This post was written to help you think through considerations in preparing your family office post-divorce. It accompanies and builds upon our previous blog, the “Top 3 Priorities in Preparing Your Family Office for Divorce.” Whether it’s a new concept or not, as you prepare for the rebirth of your family office, there is a tremendous opportunity for change, impact, and empowerment.
Top 3 Priorities – A Summary of Our Previous Blog Post
Divorce can feel like a whirlwind of confusion with many decisions to be made while your mind is understandably not operating at its clearest level. For better processing, we suggest that you take it one step at a time, starting with these three key considerations (not necessarily in this order):
1. Perspective – this is an opportunity for improvement of yourself and your family office. Your mindset is crucial. It’s not easy to do, but we recommend that you hit the reset button and shift your thoughts away from focusing too much on the negatives and what could possibly go wrong. Instead, this can be a time for growth and self-improvement, setting the stage for the next and better phase of your life.
2. Values – think through what you want the purpose of your wealth to be. Define your core values. Knowing what you believe in most strongly helps you and your team to more easily make decisions and determine the direction of the family office.
3. Seeking out help – with the high rate of failure for passing on wealth to future generations and for transitioning family businesses, the risk is too high not to seek out advice from people you trust and from those experienced in these endeavors. Do this early.
Personnel - The Next Step
The steps above are critical for the successful emergence of your new family office. However, you make have taken these steps in a different order or even moved beyond them before circling back. That’s okay. Although this post is meant to serve as a guide, we recognize that everyone’s path is different. In fact, it’s likely that you haven’t gotten this far without already thinking about personnel. Depending on the size, structure, and focus of your family office, it’s not unusual to have one to three senior executives (or possibly more), including a President (sometimes referred to as Managing Director-MD or Chief Executive Officer-CEO), Chief Financial Officer-CFO, and Chief Investment Officer-CIO. It may be a perfect time to upgrade the quality of your staff or to find people that mesh better with your style and freshly defined purpose.
If you already have people in mind for certain roles, you’re ahead of the game. Perhaps an employee or two will be transitioning over from the existing family office, or potentially even the entire team. Prior family office experience is very helpful, particularly so if there is an existing familiarity with your values and purpose, and a level of trust has already developed. The people you have in mind might be an ideal fit for day-to-day operating positions, or they may be more suitable as an advisor or board member for larger family offices.
You also may have family members in consideration for certain roles This presents an opportunity for their growth and fulfillment, as well as legacy. If their abilities aren’t there now, are they developing the skills they need? Do their desires match yours? Although the following quote may not apply to you, I found it striking:
Owners who consider transferring a business to family members do so for non-financial reasons, such as providing for the wellbeing of the owner’s family, perpetuating a mission or culture, keeping the company in the community or allowing the owner to remain involved. (1)
It’s never too early to think about personnel. Filling key positions can often take a year or more. As shown in the table below, many have also found it advantageous to hire outside the family, gaining benefits that may include additional perspective, skills, professionalism, etc.
External heads (Chief Executives and Managing Directors) of Family Offices (2):
Middle East >33%
Values, purpose, people, and other considerations will help to shape the structure of your family office. Future posts will go further into the options for your family office structure, including Single Family Office (SFO), Multi-Family Office (MFO), and Virtual Family Office (VFO). Let us know if we can be of service during your divorce process.
(1) “Business Succession Planning for Private Companies,” Quist Financial, Inc., 2015. Accessed 7/17, 21. https://www.quistvaluation.com/wp-content/uploads/2015/08/Quist-Insights-Business-Succession-Planning-for-Private-Companies.pdf
(2) “Family Office: To Keep It In The Family Or Not To Keep It In The Family, That Is The Question,” Paul Westall, Forbes, June 8, 2021. Accessed July 17, 2021. https://www.forbes.com/sites/paulwestall/2021/06/08/family-office-to-keep-it-in-the-family-or-not-to-keep-it-in-the-family-that-is-the-question/?sh=40a23ecc3f70
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