What Due Diligence Questions Should a Family Office Ask a Manager?

A family office should question the manager's claims, understand the fund's structure, and assess how the investment could lose money. Tailor questions to the strategy and the family's mandate. Check answers against documents and independent references.

Understand the Strategy and the People

Ask how the strategy works in practice. Find out what investments the manager makes, what conditions could weaken the approach, and how the team selects and monitors opportunities. Clarify who makes investment decisions and what experience those people bring. Ask how the opportunity compares with the manager's past work, and whether the same team and process produced the track record.

Ask for clear explanations and supporting records. Request examples for important claims, then note any that remain unverified. The manager should be able to explain the strategy in plain terms so your team can assess whether it understands the approach. Related guidance on how family offices evaluate fund managers can help frame this review.

Examine Structure, Performance, and Risk

Find out how the fund is organized, what fees and expenses apply, and what rights or limits investors have. Request past performance details, the calculation method, and information on whether records were audited. Discuss liquidity, valuation practices, borrowing, and the conditions that could lead to losses or make it difficult to exit. Questions will vary by investment vehicle and jurisdiction. Family preferences also matter, so involve qualified professionals for legal or tax specifics.

A DDQ can keep the review orderly. Family offices may ask about structure, performance, audits, and references, along with other areas. Use a template as a starting point and adapt it to the investment. Compare the manager's responses with financial materials and governing documents. Check audit records and other available evidence as well. For the broader sequence, see how family offices conduct due diligence.

Check References and Background

Speak with people who know the manager's work firsthand. Ask how the manager communicates and handles difficult periods. Find out whether they follow through on commitments. Reference calls are useful when they test specific claims, beyond gathering general praise. A family office may also run background checks and compliance reviews. These checks cannot remove every risk, though they may uncover information absent from the pitch materials.

If a manager resists a standard background check, examine the response as a concern. Make sure the check fits the people and entities involved. For more on the purpose and limits of this step, read how family offices check a deal sponsor's background.

Confirm the Answers in Person

An onsite visit or in-person meeting can show how the manager operates and whether the people involved match the systems and claims presented. Prepare follow-up questions from the document review, then compare the answers with the manager's earlier materials. Keep a written record of open issues and the evidence needed to resolve them.

Before committing, share the findings with those responsible for the decision. A strong review can still lead to passing on the investment. That is a valid outcome if the evidence does not support it or key questions remain unresolved.

This part of the due diligence process can sometimes slow down the momentum toward a deal, as it usually requires both sides working through the granularities of structure, past performance, audits, references, and other time-consuming tasks.

Sources: Richard C. Wilson solo transcripts, The Single Family Office. Informational only, not financial, legal or tax advice.