates the exact return the Redditor is both looking and hoping for. 

Another caveat that some of the responses in this post give is that the basis points should include everyone looking at the account. This would include a financial advisor, record keeper, investment manager, etc. Anyone who might touch the account should be included in the initial basis point quote, so there are no surprises down the line.

Alternative Options

As this is Reddit and you have a whole lot of diverse opinions in the fat FIRE section, there are also those individuals who believe going with a family office is not necessary. Some recommend buying low-cost index funds, which the original poster doesn’t necessarily disagree with. However, they also want someone to fawn over them a little to make them feel important. 

Ego lift aside, if the Redditor can’t find someone in the 30 to 50 basis point lineup, continuing to manage their portfolio themselves might be the best option. Judging by what other Redditors in this thread contributed, they should be able to find a family office that offers something in the range they are hoping for and should continue shopping around until they find such a place.