Family Office

A best-of-breed Family Office is often integral to the successful transition of wealth from one generation to the next.

We advise families in the creation of a Family Office, tailored specifically for their needs. This includes establishing the most effective structural, investment, reporting and benchmarking processes.

Where a Family Office already exists, our role is focused on ensuring the next generation are educated and engaged in working effectively with their key advisors to protect and promote the family’s interests.

Successfully building a best-of-breed Family Office is a complex, constantly evolving exercise.

More than any other structure, the Family Office must be engineered to serve the precise needs of each individual family.

The accompanying model is an illustrative example which highlights the three key functions a Family Office might focus on: Human Capital, Investment and Family Business.

Click on the sections in the diagram to learn more.

Governance Management CEO Business Board of Directors Shareholder Board Business Protocol CIO, CFO, Analysts Investment Policy Investment Committee G2/G3 Transition Tax and Legal Planning Family Administration Family Assembly Family Board Human Capital Family Investments Business Governance
Governance Management CEO Business Boardof Directors ShareholderBoard BusinessProtocol CIO, CFO,Analysts InvestmentPolicy Investment Committee G2/G3Transition Tax and Legal Planning Family Administration FamilyAssembly Family Board Human Capital Family Investments Business Governance

Family Board

  • Regular professional meeting of key family decision-makers
  • Oversees all aspects of the family's affairs
  • Formal, executive decision-making body

Family Assembly

  • Meeting of all family members
  • Typically includes spouses, cousins and young adult family members
  • Opportunity to keep updated on family news
  • Updates given by family executives and professional managers
  • Opportunity to discuss "softer" issues such as Philanthropy and Education

Family Administration

  • Family administrative and support services
  • Accounting, tax filing and other financial affairs
  • Concierge and organisational services

G2/G3 Transition

  • Educating the next generation to prepare for transition
  • Creating a cross-generational transition team with G1
  • Defining roles and responsibilities
  • Managing conflict and expectations
  • Creating rules for spouses, cousins and grandchildren

Investment Committee

  • A team of external, expert investment advisors
  • Includes family members
  • Oversees audit, reporting, benchmarking, performance management
  • Gives expert, independent guidance to CIO
  • Ensures the Investment Policy is adhered to by CIO

Investment Policy

  • The Family’s stated Investment Target and Performance Goal
  • Clear description of the Family’s Risk Parameters to ensure risks are:
  • Accurately Identified
  • Intended
  • Communicated
  • Understood

CIO, CFO, Analysts

The Investment Office often consists of a CIO, CFO and a team of analysts who:

  • Identify and recommend investments in multiple asset classes
  • Assess individual managers and negotiate best terms
  • Ensure Counterparty Risk limits are managed
  • Implement effective cashflow controls and keep accurate records

Business Protocol

Formal agreement on:

  • The family’s involvement in the business
  • Rules around share ownership
  • Dividends and voting control
  • Board membership
  • Rules for when and how to employ non-family members

Shareholder Board

An Educational forum to mentor and advise Shareholders on:

  • Successful interactions with Executive Board
  • Long-Term Corporate Strategy
  • Understanding key Board documents
  • Shareholder roles and responsibilities
  • Executive Remuneration
  • Dividend Policy

The Human Capital level is where the family organize themselves to focus on a cross-generational, long-term goal for the family’s wealth. Throughout this website, there are a number of approaches which detail how this can be successfully achieved.

From a structural perspective, a family will usually organize itself with a Family Council, perhaps a Family Assembly and a range of other groups to manage a family’s Philanthropic or Next Generation goals.

Please note: none of these structural solutions are of any use unless a family first agrees on its Family Wealth Mission and resolves any interpersonal conflicts which are currently present or which might arise upon the death of a patriarch or matriarch.

Included in the Family Administration section are the often complex, multi-jurisdicational tax, legal and inheritance planning processes to ensure the greatest quantum of the family’s wealth is passed onto the next generation.

 

The “Family Investments” level is where the family establish a best-practice structure to deliver their investment objectives. This will include effective audit, management, benchmarking and reporting of a family’s investments. Typically, family wealth is best protected by an independent Board of experts in the form of an Investment Committee, who ensure that a family’s investment objectives are clearly defined and faithfully adhered to in execution by the CIO and their team.

 

The “Business Governance” section is designed to professionally run a family-owned enterprise. One of the great challenges many families face is that the wealth creator (often the father) is the majority Shareholder, Founder, CEO, Chief Strategist and key decision-maker tied into one. This strangely unique and yet common dynamic makes an orderly, well-structured and effective transition from one generation to the next particularly challenging. For this reason, we tend to focus initially on two structures to aid the transition; the Business Protocol and Shareholders’ Board.

The role of the Business Protocol is to formally establish the policies and procedures that a family uses to manage its interests in the family business.

The purpose of Shareholder Board (as distinct from the operational Executive Board) is to provide long-term expert and authoritative guidance to family members on the running of the business and the roles and responsibilities of shareholders.