Starting or creating a family office
How Should a Family Define the Purpose and Scope of Its New Office?
Short answer. Define the office by the family's shared goals and the work it needs done. Agree on whom it serves and which decisions it owns. Set out what stays with outside advisers. Write down a manageable initial mandate, then expand when recurring needs and clear accountability support additional services or staff.
A family should define its new office by the needs it intends to meet and the responsibilities it is willing to assign. Start with the family's goals, then specify its work and authority. Set clear service boundaries. A written purpose helps guide choices about staffing, providers, reporting, and cost.
Agree on the Family's Aims
Begin by discussing what the family wants to preserve, improve, or coordinate. Some families want better financial reporting and administration. Others want direct investment oversight or continuity across generations. A central contact for advisers may also be a priority. The family can rank these aims so the office knows where to focus first.
Ask what prompted the discussion and how the family will know whether the office is helping. Identify the people affected by its services, including generations and branches of the family. Discuss expectations for privacy and participation. Clarify how decisions will be made. These questions help create a family compass, a shared reference for the aims and principles that guide the office.
Set Boundaries and Authority
Define what the office will do, what it will coordinate, and what remains with the family or outside professionals. For example, an office may gather information and prepare reports without making investment decisions. It may coordinate estate planning without providing legal advice. Assign an owner to each responsibility and write down approval authority.
Agree on whom the office serves and how it will handle individual requests. If it supports several households or branches, discuss how to manage service priorities and costs. Set a process for resolving disagreements. Also establish how the family will review a decision that affects it as a whole. The governance guide can help frame these responsibilities and decision rules.
Make the First Scope Manageable
List the recurring work needed to support the purpose. Assess which tasks need an internal owner and which can go to an existing adviser. Identify any tasks that require a specialist. Consider the capacity of the people who will lead the setup and operate the office. A broad mandate can sound appealing, but without defined work and authority it can create confusion and ongoing expense.
Use a phased plan. Begin with a few priorities, such as consolidated reporting and adviser coordination. Include core administrative procedures. Add services after the family sees which work recurs and where the initial scope leaves a meaningful gap. The fundamentals guide can help organize the setup choices. The readiness score can prompt discussion about goals and preparedness.
Connect Scope to Resources
Estimate the staffing and provider fees required for the proposed mandate. Factor in technology and oversight. Use the family office cost calculator to work through operating assumptions. When comparing internal and outside capacity, account for coordination time as well as direct cost. Talk with your attorney or CPA where the scope touches legal entities, regulation, or tax matters.
In my experience, a purpose statement is useful when it guides everyday choices. Keep it concise, assign matching responsibilities, and review the scope as the family's needs change. This gives the office room to adapt while keeping its purpose in view.
This type of scenario planning activity can create an improved sense of comfort for the wealth creator.
Sources: How to Start a Family Office, The Single Family Office. Informational only, not financial, legal or tax advice.