Sometimes, they are formed as a consequence of a liquidity event converting the ownership of an ‘active’ business into ‘passive’ investable capital. However, they are formed or evolve, at some point either at inception or as generational change occurs there is a need to contemplate the design of the family office. The imagination that inspires the creation of wealth is typically fuelled by a passion and commitment to succeed. Success does not necessarily follow a defined path nor work within the confines of a tight framework. It is built on instinct, flexibility and resilience and often accompanied by good timing or good fortune.
Should the same imagination that created the wealth define its future administration? Or should the wealth owner use their imagination to look over the horizon to determine how the future management and administration of their wealth should be undertaken for the benefit of future generations?
You might like to consider the following table in assessing your own family’s needs and objectives.
|Defining the family’s goals and objectives
||What does the family want to do and why does it want to do it?
||Gain consensus as to the benefits of being a family whose affairs are managed collectively
||Provides the basis for decision making |
||What is the current position?
||Articulate how service is currently delivered to the family
||Defines what works and doesn’t work, what fits and doesn’t fit|
|Outline service needs as a family
||What services does family need?
||Summarise the role that would be played by a ‘family office’
||Highlights service requirements |
|Defining a new structure
||How are the service needs of the family met?
||To begin designing the structure of a ‘family office’
||Enables a ‘broad business plan’ to be put together |
|Setting goals and objectives for the ‘family office’
||How is the ‘performance’ of the family office measured?
||Defines the family’s expectations as regards overall costs of delivery, revenue performance
||Helps develop a coherent strategy by defining the ‘capacity’ of the family office to deliver services|
|Commence process of communication of strategy to stakeholders
||How is the transition from the current view to the better view to be managed?
||To develop a plan for implementation
||Sets time frames and allocates responsibility for moving to a new ‘office’|
The steps towards creating and implementing a family office structure
In KPMG member firms’engagements with client families we understand that no two client family circumstances are the same. However, what we do is apply a consistent approach to helping families define for themselves why they wish to use a family office, what it is that the family seeks to achieve from either creating or maintaining a family office and what the family office must do as an organised supply of services to meet the family’s needs and objectives.