Think it’s time to establish a family office? Here are a few things you should consider

family office september 2018

Think it’s time to establish a family office? Here are a few things you should consider


When it comes to managing and passing on your wealth there are many benefits to having a family office. For starters, family offices are a tailored service; designed and implemented to support your individual family goals and financial needs. They also provide you access to coordinated financial, taxation and legal advice all in one place, often saving you time, money and complexity that seeking the services of multiple individual providers can lead to.

However, with all these clear benefits of family offices why is it that around 70% of intergenerational wealth transfers fail? What’s causing them to fail and what should you consider before establishing your own family office?

Why do so many family wealth transfers fail?

There are many reasons why family wealth transfers fail with the most common cause being a lack of trust as a result of a breakdown in communication among family members. However, some other common reasons are:

  • An unclear family wealth vision or purpose – often leads to wealth just ‘disappearing’ or interfamilial conflict
  • A lack of succession planning and preparation – the heirs may not have the education or experience to take over the family wealth
  • An Inability to let go – sometimes it can be tough for leaders in the family to pass on the responsibilities and legacy to the next generation
  • Family expansion – as the number of family members increases, the purchasing power of each member often shrinks without careful strategic planning

So, what are some things you should consider when establishing a family office?

The purpose of your family wealth – What are you family’s vision and goals?

Each family has their own reason for wanting to establish their family office. Perhaps, you would like to be able to make a positive impact on your community, pursue and entrepreneurial opportunity or ensure that the education needs of the next generation are met. Whatever your motivations may be, developing a clearly defined set of values and goals that you and your advisors can refer to when making financial decisions can prevent familial disputes and ultimately, make the difference between sustaining and growing your wealth or being part of the 70% that fail.

The scope – How much will your family office cover?

In order for a family office to be successful, it must have a clear governance structure that outlines its responsibilities and focuses. While there is an overall strategy for a family office, the types of assets (real and financial) can impact the type of investments are made and the expertise required to manage them. Furthermore, there are many other personal services that the family offices can offer including, philanthropy, financial planning, taxation and legal support and succession planning. Having a good idea of the scope of activities your family office will help ensure that the right structure and guidelines are in place to achieve your goals.

Your family’s dynamics – How can you prevent disputes?

Understanding you family’s dynamics, personalities and how each member makes decisions can help prevent conflicts by ensuring transparency and clarity about financial decisions being made. As family disputes are a common reason for failed wealth transfer, consider incorporating an independent chairperson and formal family meetings. An impartial party can help prevent disputes as well as help ensure that the family remains on track to achieve their goals. 

Should you have any questions or need assistance in relation to this matter, please call your relevant ESV engagement partner on 02 9283 1666.