What Is a Family Compass and Why Build One Before the Office?
Short answer. A family compass is a written guide to the family office's mission, goals, values, and policies. It records priorities and gives the team a basis for decisions. Create it before structuring the office so its roles and investments serve agreed family objectives.
A family compass is a written guide for decisions in your family office. It records the family's mission, goals, and policies, along with its values and priorities. I encourage families to agree on these points before setting up the office or hiring a team.
Put Shared Priorities in Writing
Families may discuss protecting wealth, supporting relatives, growing assets, or giving to charitable causes, but conversations can leave room for different interpretations. Writing down the mission and goals makes priorities easier to discuss and communicate. It also gives the people working for the family a clearer sense of their responsibilities.
Your family's aims may differ from those of an endowment, pension fund, or traditional wealth management firm. The office might focus on preserving capital, supporting family members, pursuing growth, or advancing philanthropy. The compass should reflect your objectives, clarify what matters most, and set out the family's limits.
Connect Values to Decisions
Values help the family assess whether a hire, investment, or business activity fits its standards. They can also help family members explain their reasoning to the next generation. In my experience, a founder's values can shape an office's culture even when its executives are not family members. Written values are easier to sustain when the family discusses them.
A compass can cover more than a mission statement. It may set expectations for governance, ethics, and confidentiality, as well as public image and family participation. The documents do not need to answer every future question. They should provide a starting point for decisions and identify who has authority when family members disagree.
Build the Office Around the Compass
Once the family agrees on its objectives, it can assess the structure and talent needed to carry them out, along with any outside support. For example, a family that wants close control over investment decisions may organize its team differently from one that expects to rely on external managers. A family that prioritizes privacy may make different choices about public profile and service providers.
Following this sequence can help prevent an office from being well staffed but poorly matched to the family's needs. If you are considering whether a formal office fits your circumstances, start with what a single family office is and how much money you need to start one. Then work through the family compass step and the questions to answer before forming an office.
Keep the compass concise enough for family members and staff to use. Revisit it when priorities change and communicate it repeatedly. It gives the family and its office a shared reference for choices today and continuity as responsibility passes to another generation.
Your Family Compass is the set of documents and policies that will help you navigate your way through uncertainty
Sources: How to Start a Family Office, The Single Family Office. Informational only, not financial, legal or tax advice.