Two years after their father died, Paul and Hank knew the time had come when they should break-up their family office. At their father’s insistence, the family’s substantial financial assets had been invested together. As their father’s business was the source of the family wealth, the brothers felt an obligation to build a single-family office together. But investing decisions soon became a source of conflict. Decision-making authority was murky; each brother lacked transparency into what the other brother was investing in and why. How aggressive to be on tax strategies became a matter of great disharmony.
Is Your Family Office Built for the Future?
Five critical decisions to set it up for long-term success.
September 26, 2022
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Summary.
Family offices can provide a number of benefits, including privacy, customization, and having your own team to handle a wide range of services, such as guiding family philanthropy, managing shared properties, or even managing household help. Successful principals in hedge funds, private equity, real estate, and tech entrepreneurs, and even family businesses owners selling their firms, have recently created an explosion in the number of family offices. While most single-family offices are set up with good intentions of continuing to keep the family (and its wealth) close, they face some unique built-in tensions that family businesses don’t have that leave them vulnerable in the long-term. This article addresses five key decisions that family offices need to make if they want to set themselves up for long-term success.