That makes it especially important for the family office director to be able to balance and manage the family relationships. On top of effectively managing the operational aspects of the family office, that can present significant challenges.
“When we’re working with clients to set up a family office, one of the key areas we focus on is the nature of that professional relationship,” says Russell.
“We’re saying to the person who will become the director of the family office that you’ve got to be conscious of where you sit in relation to these issues. You’ve got to be wary about getting too close to any particular person or viewpoint, or being seen to support that, because your role is to serve all of the family.”
Family offices achieve that through creating a robust infrastructure. Russell explains that producing a structure chart that defines roles and responsibilities, clearly shows where decision-making and control lies and identifies accountabilities and reporting protocols, can help to enforce that. Taking the time at the outset to consider whether there will be a family office board and, if so, who will sit on it and the role of independent directors, can be really useful.
“The ability of the director to see, manage and get on top of these issues is absolutely pivotal to a successful family office role,” he adds.
Being able to achieve that requires a deep understanding of the values of the family and its objectives and how the dynamics work. It’s where HSBC’s focus on people can really make a difference, says Jeremy.
“It allows us to offer a perspective that clients perhaps hadn’t considered, understanding their needs and concerns, not just from an investment perspective but more holistically. Are they worried about the risk to their assets that they’ve worked hard to build up, are they concerned about the impact of relationship breakdowns, do their children value the wealth that they have, does the next generation share their principles, will their wealth become a force for good or is it toxic?”