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Building bridges with your family

Building bridges with your family

Family Governance
Wealth preservation
Family office
Family Wealth

Building bridges with your family

Mar 25, 2022

When personal interests threaten to diverge or compete, could a family office be the nerve centre that maintains communication and safeguards core values?

Relationships of any kind can have their difficult moments. Family relationships; no matter the size, wealth or complexity of the family are often the hardest of all. Add in managing numerous business interests and investments, and the challenges can be even greater. From multi-generational families, where younger members perhaps don’t share the skills or values of the original matriarch or patriarch, to blended families with step-children and half siblings; then throw in family members living overseas and possible questionable relationship choices, and it can be a potent mix.

But could a family office help? If it’s well thought through and structured, it could be a solution worth considering says Russell Prior, Head of Family Governance and Family Office Advisory, HSBC Global Private Banking.

“Having a family office with the right people in it can actually help separate some of the issues, such as the management from the decision-making,” he points out.

External perspective

The fact that multi-generational, blended and international families are becoming more common could be one reason behind the growing popularity of family offices, adds Jeremy Franks, Managing Director, Head of Wealth Planning & Advisory, EMEA at HSBC Global Private Banking.

Another could be that it makes sense to bring in external specialists to help manage diversified portfolios and interests and support the core strengths of the family itself.

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.

Maintaining impartiality

“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.

Sharing ideas

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?”

Support and challenge

Combining that deep insight with an effective infrastructure can help a family office director recognise when third party support can help with issues that arise – offering, as Russell says, “an untainted perspective” on matters both personal and operational. It’s an important role and one that HSBC is often called upon to play.

“A key tactic is recognising when we can support a family, when we can challenge a family, and when we can be that critical or supportive friend around some of these issues. It’s all about recognising when we can provide an outlet for them to talk outside of the family but with that same understanding, and when we can challenge their thinking about their objectives, their purpose, and the next generation. Doing that in a timely, well-organised way can add a huge amount of value,” says Russell.

This material is issued by HSBC UK Bank plc which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the UK. It has been issued for your information purposes only.

Please note that HSBC does not provide tax or legal advice and clients should seek professional advice from their tax advisor. Any reference to tax is based on our knowledge of the current and proposed tax regime and is subject to change.

In the United Kingdom, this document has been approved for distribution by HSBC UK Bank plc whose Private Banking office is located at 8 Cork Street, London, W1S 3LJ.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of HSBC UK Bank plc. Copyright© HSBC Private Banking 2022. 

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