Strategies to Support Growing Families

As families grow, their needs change — and family offices must be ready to adapt.

When a family grows, family offices often thrive: A growing family can mean a larger client base and more assets under management. However, growth can increase complexity as well.

As the family’s needs change, the way family offices address those needs may need to change, too. Knowing when — and how — to change can help family offices continue to provide the services families expect without straining the office’s resources. Here are some communication and administration strategies that we have found through our own experience can go a long way toward accomplishing both.  

Communication: sustaining family connections

As a family grows to multiple generations, communication among members can become cumbersome. It may become harder to organize meetings or get all parties into the same room. Family members may also have diverse opinions about how financial decisions should be made. Family offices can help minimize conflict by opening and maintaining lines of communication with the entire family, including by:

• Offering relevant information and a financial education tailored to the family’s needs, while positioning the family office as objective arbiters who care about all family members’ needs equally.
  
• Scheduling regular meetings with individual family members to understand their goals, needs and differing perspectives. This can help you determine whether there are additional assets that they would like you to manage, or whether there are opportunities for the family to use pooled purchasing power to gain access to investment opportunities and managers that they might not be able to obtain individually.
• Instilling good governance and transparency. Checking in with family members and exploring governance structures that suit everyone’s desired level of involvement can help keep family members engaged. Some families have a committee for spouses to facilitate relationship-building, for example.
• Networking with peer families can also uncover strategies that can help make the family office a hub that brings the various branches of the family together, in addition to providing important services.

Administration: handling increased wealth

Growing families may also present more diverse needs when it comes to financial tools and strategy. Family members may have different risk tolerances, or they may be interested in particular asset classes. They may also have different expectations about the type of reporting they want to see. The more people a family office serves, the more robust their systems need to be to ensure they can match the complexity of the family’s reporting, tax preparation, and security needs, among others.

When family wealth scales or family members invest in new assets, family offices must be able to scale their operations accordingly. This includes:

• Regularly evaluating both the services offered and the talent on staff. For example, it may be easier for younger relationship managers to support younger family members. Or the family may benefit from areas of specialized expertise, such as a business advisor for families with multiple entrepreneurs. If team members have these capabilities, it’s worth putting them to use.
• Reviewing your tech stack to ensure your office can provide the range and sophistication of services needed while also growing assets under management. You must have the right technology to manage expanded reporting and investment capabilities. Additionally tax preparation, supplemental software tools, and cybersecurity needs all grow in complexity over time and require constant attention.
• Using customer relationship management software — and ensuring adoption by all relevant team members — to track the information gleaned from meetings and conversations with family members.

Matching families’ growth with office growth

Expanding families require more time and resources from family offices. By planning ahead for a family’s expansion and keeping a close eye on individual family members’ evolving needs, family offices can adapt in ways that support these long-term relationships and result in mutual growth.