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Questions to ask

Updated: Aug 18

Questions to spark discussions around family office structure


As family offices explore creating, enhancing, or reevaluating how they operate, the following provides several questions across key functional areas.


Stated Mission

  • What are the family office's objectives?

  • For whom, and over what should the family office have oversight?

  • Will the family office manage the assets and personal affairs of children and other extended family members?

Motivations and Service Requirements

  • What are the motivations and priorities of the principals, both stated and unstated?

  • What are the process rules around critical operational decisions?

  • Which specific services should the family office provide, and which should be the responsibility of individual family members?

  • How hands-on or delegatory are principals in their decision-making? Are there variations in this mindset by different principals?

  • What should the family office do in-house versus outsourcing?

Investments and Capital Expenditures

  • Which investment and personal assets does the family office manage?

  • What level of authority will (or should) executives within the family office have over making investments and/or changes to the portfolio?

  • Which investment activities should be conducted in-house, by third parties, or split between the two?

  • Are direct investing activities a meaningful part of the family office's responsibility and, if so, are these done directly or in partnership with private equity firms?

  • What kinds of portfolio reporting and analytical technology does the family office employ today, and are there more efficient and effective platforms?

Funding the Family Office

  • What does it cost to run the family office annually, and how might this change over 3 to 5 years?

  • How does the family office plan to fund itself?

  • Are there tax planning opportunities that should be considered?

Continuity of Operations and Risk Management

  • What plans are in place should principals unexpectedly die or become incapacitated?

  • What are the current disaster recovery plans for essential assets, whether they are physical or digital?

  • What conflict resolution mechanisms has the family office established?

  • Which types of insurable exposures do the family office have, are there mitigation plans, and when did the family last review their insurance coverages?

  • Is the family office responsible for physical and cybersecurity risk management, and when did the family last conduct an end-to-end security review?

Organizational Design

  • Which organizational structures are in place today, and are there different ones needed to accomplish the family's various tax, estate, philanthropic, and other plans?

  • How centralized or spread out is the family office enterprise? Are there potential geographic issues for principals, family members, or staff to consider in the family office's organizational design, process management, and services?

  • Does the family office have an informal or formal Advisory Board? Is there a need to leverage independent professionals, or extended family members, on a board or boards?

Human Capital

  • How should the family office source, recruit, compensate, and retain the necessary human capital?

  • Who are the family office's key employees, and what are their roles?

  • How close and what kind of relationships do family office employees have with the principals and family members?

  • Has the family ever considered using recruiters to source and assess family office employee candidates?

Communication

  • Which modes of communication do the principals and/or family members prefer? How frequently should communications be provided, and in what form, across the various stakeholders?

  • How, and how often, do principals engage directly with external and internal professionals on items that are important to them (e.g., concierge, estate management, personal assets, investments, etc.)?

Performance Metrics

  • How does the family office define success? How do principals define the success of the family office?

  • How are Key Performance Indicators (KPI) defined, integrated into operations, and measured?

  • What metrics are needed to measure performance at a strategic and service level for the family office, principals, family members, and employees?

  • Which benchmarks does the family office use (or should use) for investments managed? How are they determined and applied?


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