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The Secret to Setting Up a Family Office Correctly

What are the key considerations when structuring a family office? With the continuous creation of significant affluence, new worlds are unleashed for families of ultra-high worth. There are tremendous opportunities, as well as challenges, both new and existing, that are directly linked to the complexities that this type of affluence puts forward. 

Why You Might Consider Setting Up a Family Office

Setting up a family office today can be one of the most fundamental decisions concerning oversight and management of the financial affairs related to the family that can eliminate the restraints that come with complete reliance on financial establishments that traditionally provide these services. 

Important Considerations When Setting Up a Family Office

Notwithstanding investment fraud, business failures and closures, and cybercrime attacks in this day and age, many families are considering the move to adopt an institutional approach to risk management at the family level. However, this type of strategic approach requires information to help you conduct the careful planning and continuous analysis necessary. 

setting up family office

Staffing a Family Office

A starting point to help wealthy families build on their current understanding of how the family offices operate and what will make them successful starts here. 

Many family offices take roughly two to three years to establish and operationalize fully. A time-consuming key component includes talent acquisition and balancing the requests and needs of the families . Some families have ongoing concerns about investment management decisions which cut across the rest of the family, and setting up the family office will not be sufficient without this consideration. 

Drawing up a family tree is a good step, and this starts with the original wealth development individual. The importance of recognizing the generations that are involved in the wealth is essential knowledge for the family office advisors. Mind mapping is another strategic tool that can be incorporated into the family office. It links to the team that has been built, and defines the office’s success or failure. 

Developing a Structure

The family office is structured as the center for communications to and among family members. During events, such as family meetings, retreats, and the leadership of the family office may want to communicate its goals and outlook to younger generations. Although the family’s senior generation often institutionalizes the structuring of family offices, the modus operandi of this project requires effective governance that hinges on the in-depth guidance of experienced senior individuals that were influential in creating the wealth and delegation of the wealth management roles to upcoming generations. 

Upholding the strategy and vision the family has developed is impossible in the structuring process. The tactical decisions and execution are left to talent acquired as personnel and support from the designated advisors.  

Family Office Oversight

Oversighting activities are central to the modus operandi of the leading practice of structuring, which is the foundation of the board of directors that provides guidance. The composition of the board of directors must follow an imperative consideration. Thus, the board should comprise senior family members and outsiders, such as advisors with divergent opinions without vested interests. The systems and processes should have been developed within the first financial year and further ensure there is accountability to the responsibilities of the personnel and advisors. The growing concern attributed to succession and contingency planning of the wealth is considered an oversight by this impeccable team of board of advisors. In addition, the need for oversight of the comprehensive approach to safeguarding the long-term prospects of the family and family office—for instance, developing a plan and educating upcoming family generations on the tree and understanding what happens when the family patriarch or matriarch passes to avoid future conflicts.  

The Bottom Line

In conclusion, the consistent development of operational efficiency in the family office is coherent with the needs of the ultra-wealthy families that encounter ongoing operational challenges, whereby successful family offices and families need innovative approaches and recommendations to improve these processes. Whether it is a newly formed office or an existing one—and whether the board of executives has been in place for years or is newly selected— and stakeholders could benefit from the day-to-day activities which are measured by the Key Performance Indicators (KPIs) and efficient processes to ensure the family office, as it should be. Development of financial control through an investment portfolio and identification of ethics and governance policies on strategic approaches such as legal structures of investments, business, real estate holdings, and ethical obligations. The diverse advisory board of directors and investment committee establishes policies that oversee governance issues within the family office. Employing technological capabilities in the family office is key in transforming communication with the senior family, improving the operational efficiency, and security of the information.


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