David’s Articles

David has been writing and publishing since 2006.  

This post was written and published prior to September 2023 when David and his prior firm, Family Capital Strategy, merged with Greycourt.  Views expressed reflected David’s personal views at the time and do not necessarily reflect the views of Greycourt.  Posts and information may be out of date and should not be relied upon for investment advice.

The Why of Family Offices

Dec 5, 2019 | Family Wealth

Photo by Benjamin Davies on Unsplash

Today I want to conclude our 3 part series looking at the basics of family offices. In the first two parts, we considered what family offices are and what they do. We concluded the primary role of a family office is to help manage the complexity of a family of significant means.

Best in class family offices pursue this end by either following a strategy of exceptional coordination or exceptional comprehensiveness – i.e. they assemble a team that provides an unrivaled depth of service delivery or they assemble a team that provides an exceptionally broad service offering. Family offices typically offer services around planning, administration, investment, and family support.

Whether the family chooses the inch or the mile-wide approach, realistically the family office is unlikely to do all things for all family members exceptionally well. Really, the only circumstance where that might be possible is an exceptionally small but wealthy family – think like a tech founder – where there is zero regard for operating cost.

Implicit in our discussion to date is the purpose behind why the family office is created. Yes the FO helps manage the complexity of the family – but in a market place full of experts, there are many well-established and reputable professional services firms that could accomplish the same tasks. Instead, I would argue that there is a deeper purpose that underlies the choice to establish the family office, the family.

The family portion of family office can quickly be looked over relative to other more technical considerations when establishing the office. But ultimately, the FO is in place for the family. Embedded within the choice to establish a FO is the opinion, whether verbalized or not, that the family is better as a result of having a FO in place.

This fact may come as close as possible to the equivalent of a Hippocratic Oath for those who work within family offices. Namely, that the actions of the FO must ultimately be about the perpetuation and prosperity of the family.

Financial metrics and considerations too often overwhelm our sense of prosperity. The prosperity of family instead should conjure images of thriving, flourishing, renewal and growth. Picture growing fields or verdant forests teaming with life. While investment performance, tax efficiency, and risk management are important steps, they are necessary but not sufficient in themselves to support the family in its choice to continue through the passage of time together.

In a modern world of high vocational and geographic mobility, the reality is that most families may see 3 generations of realistic relational intimacy – grandparents, parents and grandchildren. But as grandparents age and pass on, grandchildren across sibling branches are simply unlikely to maintain strong relationships without significant effort. Yes, they may remain cordial and friendly in their dealings, but they would not make the favorites list in your iPhone.

When family’s choose to manage their wealth, in all forms, collectively, they fight back against this natural tendency. As such, the family office is ultimately a tool to support the broad success of the family, and this must be the north star against which success is managed.


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