Growing with the Family:
i need a clever subtitle/more content
By Bobby Keough
June 20, 2018
One of the largest challenges facing any family office is remaining relevant as generational shifts occur within a family. Unfortunately, there seems to be a trend of family offices falling out of a family as that family’s power dynamic changes through time. While business is business, working alongside a family so closely can make this growing apart feel a bit personal, so what can a family office do to ensure they remain with a family even as time goes on?
As Dennis Jaffe put it put it at a recent Family Office Association event, the family office must function “not just as a technical system, doing investments and doing tasks for the family, but also as a social system, because the family office is really an identity center for the family. It does some things that otherwise the people would just be a bunch of investors investing. Keep them connected together, and having some sense of meaning as a family. The family office provides services that sometimes have nothing to do with making money.”
The relationship between a family that has been raising money over generations and a family office is not just a person and an office reacting and doing tasks, but an alliance. “There’s an older generation that holds a set of values, that stands for something, that says ‘we are important not just to make money but to do other things, we have a purpose and mission, and we also have a set of wisdom, and we want that to be respected.’”
Innovation, adaptation, and growing with the changing times are key to keeping relevant with a single family, especially as that family expands and ages. The family office staff becomes an extension of the family, and must keep in mind the ideas of the youth as they soon will take over.
The family office staff becomes an extension of the family, weighing in on financial decisions that have an impact greater than just the ROI. You must think and act like a member of the family, considering not only the money to be made but the ways that money will affect the personal relationships of all the different family members.
Many view the youth simply as the recipients of the family office, forgetting that they are in fact the future of it. This rising generation has a socially responsible, entrepreneurial spirit full of bright new ideas.
It is important for the family office to communicate with every family member, not just the one that directly did the hiring. While there are bound to be family members that aren’t very technical or won’t want much to do with the family’s investments, the reality is it is still their money too.
The family office must have a purpose, it is meant to be a solution to a problem, therefor there must be a problem to be solved to begin with. Family offices with a deeper social purpose seem to last longer.
It’s far more than just a technical investment job, you have to not only think of what makes the most sense financially on paper, but the emotions of every family member and how they will be effected. Some decisions may make sense on paper, but could cause tensions in the family that will in turn effect the family office.
As generations shift, so too will the focus of the family office. Different siblings or family branches may have different objectives. It is up to the family office to alter identities in order to keep up with the transition.