Back in September in From Family Business to Family Office, I finished up by noting that I’d be writing about the family office space more frequently going forward.
I diligently followed that up four weeks later with another post on the topic, Family Office: “WHAT” vs. “HOW. But that was more than two months ago, so this is slightly overdue.
Coincidentally, I just came across an article from a recent issue of The Economist on the subject, which I found interesting, called: How the 0.001% invest.
An Investment Vehicle
An important angle of that story is evident from their secondary title:
“The family offices through which the world’s
wealthiest 0.001% invest are a new force in
global finance that few have heard of”
The story makes the point that some of the giant family offices from around the world are making waves in the financial markets like never before, which is causing them to be talked about even more.
I typically don’t talk about the “0.001%” very much, on the assumption that they are already quite well served, and because they constitute a tiny fraction of people who could ever use my services.
Where is the Family?
I typically write about things that actually concern the families themselves, even though most people care only about their money.
The number of people who would bend over backwards to cater to the “super-rich” to manage their wealth is huge.
The number of people like me who want to be a resource to those families as they manage the family aspects of their intergenerational wealth transitions is comparatively tiny.
So it’s up to me to ask the question, then, “Where is the family in the family office?”
Family Members as Clients
Well if the story from the Economist is any indication, nobody really talks much about the family members themselves, preferring to concentrate on the family’s wealth, and ways to increase it.
This also happens to be where most of the professionals make their money, by helping the family office make money.
The members of the family, for whom all of this work is ostensibly being done, are rarely mentioned. They are, though, the “clients” of the family office.
Because every family office is unique to the family it serves, it is hard to know how many of them actually have deeper levels of family involvement in the work the family office does.
Values, Goals, Mission, Vision
Because many family offices come about as the result of liquidity events in family businesses, many of the same issues are often found there. Some are simpler than those in an operating business, while others are more complex.
See: Huge Liquidity Events – Great News, Right?
Hopefully, the family office is not simply making investments based on maximizing returns, if those investments would go against the values of the family.
Ideally, the goals of the family would also be taken into consideration too, not to mention the family’s mission and vision.
This, of course, pre-supposes that the family has worked together to define their values and agree on the goals, mission and vision of the family.
I’d guess that very few family offices are currently benefitting from that kind of guidance from family clients who’ve done that important work.
Family Office as a Catalyst
Regular readers know that I like to harp on the importance of having someone “with a different last name” around the table at meetings.
It’s important for family meetings to run well, and so having a facilitator who is not a family member is the best way to go.
Someone from the family office could be well placed to handle such a role.
Multi-Family Office Opportunity
For large single-family offices (SFO) there’s really no excuse for not doing the important work of involving the family and preparing the rising generation.
For multi-family offices, (MFO) the idea of offering assistance with family meetings is an opportunity to differentiate their services from those who are strictly investment managers for high-end clients.
Check Before you Sign
This is not a new idea, of course. Many firms tout their assistance with family matters on their websites and in their pitches to potential family clients.
There is, however, a huge variation in the service levels that different firms out there can offer their clients in this area, so if part of the reason you are looking into an MFO is for help with family dynamics, be sure to ask LOTS of questions first!
