“More families are asking ‘Do we need a family office?’ and if the answer is yes, they’re asking ‘How can we be smarter?’” said Kathryn McCarthy, a prominent Manhattan-based advisor to wealthy families.

“We’re getting a lot of those questions,” said Karen Neal, a managing director for Family Office Exchange in Chicago. “We’re hearing a lot more questions about what other families are doing and what should we be doing?”

“Families are trying to figure out whether to outsource or cut down,” added Philip Strassler, a founding partner with Greenwich, Ct.-based SFO Advisor Select, a newly formed third-party provider to wealthy families. “There’s an enormous amount of demand in that area. These are very hard decisions to make because there so many choices.”

The soul-searching is being driven by both the financial crisis and generational change, industry professionals say.

“More families are coming to a transition point sooner than they thought because of market events,” said Ms. Neal.

“Generation 2 does not always want the same structure that was set up by Generation 1,” according to Ms. McCarthy. “That’s when you see change.”

Not surprisingly, families are taking a particularly hard look at their cost structures and risk exposure.
“We’re getting requests for benchmarking data as families are taking a look at their costs and what it takes sustain an office,” Ms. Neal said.

“They want better options on the investment side,” Ms. McCarthy said. “If they have an internal chief investment officer they’re looking outside, and if they’re outsourcing the investments they’re asking if they should have somebody inside.”