What Should a Family Agree on Before Hiring Its First Outside Executive?

Before hiring an outside executive, agree on the office's purpose, the role's authority, its reporting line, and how the family will judge performance. A candidate cannot succeed in a job that has unclear boundaries or conflicting instructions. Put the agreement in writing before recruiting so the family can assess candidates against a real role.

Define the Role and Its Authority

List the responsibilities the executive will own, such as coordinating advisers, managing operations, or leading investment work. Separate those duties from decisions reserved for the family, an investment committee, or a board. State who can approve spending, direct staff, and set priorities. A clear chain of command prevents relatives from giving conflicting instructions to the executive.

Write a job description that reflects the actual scope and expected outcomes. Avoid combining several senior roles unless the family has decided that one person can reasonably cover them. The single family office talent search guide can help frame the hiring process. The compensation estimator can support a discussion of role costs.

Agree on Oversight and Performance

Choose who supervises the executive and how that person gathers input from other family members. Set performance goals tied to the responsibilities in the job description. Discuss how often the executive will report on work, what information the family expects, and how feedback will be delivered. If family members disagree with the executive, decide who hears the concern and how a decision is reached.

Clarify whether the executive will make recommendations, implement decisions, or hold delegated authority within agreed limits. If an investment committee or advisory board will provide oversight, define its role and how it interacts with the executive. The guide to investment committees and advisory boards covers the value of clear charters and decision rights.

Prepare the Family to Work With the Hire

Discuss confidentiality, conflicts of interest, access to family records, and expectations for working with relatives. Agree how the family will protect the executive from competing requests while still giving relatives a channel to raise issues. Identify the advisers and service providers the executive can rely on, and decide who owns those relationships.

Finally, make sure the position fits the office's planned structure and budget. The executive may need administrative or specialist support to carry out the role. A family office cost calculator can help lay out those expenses. If employment terms, authority, or entity arrangements raise legal or tax questions, talk with your attorney or CPA before finalizing them.

The first question the employer should ask is whether this person is going to return a multiple of his or her salary.

Sources: How to Start a Family Office, The Single Family Office. Informational only, not financial, legal or tax advice.