What comprises a Family Office?

In essence, it is the separation of a business from family wealth and the attention and diligence to the management of both.

There are many other aspects often attributed to family office, including the independent management of a family’s wealth, the creation of a family board, development of a creed to cover entitlements and responsibilities and even what happens when there is no longer an active business within the family’s wealth portfolio.

These other aspects are very real and for many families they occupy considerable resource and attention, but they are built on the simple definition above.

The most important aspect is that most business owners have become successful through proper business structures, sensible policies and procedures, effective risk management, utilising good people and good advisors and attention to long term strategy and planning.

Implementing a Family Office is about replicating these disciplines across the family wealth to ensure rigorous attention and stewardship to ensure that hard earned wealth is not invested badly, squandered or simply lost. It can be simple or sophisticated, formal or informal or run by the family or independently.

Remember that when Cornelius “Commodore” Vanderbilt died in 1877, he was the second richest man in all of history and he had more money than even the US Treasury … $200b in today terms.  Yet by the end of the roaring twenties, it is said that most of that wealth had been squandered.

Hard to earn, easy to spend.