Best practices for developing a sustainable office that supports the family and their legacy
Many family offices are established to tactically address a specific need at a particular moment in time. However, this approach can be problematic to the long-term health of the office. Ensuring the office can meet the needs of multiple generations requires a strategic vision and a supporting mission that are collaboratively created and agreed upon.
The vision can be thought of as the “purpose” of the office and serve as the “North Star” for all family members and office staff. The mission on the other hand typically outlines the various services the family office will provide and may include:
- investment management
- overseeing specialized financial, estate, and tax planning
- accounting and bill pay
- concierge services
- coordination of family meetings and communication
- tax and oversight of legal services
- technology management
- real estate management
- insurance (property, casualty, liability, life) selection and maintenance
- managing assets like art, aircraft, watercraft, wine, and other collectibles
- philanthropy.
At its core, the purpose of a family office is to protect and maintain a family’s financial legacy, while supporting various other objectives, priorities, and multigenerational needs. To do this successfully, it is important to be clear on the office’s vision and mission.
Want your office to thrive? Be wary of some common practices that can limit potential from the start
- Offices seldom capture a family’s unifying sense of purpose or their vision. Many families identify tangible needs much earlier than their intangible needs or struggle to articulate qualitative capital goals that could make a transformative impact.
- Office startups can lack diversity in thought and find safety in replicating the norm. Professionals who have never started an office (and who typically come from risk-averse professions) sometimes follow the lead of peers who look, sound, and think like them.
- Offices are largely created by technical specialists (and when you’re a hammer, everything looks like a nail). Professionals, to whom most families will defer, naturally lean on their expertise, viewing priorities and decision-making through the lens of what they know best and what they assume the family wants. Families rarely hire professionals with deep understanding of family systems or who are dedicated to a family thriving. As a result, financial wealth dominates the discourse and culture.
- Office startups can be shaped by unproductive or unhealthy narratives. Family offices are most often approached as a cost-center rather than an investment in a family or individual. Family offices are structured around generational hierarchy where the few at the top make decisions for the many at the bottom.
- Professionals are not members of the family office family. Professionals creating offices to serve multiple family members rarely know those family members and don’t know if it is healthy for them to stay connected through an office. Professionals tend to start building in “doer mode” rather than “strategic-thinker mode.”
- Family members are not family office professionals. Very few family members come to the table familiar with diverse family office models and, when they do, it is typically a small, idiosyncratic data set from a few peers. Decisions around keeping family members connected are rarely co-created by those family members.
Establishing vision and mission
Starting a family office can be an opportunity to create a relevant, lasting structure that supports the family’s legacy.
When starting a family office or reflecting upon an existing office, families should pause, bring in various stakeholders (generational family members, office executives, and the like) and ask: What is the long-term vision of the office? Laying a strong foundation for the family office, where all parties are aligned, will help the family cultivate their intended legacy and create a healthy, long-lasting structure.
Each family member and office executive should be able to sing from the same songbook when it comes to the “why” around the creation of the office. That mutual agreement will help ensure alignment for future decisions.
Of course, the vision may evolve over time, which is to be expected and encouraged. An organic and responsive family office fosters growth and reflects the family’s evolving needs. Families and their offices need to revisit regularly the “why,” “what,” and “how” regarding both vision and mission. Why do we exist? What has changed? How do we deliver on our evolved vision? In our experience working with countless families, healthy family offices create an inclusive environment and frequently revisit vision and mission.
Equipped with a unified mission that can adapt to change, families will ensure the long-term success, viability, and relevancy of their office. Relevancy—the real and perceived sense of connection between a family and its family office—is the key to unlocking the potential and sustainability of a family office.
A strategically formed family office can benefit the family in several ways, including:
- Keeping the family safe. Complying with security protocols to move assets, planning for family emergencies, or maintaining cybersecurity is easier when family members are in alignment.
- Fostering continuity. Families evolve, sometimes in disruptive ways, which can cause disruption if the office is not set up to handle change. A strategically oriented office will be better positioned to navigate transition and protect the family.
- Helping the family thrive beyond financial capital. When family members feel a connection to their executives, those executives are better positioned to support and facilitate the nonfinancial success of individual members as well as the entire family.
- Recognizing impact on the broader world. The world’s wealthiest families have oversized impact, which can be a positive or a negative for society and the planet. Family members and family systems that are self-aware understand how their decisions may affect others and will act accordingly to make a positive impact.
Family offices should revisit their vision and mission once a year and answer these three questions:
- Why do we exist?
- What has changed?
- How do we deliver on our evolved vision?
Use a strategic process for creating or evolving an office
The best process to build a strong foundation depends on the life stage of the office, natural inflection points such as leadership or generational transitions, the appetite of the family to embark on a process, and the bandwidth of office professionals.
Some families use targeted conversations during family meetings while some hire consultants to interview family members. Others hire visionary executives with high emotional intelligence or dedicated learning and development professionals. And naturally, some families make space for such conversations around the dinner table or in the car.
There is no one-size-fits-all approach, but all families should go through some type of assessment with their advisors, with the goal of defining the office objectives. This should be done once a year.
Here are the core components of a process a family office can embark on to help position itself for success, today and in the future:
1. Outline the mission and vision of the office
Define the family’s wants and needs and the office’s purpose (and memorialize it in formal declarations of vision). Answer the following questions:
- Why do we have an office?
- What does our office do for us?
2. Prioritize today’s wants and needs
- Actual services required
- Estimated costs of those services
- Internal operational/managerial controls
- Oversight and governance
- Privacy
3. Commit to the idea that today’s wants, needs, and processes should be subject to a periodic review process by which the stakeholders (family, governors, and management) collectively revisit, refine, and/or re-affirm the mission, vision, services, costs, and controls.
Creating a family office that delivers on the vision of the family
Families that have either created or established a family office have an opportunity to do more than just address today’s tactical problems. They can lay the foundation for an organization that will support the family and its legacy for generations to come. To do so requires a commitment to a process and a continual review of fundamental decisions on
a regular basis. We realize that each office is unique. There is no one-size-fits-all solution. We hope that executives and family members take a moment for pause, reflect on their respective offices, and adopt a process that’s right for them to create a more relevant office that delivers on the true vision of the family.
Interested in learning more?
Visit our family office landing page to access our latest conversation guide, Questions to Ask to Help Formulate Your Office’s Mission and Vision, along with additional family office insights.
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