Forming a single-family office is a natural progression for many families of wealth. When a family is transitioning from operating a business to managing significant wealth, having one's own family office can offer significant benefits, including personalized attention, economies of scale and greater access to unique investments. 

 

When forming a family office, much attention is paid to benefits impacting the family's financial capital and issues of investment management, trust and estate services, tax and financial planning and strategic wealth management. Unfortunately, in many cases, less consideration is paid to the family's human, intellectual and social capital, which are often more important to the long-term success of the family wealth and legacy. 

 

Research has shown that  to have any meaningful chance for truly long-term success for a family's wealth and legacy, it’s often more important to strengthen capabilities related to trust and communication, leadership development and mission and vision than those related to financial and legal issues. These qualitative issues should also be reviewed first and foremost when considering whether to start and how best to manage a single-family office. This may not come naturally to wealth managers traditionally trained in the legal, tax and investment disciplines; however, it is imperative for wealth managers who wish to serve a family fully. 

 

In accepting the financial and other quantitative advantages of a single-family office, one must accept certain qualitative realities, including: taking on new responsibilities, sharing information with family members, creating new systems and protocols and managing talent.  If those realities are acceptable, one should consider implementing certain qualitative best practices, including:  establishing formal rules of governance, creating a clear vision and mission, implementing a development and education plan and communicating with clarity and consistency.  

 

Launching and managing a family office requires a great deal of time and resources. It would be a shame to go to such efforts and not undertake actions and practices that could help the office to be a long-term success. Initially considering the qualitative issues and applying best practices throughout the life-cycle of the single-family office can provide great benefits. Such attention may help the family to overcome the “shirtsleeves to shirtsleeves” phenomenon and allow the single-family office to serve the family and its legacy for many generations.