How to build your future family office
If the first thing that comes to mind when someone says “family office” is that stuffy room down the hall and a desk piled with everything from tax returns to your son’s school reports, it’s time to enlarge your business vocabulary. In this context, a “family office” is a private wealth management advisory firm that manages a comprehensive array of outsourced solutions for everything from insurance policies, legacy planning, tax services, investing, charitable giving, lifestyle management, all-around concierge services and more. Consider the modern family office to be wealth management one-stop-shopping for high net worth individuals and companies.
The modern family office is said to have been pioneered by John D. Rockefeller in the early 19th century. Rockefeller established a large cadre of professionals to manage his wealth—believed by many to be one of the greatest fortunes of all time.
Due to the sheer complexity of forces, channels, legal issues, taxes and other ‘issues’ that confront modern companies, family-owned businesses that can’t afford such all-inclusive services often resort to calling their accountant or business manager for everything. This approach has obvious limitations. (What do you mean the season tickets are sold out!?)
Yes, Great Concept, but . . .
Unless you qualify as a high net worth individual or company, how can your less-high net worth business create its own family office equivalent? Here are some suggestions that, when implemented alongside your financial managers, can help your family create a well-functioning hybrid office and take the strain off you and your overworked managers.
Internal Communications in General
While the audience may be relatively small, the positive effect of clear internal communication is large. Keep communication structured and focused to ensure that everyone is on the same page. According to Edouard Thijssen from Trusted Family (an online governance platform for family offices), “With more stakeholders involved, it becomes more important to structure and organize communication processes for the different circles (board members, shareholders, family members).”
Be sure everyone is up to date on internal current events via shareholders’ meetings, AGM dates and by reiterating core metrics and values throughout the business. By sharing more than just facts and figures, the family office can build stronger connections between relevant family members.
In today’s day and age, meeting in person on a regular basis becomes more and more difficult, and when a family has over 10 members, having written traces of discussions and decisions becomes increasingly important.
Research & Innovation
In family-owned businesses, tracking the latest developments is not only crucial to ensure that the business remains relevant, but helps engender longevity by creating an adaptable structure that naturally creates space for future generations. Areas related to yours should be regularly scanned for developments that might affect your business.
Reputation management looks at how your family and business want to be seen from the outside. If you don’t put out the story you want to be heard, the media is likely to simply make up their own story for you, and we know how that can turn out.
Storytelling is also important when it comes to positioning. A clear story equals clear positioning in the minds of the public , and that helps a company attract the top people, partners and investment opportunities needed to stay profitable.
It’s extremely important to pay attention to both your company and your family’s reputation across all the media. This could be through bespoke media monitoring services like Retriever or through one of the newer, more advanced companies monitoring social spaces, such as Mention and Brandmentions.
Good relations with the press still go a long way, but gone are the days of just sending out stockholders’ brochures or press releases announcing new appointments and annual earnings. Today the trick is to get all the external channels working together to paint the picture that you want to portray. And let’s face it, these days communications and reviews happen all over the place whether you know about them or not. (Never mind whether you like them or not…)
From a business standpoint, a LinkedIn profile is essential and there are several multi-family offices (such as Matter, North-East, Ferd and Stonehage Fleming) that make excellent use of this channel. Depending on the type of story your family or business wants to tell, it’s worth looking at Twitter for small conversational updates and Medium for longer opinion pieces. If you have a large volume of visual content, Facebook and Instagram make useful channels.
Move Over, John D
And while you may never be a Rockefeller, creating your own single-family office at least has the potential to take you from less-high net worth to higher net worth!