How to set up a single-family office in 12 steps:
1. The family office objective
Setting up a single-family office is best started by drafting a single-family office charter, also referred to as a family office constitution. Through this document all involved family members decide and agree on the objectives of the family office.
A single-family office charter can be part of the overall family governance of the family.
2. Family involvement
Establishing the involvement of the family (members) in, for example, the single-family office leadership structure is very important and needs to be done at a relatively early stage. Will one of the family members be involved in the operational activity of the family office?
3. The assets which are managed by the family office
Which family assets are within the scope of activities of the family office and which are not? Which assets remain to be managed by the family directly (such as the family business)?
4. The services the family office provides
Each family needs to decide which services the family office will provide. Although for most single-family offices managing investments is a primary service, this is not necessarily the case for all of them.
5. Family office leadership structure
Every single-family office needs a leader: the Chief Executive Officer (CEO) of the family office. Recruiting a single-family office CEO can be extremely challenging. (Read more about this in the paragraph ‘common mistakes’.)
6. Drafting the family office business plan
A single-family office business plan should be drafted. A family office business plan is necessary to bring structure in the process of establishment.
7. Budget & costs of the single-family office
The establishment of a single-family office starts with pro forma budgeting. The family office needs to grow over time from a first pro forma budget to a formal yearly budget.
8. The family office jurisdiction
An analysis should be made to select the most suitable jurisdiction to establish and operate the family office. The location should suit the situation of the family members (the clients of the family office), but that is clearly not the only element to take into account.
9. The family office structure
The location of a single-family office and its legal structure go hand in hand. The legal family office structure should fit the jurisdiction. One important element to consider is how the activities of the family office will be financed.
10. Recruitment of family office staff
Recruiting and maintaining staff for a family office can be challenging. Staff is normally the largest cost element of the family office. Every single-family office needs to analyse the number of staff needed and their role in respect of the services the family office aims to provide.
11. (Operational) Infrastructure
Although not the most exciting topic, office space and everything related to it, such as computers, will need to be organised for the family office. One also has to consider how the family office will operate in practice.
12. IT, family office software & cyber security
Nowadays the technological side of a family office should not be underestimated. Running a family office without proper IT applications is impossible. Software should be acquired or outsourced.
Both control and risk management are extremely important elements in the process of operating a family office. As they are that important we do not consider them separate steps, but when working with us you find them integrated in (almost) all of our modules. At the bottom of this page you find additional information about how we support you.