What Should a Family Office Business Plan Include?
Short answer. A family office business plan should explain why the family is forming the office, which services it will provide, and how decisions and spending will be controlled. It should identify the people and outside providers the office needs, set out the family's investment approach and reporting needs, and include a budget and a process for reviewing the plan as circumstances change.
A family office business plan should turn the family's goals into a clear operating model. It should explain why the office exists, whom it serves, what work it will handle, how decisions will be made, and what resources it needs. The plan is useful when the family agrees on its purpose before hiring people or committing to a costly structure.
Set the Purpose and Scope
Begin with the family's priorities. Identify the services the office will provide, such as investment oversight, consolidated reporting, administration, philanthropy, or coordination with outside advisors. State what will stay with the family and what will be outsourced. Keep the first scope tied to real needs instead of adding services because they sound standard.
The plan should also describe the family's investment activity at a practical level. Note the areas the family invests in, how often they need review, and who participates in decisions. An investment committee should reflect the portfolio and the work required to monitor it. Use questions to answer before forming an office and a family compass to clarify what the plan should serve.
Describe People, Decisions, and Controls
Set out the leadership role, initial staffing, and each employee's responsibilities. Explain how employees and service providers will be selected and how performance and compensation will be reviewed. If family members may work in the office, define the criteria and process for those roles in advance.
Document who may approve investments or expenses. Set separate approval rules for donations and payments. No single employee should have unrestricted authority to move large sums. Establish dual approvals or other review procedures for significant wires and checks, and identify who handles reconciliations and reporting. Set expectations for family meetings and communication, then explain how disagreements will be addressed. Talk with your attorney and CPA about the legal and tax details of the structure.
Set the Budget and Review Rhythm
Estimate the costs of employees and outside advisors, along with technology, insurance, travel, and administration. Describe the assumptions behind the budget, including which work is in-house and which is outsourced. Include a process for checking actual spending against the plan so the family can see whether the office is delivering the services it promised.
Explain how the plan will be reviewed. Family priorities, investment activity, and staffing needs can change, so schedule a regular discussion to assess what is working and what needs adjustment. A plan can start simply and become more detailed as the office matures. For operating detail, see the processes a single family office needs and the internal controls to consider. The plan should be specific enough to guide action while leaving room to adapt as the family's needs change.
Typically, no single employee, whether they are a family member or not, should have the ability to withdraw large sums of money from the business, and if someone is allowed that privilege, it should only be after receiving approval for that movement of funds.
Sources: How to Start a Family Office, The Single Family Office. Informational only, not financial, legal or tax advice.