Affluent families who face complexity in their financial lives will find that an integrated family office delivers real peace of mind. Simply put, a family office approach reduces complexity by coordinating key family advisors, integrating disparate financial interests and aligning stakeholders to support critical family decisions. The result is that affluent families can focus on being a family instead of worrying about how their wealth is managed.

But what exactly is a family office? The phrase “office” can have more than one meaning. Office can mean a set of rooms or a building where business is conducted. By this definition, a family office is simply the building where the business of your family is conducted.

There is another definition of “office” that we like much better: a position of duty, trust, or authority, such as the office of the president. By this definition, a family office is an extension of your family and is accorded the duty and trust to act as your fiduciary. How can a family office benefit your family? Here are our perspectives. 

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"I enjoy creating solutions that streamline and simplify wealth management for high-net-worth families."
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"I enjoy serving multi-generational families because I value trust and discretion. They often have very complex financial lives and multi-generational stakeholders who see things in different ways. I find satisfaction in leading a team of advisors in a united effort to serve these families exceptionally well."


Quarterbacking Complexity in Four Areas

Winning teams have great leaders. We’d like to borrow a metaphor from the sports world. You are the general manager of your family team, but the family office serves as your quarterback on the field, actually executing plays and helping the team rise to the occasion.

A family office serves as your quarterback by advising your family, managing your professional advisors and ensuring your decisions are fully implemented. The family office is responsible for watching over your wealth and for being in continual communication with you. What does a family office actually do?

In a previous article, Bob Legan identified four key areas where affluent families face complexity.

  • Advisors
  • Financial interests
  • Stakeholders 
  • Critical decisions

We believe an effective family office team will take responsibility to manage complexity in these four areas and do so in a way that reduces your anxiety and increases your confidence. We believe these four focus areas are the best solution to managing a complex financial situation:

  • Family Wealth Planning and Advisor Coordination
  • Investment Advisory Services
  • Consolidated Reporting and Family Dashboard
  • Transition Consulting and Generational Governance

Let’s explore how a family office approach can bring you peace of mind in these four areas. 


Family Wealth Planning and Advisor Coordination

An effective family office team will, first and foremost, develop a deep understanding of your family situation. To accomplish this, a family office team will likely:

  • Develop a detailed map of the existing structure of your family enterprise.
  • Get to know your outside advisors and their role in serving your family. 
  • Gain a deep understanding of both the short and long term goals for your family’s wealth.

This may result in a mission statement to serve as the guiding principle of the relationship.

A complex family enterprise may include multiple trusts that have been established for estate planning purposes and multiple accounts for each trust. These accounts might be managed by different financial advisors for various reasons. The enterprise may also have multiple family partnerships that have been established to hold assets that are owned across multiple trusts and family members. An effective family office team will take responsibility to understand the structure of the enterprise and develop a financial plan based on your family’s goals.

We often find that families have multiple advisors, each an expert in their own domain: CPA, Estate Attorney, Company CFO, Insurance Specialist and Investment Advisors. Oftentimes, the family leader has developed relationships with these advisors over the years and will reach out to them to address issues related to their particular domain of expertise.

While each advisor may be an expert in their field, it is essential to coordinate advice across the advisory team to achieve the best outcomes for the family. For example, if a family is considering a new investment opportunity, it is imperative for the family to understand not only the investment characteristics but also the income and estate tax implications.

A family office team serves as the quarterback for all of your professional advisors. A family office leader will spend the time with you and your family to deeply understand what matters to you and what you want your wealth to accomplish for your family. The family office leader will unite your advisors around a common vision and overarching strategy.

You realize several benefits from this approach. You can be assured that your values and goals are understood and communicated to all advisors. You can be confident that your advisors will make decisions that are in line with your goals across their individual disciplines. You’ll also begin to take advantage of opportunities that arise when your team of advisors collaborate and share ideas. 


Investment Advisory Services

An effective family office team ensures your wealth is achieving your goals and prepares your wealth to pass to heirs and causes you believe in. This requires not just a detailed understanding of your family’s current assets, but a thorough understanding of your goals, dreams, and risk tolerance.

To achieve this understanding, an effective family office team will utilize a thorough and comprehensive consultative process. This will lead to a big-picture understanding of your goals that can be translated into an investment policy framework. The family office leader can then share this big picture with all of your investment advisors and analyze how closely your existing investments match up to your stated goals.

We often find that when a family’s financial interests are managed across multiple investment advisors, it is difficult for the family to understand their overall asset allocation. A family office quarterback can oversee the entire wealth management and investment process, ensuring that the investment policy framework is adhered to.

Moreover, an effective family office takes into account all of the generations of your family. Depending on how much wealth is involved, it often makes sense to develop and implement a customized wealth management and investment plan for each generation. 


Consolidated Reporting and Family Dashboard

Families with substantial wealth face a major challenge. It is often very difficult to get their arms around the health and status of everything the family owns, or what we call the family enterprise. It’s also challenging to know if every facet of their wealth is moving in the right direction. This is why family enterprise reporting is crucial.

Cutting-edge family office teams can provide comprehensive consolidated reporting, including an easy-to-understand family dashboard. A dashboard can provide a high-level overview of everything a family owns and can include drill-down reports on specific items. For instance, a real estate tab in a dashboard can show you all the properties a family enterprise owns.

The value of a dashboard is that it gives family members a concise overview of the family enterprise and allows for more specific inquiries about assets or cash flows that deserve a closer look. Another value of a dashboard is transparency and ongoing communication with respect to the assets of the family enterprise.

Consolidated reporting and dashboards can be customized to give different family members at different generational levels the information they need and are authorized to see. If younger family members are kept in the loop until they are in charge, it’s much more likely that they will continue with the family’s successful long-term investment practices and disciplines.

Bottom line: whether you are the head of a family, a member of a second or subsequent generation, or a professional advisor serving the family, you cannot make optimal decisions unless you clearly see the big picture. And you can’t clearly see the big picture unless someone has quite consciously and deliberately put the big picture together in an easy to understand format. This is what a family office can do for you. 


Transition Consulting and Generational Governance

Eventually, all families with some measure of wealth face significant transitions and life events. These might include selling a business or transferring it to the next generation. It might include the passing of a loved one or the expansion of the family by birth and marriage. As these transitions take place, there are numerous opportunities to prevent potential misunderstandings with proper communication to all stakeholders.

Transition consulting and generational governance can address these issues and help a family remain united and healthy even in difficult times. A crucial component of family governance is the development of a family enterprise mission statement and possibly a family constitution.

An effective family office will help you develop both a mission statement and family constitution by way of a consultative process. The process will take into account the family stories, usually the stories of the first-generation wealth creator and the values, work ethic and tolerance to risk that gave rise to the wealth.

One of the greatest concerns of family leaders, especially if they are the wealth creators, is that the generations who follow them will not understand or respect what it took to create wealth. The elders fear that their wealth will dissipate in just a couple of generations. They are often very well aware of the saying – shirt sleeves to shirt sleeves in four generations. This is where a family mission statement and constitution can greatly reduce anxiety and ensure that the generations who follow practice good stewardship of the wealth.

Regular family meetings are also important to promoting family unity and stewardship. These meetings serve to educate and mentor younger generations. When paired with reviews of the family dashboard, these meetings are great opportunities for big picture discussions of family succession, wealth inheritance and the potential sale or other disposition of the family’s business holdings and investments.

Regular family meetings make these transitions much easier to navigate. Moreover, when it comes to making important family-related decisions, by keeping second and subsequent generation members well informed—and better yet, by inviting their active participation—you greatly reduce the likelihood for resentful feelings.

Great coaches say “you play the way you practice.” This is also true in long-term family governance. A wealthy multi-generational family that practices transparency and holds regular respectful family discussions on important topics is likely to be much happier and healthier in the long-run.


The Ultimate Benefit

The ultimate benefit of a family office is that you and all your family members will have a clear picture of the family enterprise and know that you have a strong team and a scalable infrastructure that provides useful information to all family members and advisors.

An effective family office helps unite a family through defining a family mission. A family office relieves the burden and pressure of managing a group of professional advisors who do not typically interact on a regular basis. A formal investment policy framework ensures that family wealth is appropriately diversified and aligns with family goals. A family enterprise dashboard provides big-picture views and transparent management that invites younger generations to step into leadership roles.

We believe that a well-managed family enterprise results in higher quality family time. Family events and get-togethers—from graduations and weddings to holiday celebrations and even funerals—are where family members connect most deeply, have an opportunity to express their love and affection, and enjoy each other’s company, stories, and experiences as only family members can do.

When your wealth is well-managed through a family office, it becomes a source of joy, blessing and freedom. We believe you deserve the rewards of your wealth and it would be an honor to serve as your family office.


The information contained in this article is provided for informational purposes only. No illustration or content in it should be construed as a substitute for informed professional tax, legal, and/or financial advice.