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Setting up a family office generally depends on how many families it will serve. As a background, there are two main types of family office namely, the single family office and the multi-family office. Though, setting aside the difference, the family office structure will basically depend on the needs of the family. There are families that only need the basic administrative assistance while others would opt to have a group to administer the family’s wealth, enterprise  and their daily affairs.

It is fundamental for the family to determine first the vision of the family office. The vision or the mission statement of the family identifies the intention of the family office and serves as a guide for the professionals or the pool of experts providing service to the family. It gives direction on what strategies to engage or plans and programs to implement in building the enterprise. After the family identifies the vision, this is where the designing or setting up of the family office comes in. This is where the details are discussed along with the development of the business plan.

In order to realize the structure that best fits the family office, the family should be able to define the responsibilities, create family governance and evaluate performance. By defining the responsibilities of the members involved in the family office, it implies that the family is also treating the family wealth like any business. It is a business or an enterprise wherein each member has a role to play in order to achieve the common goal, which is basically to increase the family wealth. Family offices let the member or any professional clearly identify what needs to be done or as it will be properly documented. The family office should maintain accountability only for activities which were developed from in-house business routine and has added value. Apart from that, some activities may be contract out especially if it involves additional cost and becomes more difficult.

It is always a challenge to accomplish how to define the family office’s responsibility for the complexity of family relations that comes with it. Adding to the varying preferences of family members and executives with the type of investments that may benefit the family. The guidelines on investment decisions are mostly a challenge to take in. The administration of financial assets requires competencies which are different from what is required for the management of real assets. Thus, dividing the management responsibilities can make the most effective approach especially in selecting managers with the required set of skills in dealing with investments depending on assets types. More than the asset management activities, the family should settle on whether the family office will be in charge for the family’s financial planning, tax and legal support and charitable activities, in addition to the wealth education of the next generation. Some family offices are also providing the management of the daily activities at home and other personal assets that are not initially financial investments. With this, the family office should be able to set a distinction on who manages the more financial aspect of the enterprise and the non-financial activities as well. The separation of responsibilities will guarantee that a committed team has the required competence with clear focus on the goals and will be able to optimize the value depending on the assigned tasks. This will also promote or enhance the mentoring of the younger generation as they will have a grasp of the activities that will be entrusted to them.

The family office needs structure and it can be accomplished by establishing governance with clearly defined specification. Effective procedures in governance can maintain family unity as a result of transparency which will eventually avoid or lessen disputes or coordinate an organized decision making process for the family. It also enables the family office to perform its function to administer and move it towards achieving its targets.

An effective family office should not prevent improvements and settle for status quo. The family office should further develop itself and evaluate its performance. This is a way on how to measure the performance of a family office which could be accomplished through benchmarks. However, participating benchmark activities may be a challenge especially in looking for a direct comparable family office portfolio. Portfolio segmentation will be able to pinpoint comparable benchmarks in certain activities. The process involved in coming up with similar portfolio is a good exercise to the family members wherein they are able to discuss possible innovation or creating value to their current practices.

To be able to assess how the family office performs is a step in creating value. Family members should be able to discuss in detail. It is significant to define long term goals for the family office which will include the coverage in relation to activities at the same time, its investment objectives. Family trust is essential in deciding of the roles in the family office to know if this will foster family cohesion or may result otherwise. Family disputes should primarily be avoided in order to have an effective and efficient management of the family office.