Globally, the number of single-family offices continues to increase. Virtual family offices have helped more and more families to take charge of their finances. Complexity will accompany you whether you have an existing family office, or are planning to create one. Complexity can have a significant impact on performance.
Despite the fact that design and implementation processes are aimed at providing institutional services, achieving outstanding results is not guaranteed. Specific efforts will be required. A single family office can be tailored to meet the needs of each family, so there are no standard sizes, governance or service levels.
Families are increasingly looking inward to determine the investments and social responsibility of companies within their portfolio. A founder invested 90% of his 財產分配 endowment in “mission-related investments” as part of an effort common to family offices that want to increase the amount of investments related with sustainability, governance, or impact.
As these discussions occur within families, many are deciding whether the focus of their efforts is the formation of an investment-, philanthropic-, or administrative-focused family office. These aren’t exclusive concepts, but the institutionalization of family offices and their sophistication is an important step to help high-net worth families and stakeholders create significant value.
Single family offices are faced with many challenges. They should be managed and designed like businesses, but they only have one client, which is the family. There isn’t a market or immediate competition in the single family office industry to compare and learn from. This is why it is difficult to achieve excellence. What are the areas that lead to institutional performance? The main five are: Human capital, Governance, Technology, Investments, and Outsourcing.
Finding the best people to fit into each individual family office structure is the most important asset. Imagine that your single-family office has an established mission, vision and value proposition as well as specific underlying values. The first thing to do is define what skills, experiences, and mentality are required to develop and preserve the team.
You should focus not only on skills but also intangibles like motivation and emotional intelligence. This will ensure the people working at your family office share your culture, values, and have empathy with your problems and concerns. A well-designed recruiting process is required, as is a thorough understanding of the work to be performed.
You should look for individuals who can communicate equally and are able to fit in a hierarchy. The single family office is primarily devoted to the family, so it must have a unique approach on family education and risk management. In a competitive market it is not enough to pay the industry standard compensation.
The reward must be unique and provide value for both the office and the people. Education programs and placements in niche companies such as sustainability or private equity boutiques, are examples of how to align your purpose. Family offices may consider funding investments for their staff or providing life insurance.