SEC Proposes Rule to Define 'Family Office'

"Family offices" are entities established by wealthy families to manage their wealth, plan for their families' financial future, and provide other services to family members. It is estimated that there are between 2,500 and 3,000 single family offices in the United States managing more than $1.2 trillion in assets. Generally, family offices meet the definition of "investment adviser" under the Investment Advisers Act of 1940 (the Advisers Act) because, among other things, they are in the business of providing advice about securities for compensation. However, family offices usually either take advantage of the private adviser exemption found in Section 203(b) of the Advisers Act¹ or request an exemptive order from the U.S. Securities and Exchange Commission (the SEC) declaring the office not to be an investment adviser.