<p>For a number of reasons, some hedge funds are returning investor monies and choosing to operate as a&nbsp;<a href="http://www.forbes.com/sites/russalanprince/2013/05/22/what-is-a-family-office/#41ee245a1038" target="_self">family office</a>. A closer examination of these transitions shows they progress from hedge fund to private investment company to multi-service family office.</p> <p>When hedge funds become family offices, except in a few cases, they are actually converting to a private investment company as money management is their only intent. The reason they are referred to as family offices is a legal one. This way they can run their own monies without the oversight of the SEC. They are not family offices defined as entities that cater to a range of financial and lifestyle needs of a wealthy family.</p> <p>According to&nbsp;<a href="http://ffollc.com/">Rick Flynn, managing partner of FFO Business Management &amp; Family Office</a>&nbsp;and author of&nbsp;<a href="http://www.fa-mag.com/book--high-functioning-single-family-office">The High-Function Single-Family Office</a>, &ldquo;We&rsquo;re periodically approached by hedge fund general partners about converting their funds to a family office. What they&rsquo;re most interested in is addressing the mechanics of setting up a private investment company. After establishing their private investment companies, a percentage of these firms choose to add on other services and products. Very often, broader administrative expertise as well as&nbsp;<a href="http://www.forbes.com/sites/russalanprince/2015/09/08/what-is-advanced-planning/#181e5cd19ff0" target="_self">advanced planning</a>&nbsp;capabilities, such as&nbsp;<a href="http://www.forbes.com/sites/russalanprince/2013/11/04/what-is-estate-planning/#36f24bc57ee8" target="_self">estate planning</a>&nbsp;and asset protection planning, is added. The two types of lifestyle services that are most quickly incorporated are&nbsp;<a href="http://www.forbes.com/sites/russalanprince/2013/05/30/what-is-concierge-healthcare/#3af07c40492b" target="_self">concierge healthcare</a>and&nbsp;<a href="http://www.forbes.com/sites/russalanprince/2015/01/06/teaching-the-wealthy-to-literally-fight-back/#2cc13405f23c" target="_self">personal/family security expertise</a>.&rdquo;</p>