Family offices can be a great asset in terms of establishing better business flow and synergies between different aspects of your family business. It is important to ensure you have the right structure linked to your objectives, or you could make costly mistakes. When establishing a family office, you have the opportunity to create holistic, personalized solutions. To get it right we suggest you ask yourself these questions before you move forward:
Are you looking to preserve, grow, or spend your wealth?
Many families setting up offices are looking to preserve or grow their wealth. The office provides the platform for professional services and support to meet these objectives. Spending is often linked to purpose-driven giving and the family office can help define the motivation, focus and ambitions of the family’s giving or philanthropic journey,
Where does your family stand on socio-emotional wealth?
Socio-emotional wealth refers to the non-financial aspects of family owners, such as the desire to exercise influence to meet the family’s social and personal needs. This is often the way families seek to perpetuate their dynasty. Family members will make major strategic decisions based on trade-offs between financial and socio-emotional wealth, so it is important to understand what kinds of wealth and influence you are interested in as a family, and specifically what role these should play in an office setup.
How cohesive is your family enterprise system, and how could a family office foster greater cohesion?
Family offices can provide great benefits, including motivation and strengthening cohesion by embedding and sharing goals and actions. However, decisions by the family office can also cause conflict among family members. It is necessary to define proper governance structures that take into account both senior family members and the next generation. You should consider areas of possible conflict and figure out how to mitigate them through the family office’s governance system.
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