How to Start a Family Office

How to start a family office in 12 steps, from deciding why you want one to hiring, governance, deal flow and investment committees, based on Richard C. Wilson's book. Richard has helped set up more than 200 family offices, and each step below comes from that work.

By Richard C. Wilson, founder of the Family Office Club

The 12 Steps

1. Step 1 Why start a single family office

   A family office can bring your advisors and assets into one coordinated plan, protect your time, and help you manage wealth around your family's priorities. Start by identifying the problems you want it to solve.

2. Step 2 Creating your family compass

   Put your family's purpose, values, and decision rules in writing before you build the office. A clear compass helps family members and staff make decisions in line with shared priorities.

3. Step 3 Fundamentals of creating a single family office

   Turn your family's priorities into a practical plan for people, processes, systems, and oversight. Map the family and its advisers, assess risks and needs, then organize the work in stages.

4. Step 4 Partners, vendors and service providers

   Decide which work belongs in-house and where outside specialists can fill a gap. Match each provider to your family's needs, oversee the relationship, and review the cost and value of every contract.

5. Step 5 Portfolio models

   Compare broad portfolio approaches, then match your family's investment focus to its wealth story, strengths, goals, and ability to execute.

6. Step 6 Single family office governance

   Define how the office makes decisions, handles money, hires people, and works with family members. Governance rules help set expectations and support accountability as the office and family grow.

7. Step 7 Family office public relations

   A family office can build credibility and relationships without putting the family name in the public spotlight. Choose what to share, what to keep private, and how the office presents itself.

8. Step 8 Single family office talent search

   A family office depends on a small team of trusted professionals who can cover broad responsibilities. Build your talent network early, define the skills you need, and use several channels to find the right people.

9. Step 9 Single family office operational processes

   Set clear routines for running the office, screening opportunities, monitoring the portfolio, coordinating advisers and reporting to the family. Good processes help the team manage growing complexity without losing sight of the family mandate.

10. Step 10 Building your deal flow totem pole

    Build a repeatable way to find and rank direct deals. Focus your outreach on the sectors, partners, and relationships that fit your family's investment goals.

11. Step 11 Investment committees and advisory boards

    Give investment decisions a clear process, defined authority and informed discussion. Establish an advisory board to bring outside experience to important family office questions.

12. Step 12 The future of the single family office industry

    Family offices are still developing as an industry. Prepare for growth, greater professionalization, and more regulatory attention by building a clear operating model and staying informed.

Tools for Each Step

• Readiness score: 20 questions that show which steps you still need.
• Family office cost calculator: your annual budget in dollars and basis points.
• Break-even calculator: when your own office beats a multi-family office.
• Compensation estimator: pay ranges for your first hires.

Common Questions About Starting a Family Office

• What is a single family office?
• How much money do you need to start a family office?
• What are the first steps to set up a single family office?
• How long does it take to set up a family office?
• Should I start a family office or keep using my private bank?
• What is a family compass and why build one before the office?
• What legal entity should a single family office use?
• Where should a family office be located?
• What are the most common mistakes when starting a family office?
• Who should lead the project of starting a family office?
• Can a family office start with one employee?
• What should a family office business plan include?
• How do founders transition from running a company to running a family office?
• What questions should a family answer before forming a family office?
• What should a family office do in its first 90 days?
• How do service providers fit into a new family office?
• What partners and vendors does a single family office need?
• What operational processes does a single family office need?
• What is the future of the single family office industry?

Source: How to Start a Family Office, by Richard C. Wilson. Informational only, not financial, legal or tax advice.