How family offices make decisions on managing their clients’ investments is very important and that is why family offices often carefully structure their investment committees to be as efficient and effective as possible. In my recently published book, The Family Office Book: Investing Capital for the Ultra-Wealthy, I spoke with several family office executives on how they make their investment decisions and how they structure their investment committee meetings. Here are just a couple excerpts to give you a glimpse at the different approaches among family offices:
Chris Allen, a single family office expert with over a decade of experience running a SFO, highlighted the differences from family client to family client and recommended building consensus within the family. ”It’s very family specific,” Chris told me, “but there are some very similar tracks for the families that I’ve talked with over my career . . . The best family offices that really do make good investment decisions evaluate every single aspect of teh opportunity and make a decision that’s generally consensus. If you don’t build consensus within your investment committee, you’re going to end up in a fight down the road.”
Some family offices do not have a formal investment committee. Andrew Hector explained how his family office, Candor Financial Management, operates:
“There is no formal investment committee. We match each client to their objectives, including their financial objectives, and their risk profile and they are all different, different degrees. But as far as it comes down to investing, each advisor has the obligation and the right to select investments for the client, and they know the clients the best. That said, most investments are peer reviewed and discussed with the other advisors . . . “
Paul Tramontano of Constellation Wealth Advisors, a top family office, offered his opinion on what makes for a successful family office investment committee: ”The key to any successful investment committee is open dialogue and the ability to really sort of debate the important issues.”
I hope that these excerpts from my conversations with family office executives help you better understand this industry and how family offices operate. For more on this subject, you can read the full interviews in my new book: The Family Office Book: Investing Capital for the Ultra-Wealthy
Tags: family office perspectives, family office investing, family office investments, family office investing best practices, how family offices invest, family office investment, family office allocations, family offices, family office investment committees, family office investment committee, investment committee best practices, family investment committees
