The words of “family office” conjure a sense of excitement and exclusive appeal.  As Perth accountants we have been fortunate enough to come across many ultra-high net worth individuals with a private family office.

We have detailed some of our common findings:

Beware the advertising

A family office is just actually that.  An office for the family.  The family office will employ staff to do stuff and the staff will have job descriptions and employment contracts.

A lot of advisors describe themselves as “private family office” advisors and then proceed to tender for all work.  This is an expensive task for a high net worth family and is more often than not why a family office is created.  By employing staff to do these tasks the family reduces the cost of external advisors considerably.

A lot of websites are trying to attract the investment monies of a family office.  However the ability of these firms to attend to the true purpose of the family might sometimes come into question.

Finding the right staff

We often find that a family office, especially in Perth, has grown over time.  Typically the parents have become so inundated with paperwork in managing their asset pool that they have employed a full time bookkeeper to manage it – rates notices for a holiday home, dividend statements, tax returns and co-ordinating real estate agents.

Over time the bookkeeping role can grow into an accounting role that also requires a bookkeeper.  Then the monies paid to an investment group become so large that an investment professional is employed. Sometimes a lawyer is engaged as well.

Keeping it separate

As the family office grows is sometimes does so organically.  Each person is engaged at a time of pressure and often a detailed high level strategy is not created for the growth of the family offices.

Sometimes the staff of the business wear two hats and attend to both the business needs and the family needs.

It is important to treat your personal family finances just like you will treat your business finances.  Creating a professional environment and setting clear goals and tasks is imperative in both aspects.

However, the professional environment means that you cannot cross over your business staff and the family office staff.  At some time your family will argue and the staff in your family office will see that argument.  If you can insulate a family argument away from the business operational staff you can start to create a business that will continue onwards.

Get the advisors onside

When you employ a staff member the external consultant will be directly affected.  The employment of a lawyer will, at the beginning, mean that the external law firm will have reduced work.  The employment of an accountant will mean that the external accountant will have reduced work and so on.

Talk to your advisors and explain what you are looking for.  An advisor with experience in family businesses will be familiar with what you are trying to do and should be able to guide you early in the process.

Keep it simple

Most family offices are very small.  A good external advisor will point you in the right direction on how to do things on a small scale and allow your family office to grow into something bigger over time.

A good example is a private ancillary funds.  If you are committed to starting a charity you could look at a named fund.  This allows you to put a small amount away in another charity where the funds are earmarked for your charity and you can then build the amount up over time.

Understand your purpose

The purpose of your family is difficult.  Typically the purpose will change and grow over time.  Your family will change whenever somebody gets married, gets divorced, is born or dies.

Every time your family changes the views and collective thoughts of your family change.  However, getting an initial consensus to how the family operates and why the family is trying to work together for the ongoing success of the family is critical for both the family functioning but also the staff who are working in the family office.

Just as every business has a vision statement, defined values and a mission statement: so does a great family.

Control your family office

The purpose of every family office is different.  However, just because you have family orientated goals and objectives in the family office does not mean that the family office staff should not be accountable to the family for what they do.

A great leader in your family office should make sure that the office has KPI’s that makes the persons present directly accountable.  This will include both financial, family and legacy orientated measurement tools.

Keep it independent

One of the greatest benefits in a family offices is controlling the deal flow that comes to the family.  A family office will keep the family open to new deals floating around Perth and the rest of Australia that are of interest.  The ability to be nimble, creative, focused on what made the family great is a key advantage.

It is difficult to maintain this advantage if you are beholden to one external gate holder for deal flow.

Make sure you are open to a range of persons.  Anybody who is not independent, impartial and unbiased in their advice to you might still be great: but they are promoting something.  You should always have a series of great promotors.

Your external advisors should be friendly with each other but not friends.

The upshot is that advisors who are devoted to a family business are a great start.  They have the experience and knowledge that they can turn into value for you.  Once you create a functional family office these advisors can keep your office in check (and vice versa).  At Westcourt we have helped 5 generation family offices succeed.  We collaborate with different advisors and we don’t play ego’s with your legacy: and that is critical.


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