Under the new provision every US single-family office must choose between registration with the SEC and reorganization in ways that change how the family office has operated and the benefits the office can offer to family members.

According to the estimates of the Family Wealth Alliance LLC, a research and consulting firm in Wheaton, Illinois, there are about 3,000 single-family offices in North America managing US$1.2 trillion. About 150 multi-family offices oversee an additional US$450 billion.

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Both types of firms generally provide investment management and financial planning for their clients and neither registration nor technical modifications to operating procedures and documents will solve the issues fundamental to the family’s well-being.

Under the Dodd-Frank reform, offices with fewer than 15 clients are no longer exempted from exclusion and the SEC was asked to redefine family offices that should be excluded from regulation as investment advisors.

In June the agency approved a rule whereby offices that meet the three general conditions, such as owned and controlled by family members, no public advertisement as advisors and providing investment advice only to family clients who are generally linked by a common ancestor.

If single-family offices agree to this definition they will have to do away with their non-family investors.

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The other rule that will lead to single family-offices in loosing their businesses to the so-called outsourced chief investment officer is that the registered advisors will have to maintain bookkeeping requirements and will have to agree on certain disclosures to clients about fees and conflicts of interest, and must act as fiduciaries, or in the best interests of the investors they serve.