The growth of Family Offices globally has been on a record pace. In 2008, there were an estimated 1,000 single family offices worldwide. According to recent surveys there are over 10,000 family offices globally and approximately 5,000-6,000 in the United States.
Some of the most critical mistakes that are being made when establishing a Family Office are:
1) Selecting the wrong service providers. Many service providers including investment managers, accounting firms, law firms, consulting firms, real estate and business brokers,and even recruitment firms are selected based upon someone having a relationship with one of the firms instead of objectively being based upon the expertise and track record of the firm.
2) Not paying enough attention to the family values and missions. It is essential that the family members agree upon their mission overall and their values before making investment decisions.
3) Lack of due diligence being done for investment managers. Many family offices do not have the expertise in-house to perform the proper due diligence on fund managers and may be better off using an outsourced service provider with expertise in this area.
4) Not establishing a formal infrastructure for decision making, for recordkeeping and reporting. It is also essential that the infrastructure be established effectively for legal and tax purposes, which can be a complicated decision.
5) Not establishing a clearly defined succession plan.
These are some of the most common mistakes made by families as they set up a family office.
To avoid the mistakes listed above and many others, please feel free to contact Michael Rosenblatt, President of FON Search and The Quest Organization at 212-971-0033 or via email at firstname.lastname@example.org