Best practices for single family offices

For families looking to preserve wealth and manage assets across generations, single family office (SFO) provides a customised solution. Running an SFO effectively requires strategic decisions around governance, technology, talent, and long-term planning. Here are five best practices for single family offices that can position yours for success:

1. Determine the need and purpose for a family office

Before setting up an SFO, evaluating if your family truly needs one is essential. The costs and complexity of maintaining an SFO can be substantial, so it’s important to define the purpose upfront. According to Citi Private Bank, family office expenses often amount to approximately 1% to 2% of the family’s total active assets.

A key consideration is the cost-benefit analysis: Will the family office solely manage investments, or will it also cover lifestyle management, property oversight, and philanthropy? You may find that a multi-family office structure better suits your needs if you require similar services at a lower operational cost having a clear purpose from the start ensures the office’s structure meets your family’s unique requirements and objectives.

2. Leverage technology for efficiency

The right technology can streamline operations, improve decision-making, and enhance data security. In today’s digital age, SFOs have access to a range of family office software solutions. There are many benefits of family office software, including data aggregation, portfolio management, reporting, and document storage in a single platform. Automation of routine tasks, such as expense tracking and compliance reporting, allows SFO teams to focus on more strategic initiatives. Family office tools are better suited to family offices than a simple spreadsheet and are also big on security.

Asora helps single-family offices track and oversee assets, automating data capture and offering digital on-demand reporting on web and mobile. The software provides a secure, single source of truth for managing family wealth.

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Moreover, real-time access to financial data enables better investment decisions and risk management. By leveraging technology, SFOs can improve transparency, reduce errors, and optimise their resources for maximum efficiency. To learn more, here are the top 5 features to look for in family office software and the best questions to ask your family office service provider.

3. Establish a strong governance structure

Effective governance is the foundation of a well-functioning SFO. It ensures that decision-making processes are transparent, accountable, and aligned with the family’s core values and objectives. Establishing clear governance structures involves defining roles and responsibilities for family members, advisors, and office staff. Formalising decision-making processes through family charters or constitutions can prevent conflicts and ensure that everyone understands their role in the stewardship of family wealth.

A strong governance framework should also include regular family meetings, succession planning, and dispute-resolution mechanisms. As families grow and new generations emerge, well-structured governance becomes even more critical to maintaining harmony and preserving wealth.

4. Focus on long-term wealth planning

Wealth preservation is not just about the current generation — it requires careful planning to ensure that future generations are equipped to manage their inheritance responsibly. This involves not only structuring estate plans, trusts, and philanthropic efforts but also educating younger family members about financial literacy and the family’s values.

Proactive communication across generations is key. SFOs can hold regular family retreats, workshops, or meetings to engage younger members in discussions about wealth, responsibility, and the family’s legacy. This helps avoid the fragmentation of wealth over time.

5. Invest in talent and expertise

Building the right team is crucial to the success of any SFO. The family office should employ experts in areas such as tax law, financial management, legal affairs, and estate planning. Investing in top-tier talent ensures that the family’s wealth is managed professionally and in compliance with evolving regulatory landscapes.

If necessary, consider hiring external advisors or partnering with other family offices to bring in additional expertise. Training and professional development opportunities for SFO staff are also important to keep them updated on industry trends and regulations.