1. Lack of alignment of interests between the business and the family – The personal goals and appetite for risk-taking of some owners may not align with the interests of the business.
2. Heavy reliance on the same resource for both business and personal matters – Using a trusted business executive as a personal financial advisor leaves both the business and the family vulnerable if that executive leaves the business or worse, is fired.
3. Loyalty and allegiance of employees to the business, not the family – The loyalties of the associated executive may reside with the business, more than with the needs of family members.
4. Lack of service to family members who are not working in the business – Family members who do not work in the family business have different financial needs and goals that may not be equally represented or provided by employees who don’t see them every day.
5. Ad hoc requests – Without specific role definitions, family members often come to business employees with ad hoc and uncoordinated personal requests; this can be disruptive to business operations and pull employees away from their day jobs.
6. IRS challenges – In the absence of sharing of costs for business resources used by family members, the business is subjecting itself to potential IRS challenges relating to the tax deductibility of personal expenses and the improper transfer of family wealth.

This blog post is excerpted from the FOX white paper, Managing Family Capital Generated by the Family Business, which looks at the advantages of separating a family's wealth management from their operating business.