With an estimated 6,500 to 10,500 family offices worldwide, there is no blueprint of how family offices should operate or be structured. However, as Amy Collins, Executive Director in our Private Client team explains in this sector snapshot, implementing a governance framework is key to a family office's success. *
The Covid-19 pandemic and the regulatory and political changes of the past 18 months have prompted family offices to review their operations. These market forces have brought about both risks and opportunities, but perhaps the most notable change at hand is the focus on how family offices are governed.
Family offices have always been unique and complicated, with variable family dynamics and multiple generations often spread across the world. This is increasingly the case as many family members are in different locations and have different travel schedules compared to two years ago.
The complexities of beneficial ownership and economic substance regimes; the impact of an unanticipated global event like Covid-19; the sophistication of cyber-attacks; the necessity for effective succession planning arrangements; and the need to educate the next generation on how to manage wealth are testing existing governance and operational frameworks and have, in many cases needed to be revisited and revised to take into account different lifestyle patterns.
Most larger family offices have robust governance frameworks in place to manage the effects of these market forces, but many medium to smaller sized family offices are only now beginning to recognise the importance of a robust operational governance model and to learn what that may look like. From sitting down to develop a shared family vision and building clear avenues for communication, to creating a customised governance structure and baking in operational flexibility, laying down these fundamentals and reviewing them regularly gives a family office the best chance of achieving longevity and success.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.