B∆NK Exclusive: Starting Your Own Family Office
Become financially sovereign
Most people don’t know what a family office is, or recognize the advantages of operating one.
There are many compelling reasons to evaluate starting your own:
center for accelerating wealth building
optimize tax liability surface area
build systems to lever your wealth to build more wealth
Let’s walk through how you put together your own single family office (SFO).
Quick note: Work with experienced attorneys to ensure your family office model satisfies all applicable local regulations.
Carefully weigh the costs and control factors when deciding which services to keep in-house vs outsource to service providers.
Here's the process I used to build my SFO along with explanations about what's involved at each stage along the way.
Conduct a Feasibility Analysis
Needs Assessment: Define the specific problems you want the family office to solve (wealth management, estate planning, philanthropy, etc.). Think long-term and intergenerational impact.
Cost Analysis: Carefully estimate setup costs (staff, technology, etc.) and ongoing expenses. Balance this against the potential benefits and services the office would offer.
Before leaping in, it's critical to assess if a family office truly suits your needs.
Start by thoroughly defining the specific wealth, estate, tax, or philanthropic issues the family office should address. Consider both current needs and long-term, multi-generational goals. Analyze all costs associated with set-up (legal, staff, technology) and ongoing operations. Estimate the potential return on investment by comparing these costs to the projected benefits of centralized wealth management.
You need to understand your target to ensure you are journeying in the right direction.
Define Structure and Processes
Mission and Values: Formalize your family's core values and goals for the office. This will guide all decisions.
Governance: Establish clear decision-making structures. How will family members be involved? What role will outside experts play?
Service Scope: Specify which services the office will provide in-house vs. those it will outsource (legal, accounting, investment management, etc.).
Your family office needs a foundation.
Create a mission statement articulating the family's core values and how a family office will further these goals. Lay out clear governance structures defining decision-making processes, the role of family members, and how you'll incorporate external experts. Choose between in-house or outsourced services. Decide if your family office will handle investment management directly, or if you'll utilize advisors.
The same applies to legal, tax, philanthropic endeavors, and even services like concierge, education, or lifestyle management.
Build, Build, Build
Team: Determine the positions needed and hire accordingly. Look for experienced professionals in financial advising, legal, operations, etc. If outsourcing heavily, identify top-notch partners.
Technology: Set up a secure IT system for managing family information, reporting, and coordinating with external providers.
Operational Processes: Develop detailed workflows and procedures to ensure efficiency, transparency, and risk management.
The building stage focuses on team and infrastructure. If staffing internally, hire professionals with expertise in finance, law, and operations. If relying heavily on outsourcing, establish relationships with top firms. Invest in secure technology platforms for data storage, financial reporting, and communication.
Finally, develop highly detailed operational procedures to ensure efficiency across wealth management, tax compliance, communication, and risk mitigation.
Always Experiment, Always Improve
Pilot Programs: Start with smaller initiatives or manage a portion of the assets to ensure systems function smoothly.
Cybersecurity Emphasis: Rigorously stress-test your data protection with simulations and penetration testing to protect sensitive financial information.
Feedback: Solicit input from family members and advisors to refine processes before a full launch.
Before full launch, "stress-test" your family office.
Start with smaller initiatives or manage a portion of the assets to ensure your team and systems function smoothly. Prioritize robust cybersecurity measures from the start. Actively seek feedback from family members and advisors, iterating on processes and strategies before managing all the family's wealth.