The Evolution of the Family Office

Building and Future-Proofing Your Team

Mayeer Pearl
| 2/15/2023
A few years ago, I recall meeting the three adult children of a family that in the late 70s had started a manufacturing business in Mississauga, Ontario. Over the years, with the addition of multiple real estate acquisitions, and consistent growth in their sector, this small family business grew into a sizable and very successful organization. What didn’t change though, was the comparatively simple lifestyle that the entire family led.  

While the eldest child continued to work within the business, the two younger siblings grew their careers and families outside of it. All three children benefited modestly from the success of their parents’ business with the assistance of a first home purchase and new vehicles every few years. Fast forward to 2019 – the sale of both the family business and the associated real estate assets, created an estate valued at over $500 million dollars.  

Not only were the children totally unprepared for the sudden arrival of wealth, but it was also very unexpected. At no point had they been made aware of the potential value of the family business. Much like having a pop-quiz that you can’t study for, the three heirs did not have the skills, experience, or to some degree, desire to manage the responsibility and expectations that are required of a high-net worth family. While I changed few details in this story to ensure anonymity, tales very much like this one are becoming more and more common and serve to underline the need for a structure like a Family Office (FO).  
Family offices have long existed, but now driven by a huge transfer of wealth across generations, the tech revolution, and the rapid growth of certain economies, their numbers are growing like never before. This market expansion and change along with the increasingly powerful clout of these bespoke, diverse organizations for preserving and growing intergenerational wealth, means families are approaching the question of their team development and structure very differently.  

It is often said – “once you have seen one family office, you’ve seen one family office.” Like snowflakes, there really are no two that are identical – each having its own unique set of needs, goals, dynamics, history, and stakeholders. Their diversity is also a consequence of the secrecy and privacy that surrounds a traditional family office.  

That said, there is a common intention amongst all family offices, which is to create an infrastructure designed to support and protect families that belong to the high-net worth (HNW) or ultra-high-net worth (UHNW) category. Through their family office, HNW and UHNW families manage their financial and family affairs, including assets, taxes, and philanthropic activity.   
Your Family Office Team

Why set up a family office?

Determining whether to set up a FO depends not only on the family's overall net worth but also on how complex their financial affairs have become. Because the source of these families’ wealth is often not inherited wealth but created as a result of the sale or divesture of a business, investment, real estate, or another liquidity event, this complexity can sometimes occur almost overnight.  

As in my anecdote above, family offices are often created out of the need to manage or extend wealth. Often, FOs are put in place to help families grow and maintain a legacy for their children or relatives while also advancing the family's goals through either a business, philanthropy, or both. The secret here is in the establishment of those goals, which is another area where some families struggle.  

Setting clear family office goals 

Where a FO can often provide significant value to a family, is in acting as an impartial and objective third party in the development of clear and focused goals. 

Developing FO goals is not as simple as listing resolutions or hopes and dreams. Rather, it involves big picture thinking and planning with the family vision and legacy at the forefront. It can involve ownership transitions, leadership transitions and successful wealth transitions, all while navigating the rational tasks of running a business with the more emotional elements of family dynamics.

The elements of big-picture planning can include: 

  • Defining and supporting family vision and legacy 
  • Leadership and successful wealth transition  
  • Education around the responsibilities of wealth
  • Philanthropic planning 

To achieve the family’s goals and vision, there is, of course, the day-to-day components that can either be managed entirely by, or supported through, the actions of the family office. These can include, but are not limited to: 

  • Managing investments and insurance 
  • Managing family governance  
  • Managing properties 
  • Bookkeeping and bill payments 
  • Fund distribution 
  • Execution of philanthropic and gifting strategies 
  • Concierge-style services 
  • Managing relationships with accounting and advisory team, legal team and other professionals 
No two alike
It is often said – “once you have seen one family office, you’ve seen one family office.” Like snowflakes, there really are no two that are identical – each having its own unique set of needs, goals, dynamics, history, and stakeholders. 
No two alike

What are the characteristics of a good family office?

While it is true that no two family offices are the same, there are some very clear common qualities among those that perform their function well. A good family office should: 

  • Provide bespoke services tailored to the multi-generational needs and goals of the family it serves. This customization should reflect the family’s philosophy, risk tolerance, vision, and goals.  
  • Offer a comprehensive range of financial services including corporate and family governance, estate planning, tax planning and philanthropic consulting while maintaining independence from a specific financial institution to ensure the family office is free from conflicts of interest.  
  • Have a strong reputation for providing exceptional service as well as deep bench strength and experience in supporting and protecting HNW and UHNW families. 
  • Excel at responding to and anticipating the needs and at times, competing goals, of the family while maintaining the utmost discretion and privacy.
  • Holistically and objectively, act as the quarterback for the family in achieving their long-term vision as well as the gate keeper between the family and third parties. 
  • Plan, coordinate, educate and advise the family members on all areas related to the responsibilities of wealth
  • Balance the personal and business performance agendas of the family.  
Family Office Roles

What are the roles that make up a family office?

A FO is made up of multiple advisors who work together as a cohesive team under the common goal of protecting the family. Team members can include accountants, investment advisors, lawyers, estate planners, and even psychologists and social workers.  

At the centre of this family office team, and often the most pivotal role, is the Chief Financial Officer (CFO). While their title may vary, this person maintains a bird-eye view of the entire family situation and is the “point” person that the family can always call on. In addition to their financial acumen, the CFO in a family office is an expert in managing what are often delicate or complicated relationships while providing the highest level of client care. Along with managing relationships with outside professionals, the CFO quarterbacks, mandates, and reports on the work done by investment advisors, all with the utmost discretion.  

In addition to the CFO, the professionals working together in a FO ensuring the family’s needs are met and nothing falls through the cracks, include:  

  • Investment advisors 
  • Tax planning specialists 
  • Operations manager, overseeing personal staff and managing personal residences 
  • Lawyers, on a consultant basis 
  • Social worker or psychologist to help manage family dynamics or solve any discord
  • Insurance agents 

Crowe Soberman’s role in your family office 

Crowe Soberman’s Family Office is built on the mandate of empowering families, preserving wealth, and securing legacies.  

Acting as your CFO, we provide a comprehensive and personalized approach, tailored to your family’s needs. It is our size that makes us different - small and nimble enough to understand and excel at the relationship factor, yet with unparalleled bench strength and depth. Our affiliation with international network, Crowe Global, provides access to even further resources otherwise unavailable to most family offices. 

Our team has long-standing experience and understanding of the unique needs of a UHNW family and are dedicated to helping our clients achieve their financial goals while simplifying their financial lives.  
This article has been prepared for the general information of our clients. Please note that this publication should not be considered a substitute for personalized advice related to your situation.

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Mayeer Pearl
Mayeer Pearl
Partner, Audit & Advisory
M. Pearl Professional Corporation