Starting or creating a family office
Who Should Supervise the Office's Senior Executive?
Short answer. The senior executive should report to one clearly designated person or governing body with authority to set priorities, review performance, and resolve concerns. The family should agree on that supervisor before hiring and define how other relatives provide input without creating competing lines of direction.
The senior executive should have one clear supervisory relationship, agreed by the family before the person starts. Without it, relatives may give competing instructions, while no one takes responsibility for evaluating the executive's work.
Choose a Supervisor With Real Authority
The supervisor might be the family member who leads the office, a board chair, or a committee designated by the family. The right choice depends on how the office is structured and who can make decisions on its behalf. That supervisor needs the authority to set priorities, approve work within agreed limits, provide feedback, and bring significant issues to the appropriate family forum.
Write down the reporting line and the decisions reserved for the family. Do not assume that informal influence is enough. A defined structure helps the executive know whose direction to follow and helps family members understand how to raise concerns. The governance framework can document these roles, and the office's purpose and scope can clarify what the executive is accountable for.
Give Family Members a Way to Offer Input
Family members may have useful information or different expectations. Set a regular way for them to share feedback, such as a scheduled meeting or a designated council. The supervisor should gather that input, decide what falls within the executive's responsibilities, and communicate agreed priorities. Individual relatives should not bypass the reporting line with unrelated or conflicting instructions.
For investment matters, a committee can provide structured review and outside perspective. For management questions, an advisory group may offer advice without taking over day-to-day supervision. Make the scope of each group clear. An advisory board can counsel the family and executive, while the designated supervisor retains responsibility for direction unless the family's governance documents specify otherwise.
Set a Consistent Review Process
The supervisor should meet with the executive regularly, discuss progress against written goals, and record significant decisions. Reviews should cover results, workload, resources, and obstacles, not only problems. If the executive's authority is too limited to meet expectations, resolve that mismatch before judging performance. The employee goal-setting process should connect to the executive's job description and actual decision rights.
Plan for Disagreement and Absence
Agree in advance how the family will handle a serious disagreement. The executive should know whom to contact, how the issue will be reviewed, and who can make the final decision. Consider a backup supervisor for periods when the primary supervisor is unavailable. If a dispute involves employment terms or legal duties, talk with your attorney. Clear supervision protects the executive's ability to work and gives the family a fair process for oversight.
These executives meet quarterly or annually to discuss strategy, management, and any important issues that the Chairman (or Chairwoman) of the Board would like outside input on.
Sources: How to Start a Family Office, The Single Family Office. Informational only, not financial, legal or tax advice.