Key Takeaways: Is Your Family Office Built for the Future?

Josh Baron and Rob Lachenauer’s Is Your Family Office Built for the Future? delves into how you can set up your family office for long-lasting success. It carefully considers the root of tensions within a family office and what key decisions must be made to ensure longevity and success.

Built-in Tensions  

A successful family office needs a clear shared purpose, especially when it is within a business family. They must think about how to manage and pass on their wealth to the next generation. More than just improving financial performance, family offices need a shared vision and values to maintain harmony and have a long-term plan for their wealth. 

Key Decisions 

1. Design: They need to balance everyone’s interests by creating a system where family members can choose to be involved or not. This helps everyone feel heard and keeps things running smoothly. 
2. Decide: Family offices should establish decision-making policies and processes that go beyond just the founders, to prevent any problems down the line. 
3. Value: Successful family offices invest in things that matter to them, like charitable giving and projects that align with their values. They may even invest in businesses started by the next generation. 
4. Inform: It is tricky to know when and how much to tell the next generation about the family’s wealth. But some strategies that work include giving them a chance to see the family’s assets beyond just spreadsheets, and slowly sharing information over time. 
5. Transfer: When it is time to pass the wealth down to the next generation, the family office needs to make sure everyone is on the same page about goals and how much money will be transferred. 

Key Takeaways 

1. A successful family office must design a system first and foremost that accommodates everyone’s interest, offers an exit strategy where possible, and ensures decision-making policies involve more than just the founders or principals. 
2. Another key point to consider is the next generation – how and when will the next generation get a full picture of family wealth? How and why should the office invest in ventures that align with family values and beliefs, and how will the family transfer wealth to the next generation? 
3. By taking these steps, family offices can effectively manage built-in tensions and prevent potential problems down the line while ensuring that the family’s wealth is preserved and used in a way that aligns with their shared purpose and values.