As a multi-family office, we work a lot with family governance.  Family governance is a catch all for helping organize the planning, management and decision-making structure for the family’s business and estate related entities.  This includes the appropriate succession, education and involvement planning process for future generations.

Governance is the soft side of the total financial solution that we provide to clients.  It takes experience and it takes patience.  Lots of patience!
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The diagram below represents the three independent and overlapping parts to this process.

The critical difference in the family governance process vs. the corporate governance process in most public companies is the involvement of the family.  Yes, I know there is usually a founder in most public companies, but over time their interests usually decline, and nepotism is not tolerated.

With the typical family, nepotism is to be encouraged and we are dealing not just with the business of governing entities, but the past bias and experiences that the family brings with them to the process.

Let’s say Dad encouraged his sons to be very competitive towards each other growing up.  Dad has now passed on but the two sons, as part of the management and governance of the family entities, continue to undermine and one up the other due to this learned behavior.  This creates dysfunction in the governing process and lengthens the time and effort of the advisor to get something done that moves the family towards its desired goals.

The Key to The Process
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We believe the key to the process are strong family vision, mission and value statements that are reinforced across generations by the current family leaders.  This strong set of family statements then is the basis for everything the family does going forward.

In the Christian faith, we many times ask ourselves “what would Jesus do?”  In the family context everything and every decision that is made should fit within the family vision, mission and values statements.  This means how businesses are run, estates are planned, the types of giving that is done and how future generations are educated within the family unit.
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This single purpose allows the family to stay agile.  Staying agile is the ability to rapidly adjust to change by adapting from an initial stable state.  In English, this means the family must be an adaptable unit that uses the family statements to traverse an ever-changing world and family dynamic.

In the diagram above, we see most families tend to use a top down structure in their family communication and governance (left).  However, to maintain agility, a better structure might be one where family leaders direct and are involved giving and receiving feedback from those family members involved in teams within the family structure.

Some of these teams may have more formals structures such as the defined management for a family business and others may have a more informal structure, such as that of a family council that involves generations currently not involved in more formal structures.

The key to maintaining an agile family is communications.

Communication and Education

For the family to effectively overcome the “shirtsleeves to shirtsleeves in three generations” curse that tends to affect 70%+ of all families, communications and education are a must.  Effective communications can be as simple as a monthly conference call or a bi-annual family meeting.

We believe what we bring to the table is the ability to help direct and facilitate these meetings so that everyone is heard, business is accomplished and there is a framework in place to encourage each successive generation to be a part of the governance process.

Ideally within this process is an environment where younger generations are encouraged and nurtured towards a time where they take the mantle of leadership.  We see all too often, however, that the family instead tends to criticize those younger generations for their lack of knowledge or experience without laying out a path for them to gain the very experience they lack.  This further creates family conflict and dysfunction, which hurts the family’s ability to stay agile, and thereby, perpetuate its wealth and its mission/vision past the third or fourth generation.

This is an area where a family council can help involve these younger generations while encouraging an ongoing dialogue with Generation one or two elders.  I have also seen where Generation three and four have been involved on investment committees or even allocated a part of an annual foundation gift to start to involve them in the family’s business.

Conclusion

Building an effective family governance forum is an evolving process.  By definition, family governance entails embracing a broad range of perspectives, multiple generations and people who have other things going on in their lives.  It can be difficult to maintain the momentum.  

Family members who work in the business and are used to more direct and efficient process can find this process frustrating.  The process of building a family business governance system requires patience, perseverance in the short-term.  It also required agility, open communications and creativity.
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Most families find the long-term result of a stronger family and aligned systems produces a rewarding outcome for both the family and its enterprises.  The most successful of these families see their wealth and family ideals perpetuated well past the third generation.

First, off what is a family office? 
 
“According to Forbes, a family office performs centralized management or oversight of investments, tax planning, estate planning, and philanthropic planning.  Perhaps the simplest definition of a family office is an organization that assumes the day-to-day administration and management of a family's affairs.”
 
In our case, we do those functions for multiple families thus the multi-family tagline.
 
We are boutique in that we are small and intimate, like a boutique hotel in your favorite travel destination or an old fashion family doctor.
 
Finally, we are virtual in the fact that we work with a group of your professionals or those outside professionals we may introduce to the process to facilitate your planning and structure management.

​So now the part you may care about.  The answer to the question “why do I care?”
 
The simple answer is that most advisory or wealth management firms just do basic financial planning and investment advisory for the masses. 
 
They do not offer the next level services to actually help you manage the structures they helped put in place. 
 
We can do more to help you remove those management burdens, while delivering more peace of mind.
 
Check out this list of possible services we offer our clients in addition to wealth planning and investment advisory services:

​As the complexity of our families' needs increase, so do the breadth of the services we can offer including the pinnacle of such offerings, family office services.

None of this is one size fits all!  It is all customized to your needs, whether large or small.
 
In the case of the family office and family owned business services, we don’t even need to manage your investment assets to help you.  
 
Everything is a la carte and customized to your needs, just like a fine boutique hotel or the type of service provided by an old fashion family doctor.
 
How can we help simplify your life today?

There was an interesting piece in the Forbes January edition by Rob Clarfeld, a leading New York-based multi-family office, on the indicators that a wealthy family might benefit from upgrading to a family office.  

A family office is defined as a private wealth management advisory firms that serve ultra-high net-worth investors, according to investopedia.com. They are different from traditional wealth management shops in that they offer a total outsourced solution to managing the financial and investment side of an affluent individual or family. For example, many family offices offer budgeting, insurance, charitable giving, family-owned businesses, wealth transfer and tax services.

Rob Clarfeld's article does a great job of summarizing some of the motivations affluent families have for forming a family office or hiring an outsource family office provider, like InTrust Advisors.  To read this full story in Forbes Magazine...click here.

​Here are his glaring signs that you are in need of a family office:

1. Your direct knowledge of your family’s finances, goals and aspirations cannot meaningfully be recreated by others.
2. You personally coordinate everything: investment management, tax information, estate planning, document retention, property and casualty insurance, etc.
3. You travel often and have concerns over the handling and timing of financial matters in your absence.
4. You have retired and no longer have an executive assistant’s administrative support – or you have concerns as to the potential blurring of lines between your personal and professional lives.
5. There is no obvious future family manager. Your children are grown and their lives have moved in different directions. By “anointing” a successor manager, you may be laying the groundwork for future sibling issues.
6. Your files are an eclectic amalgam of current, relevant, dated, sentimental and useless data that only you can decipher.
7. You no longer want to deal with the financial minutia of life. 

If this describes you, we would love to answer any questions you might have about outsourced family office services from InTrust Advisors as a possible solution.

​We can tailor our program to fit your specific needs and we do not necessarily have to manage your liquid assets to provide this service.

Find out more by clicking here. ​

When I entered this industry some 20+ years ago, I had just left corporate finance and was looking for opportunities.  A former co-worker introduced me to a wealthy family that had developed a successful public restaurant concept.

My friend explained to me that they were looking for someone to run a family office.  Now I had no idea what a family office was.  I envisioned that it was that desk at the end of many upscale kitchens where individuals stacked their bills or important documents that are in need of attention. 

However, in meeting with the family it became clear that a family office was much more than a small desk tucked away in some corner, but the life blood of a family whose complexity and assets had risen to the size and scope they could no longer be easily managed by the family alone.
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Wikipedia credits the Rockefellers with the first modern day family office, but I found evidence that the concept of a family office goes all the way back to the early Egyptians.  

The first documented family office I could find was in the Bible where Joseph oversaw the affairs of Potiphar, one of Pharaoh’s officials.  However, in Potiphar’s days the work of the family office was performed by slaves.

In the Genesis 39 (NIV), we read that “Now Joseph had been taken down to Egypt.  Potiphar, an Egyptian who was one of Pharaoh’s officials, the captain of the guard, bought him from the Ishmaelites who had taken him there.”

So in other words, Potiphar bought a slave with the intent of having him (Joseph) work at the family estate.  This is the ancient version of hiring family office staff or outsourcing to a group like InTrust Advisors.

Verses 2-4 record “2 The Lord was with Joseph so that he prospered, and he lived in the house of his Egyptian master. 3 When his master saw that the Lord was with him and that the Lord gave him success in everything he did,4 Joseph found favor in his eyes and became his attendant. Potiphar put him in charge of his household, and he entrusted to his care everything he owned.”

This in my mind is one of the first recorded (if not the first) family office!

Oh and by the way, verses 5- 6 go on to say “5 From the time he put him in charge of his household and of all that he owned, the Lord blessed the household of the Egyptian because of Joseph. The blessing of the Lord was on everything Potiphar had, both in the house and in the field. 6 So Potiphar left everything he had in Joseph’s care; with Joseph in charge, he did not concern himself with anything except the food he ate.”

So how does the family office today compare with the family office of Potiphar’s time?

The complexity of today is certainly greater than in Joseph’s time. However the general concept of an individual or group of individuals charged with assisting an affluent or wealthy family with the unbiased management of their wealth really hasn’t changed.

Today, it is still about hiring of professional staff in an expensive single-family office that caters to a single family.  Alternatively, its about hiring a firm that is an extension of the wealth management industry that works with multiple affluent families.

If you are struggling to stay on top of your family’s growing assets and ever increasing complexity, maybe  we could help you find a little peace of mind the same way Potiphar did when he “left everything he had in Joseph’s care?” 

Call us today to set a time to meet or use our contact pop-up to schedule a time.