Q. When should I start a family office?
A. It’s quite possible that you already have one! It all depends on how you define a family office. My preferred definition is “a set of services provided to a family” which is very broad.
For example, you may have an operating business, but if you also spend time on diversified investment, your accounting team do the compliance and reporting for a number of entities across the family group, and your executive assistant helps plan family getaways and manages your summer home, then you already have what would be called an “embedded family office”.
The question then becomes: when should I formalise or professionalise my family office? It may be advantageous to have the family office as a distinct entity if you plan to ultimately sell the operating business, or if it needs to be a separate entity as part of your estate plan. Another consideration is the personnel required: often, the principal spends their time on the family office, but like any business, that may not be something you want to do until the day you die. Establishing a family office means putting in place appropriate policies and governance so those functions can be done by others.
Whatever you choose to do, it’s important to be conscious of what you are doing (e.g. that you actually have a family office), and how you want it to operate to best serve the current and future needs of your family.
Consider This: What resources (people, time, money) does your family office use? What competition is there within the family group for those resources? What should your family office look like in 5-10 years? How are you set up to allow that to happen?
Further reading:
- The Pros and Cons Of Different Family Office Structures
- Maximizing Results In Your Family Office: Treat It Like A Business
- What is a family office, really?
- The Five Building Blocks Of The Future Family Office
- Family office strategic considerations – pivotal questions family offices should ask their lawyer
- Building a successful family office: Top 10 questions to guide clients
- BNY Mellon Wealth Management Global Family Office Research Finds More Than Half of Global Family Office Executives Agree That Succession Planning Is Challenging as The Values of The Older and New Generations Are Hard to Reconcile
- Family offices are of many types and offer their own positives, negatives
- 8 Experts Every Family Office Should Have Now
- Family offices are not just for the superwealthy anymore
Here is more on reading on family office structure.
