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| Family Office |
Office Protocol
Anne Field
06/01/2004
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The number of staff in most family offices varies
due to a variety of factors: the number of family members, the services they
require and the type of investments they pursue, among others. “A family whose
main asset is in commercial property in multiple states would have more staff
than one primarily investing in securities,” says Ellen Perry, managing partner
of Wealthbridge Partners in Washington, D.C. “A family with 20 members and many
services needs a larger staff than one with five members who only want money
management and tax preparation.” On the other hand, what McCarthy calls
“compliance offices”—offices that simply handle bill paying or tax
preparation—require just one or two people.
Families should have least
$75 million to $100 million in assets to
justify even a simple office. For more ambitious, fully staffed operations,
the figure rises to $250 million. |
McCarthy recalls a family office
started by a patriarch and his four children. Because their primary goal was
investment management for the family, they only needed a small staff. They hired
an accountant who was a veteran of the financial services industry. His role was
to monitor the family’s investment managers and work with an investment
consultant. Because family members were actively involved in the office, they
found no need for additional staff, and outsourced legal and tax preparation
work.
Family Governance
Of course, Cavanaugh did not unilaterally make all
goal-setting and hiring decisions. He turned to the office’s board of
directors, a governing council composed of adult members of all five family
households. That group actually started meeting informally about 10 years
earlier to make financial, estate planning and philanthropic decisions. But
about a year after launching the family office, they formalized the structure
and introduced regular quarterly meetings. While the board does not manage
day-to-day decisions, it does supervise a wide range of activities, from
approving financial statements to endorsing budgets and performing annual
compensation reviews. As in many other family offices, the Russells also have
committees to oversee such areas as client services, existing investment and new
investment.
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