Family Office
Family Office Or Founder's Office - Sector Must Tighten Definitions

A consultant and former private banking and investment industry figure has a complaint: he reckons that some family offices should instead be called "founder's offices" because the people who build them dominate their management and structure.
The world’s family offices industry has a terminological problem.
The men and women who establish these entities set the tone and
direction with such force, often without sufficient thought to
the long-run interests of other family members, that they should
be called “founder’s offices” instead.
That is the complaint of former JP Morgan private banker,
Samy Dwek, who is now the founder and CEO of The Family
Office Doctor and White Knight
Consulting. Having worked in private banking and investment,
he thinks that too many family offices are not operating as they
should.
“In the majority of cases family offices are created by the
founders, hence it follows that it is built for them. The term
'family office' is because it oversees the wealth of the family.
Hence, we need to recognise its role to oversee the wealth that
the family stands to inherit, not just focus on the values,
vision and outlook of the founding family members,” Dwek,
who is based in south Florida, told this news organisation
in an interview.
“It has been my experience that CEOs of family offices are
replaced, family offices are overhauled, split up or wound down
when the parents are no longer there or in control. We can see
the same issue with clients of banks, asset managers, CPAs and
attorneys,” he said.
Dwek has been busy working on a series of white papers, such as
The Importance Of Having A Family Office Rulebook (May,
2021), Family Office vs Founder’s Office (May 2021) and
Single Family Office: Do I Need One And Is It Right For Me
And My Family?
Although the total number of family offices worldwide is unknown
- some have pegged the number as high as 10,000 - the
multi-trillion-dollar sector is large enough to attract big banks
and other service providers eager for their custom. And, as the
sector saw recently, following the saga of collapsed hedge
fund/family office Archegos Capital in
New York, the moniker “family office” is not a mere academic
matter. Regulators
are threatening to spread their net.
Family offices are becoming more visible than they were in the
past. Set up with the deliberate aim of avoiding publicity
- for entirely legitimate reasons - they are having to
adjust in order to appear on the radar of hotshot investment
firms touting their wares. If offices are completely discreet,
they are ignored. Services such as Highworth
Research, a UK-based firm generating masses of data on their
investments and activities, make these structures more visible.
(WealthBriefing is an exclusive media partner with
Highworth.)
Dwek isn’t the only person arguing that the industry should see
family offices as defying generalisation. Edward Marshall, of
international law firm Dentons, recently hired to be
global head of its family office and high net worth group, has
argued that general ideas about best practice can be made.
(See
more here.)
The question of definitions is important if these idiosyncratic
organisations want to benchmark performance.
“It’s funny, but this has been staring me in the face for a long
time, as I have seen family offices hit the wall for this very
reason. But only recently, as I had been transcribing my
experiences into white papers, did it jump off the page, so I
decided to articulate it clearly, so that founders, families and
family offices recognise the issue,” Dwek said.
The definitiion of “founder’s offices” is fixable, he said.
“There is plenty that can be done to curtail the issue, but it
requires the buy-in and involvement of the founders and their
CEOs. With the right family governance, family meetings and
infrastructure, this can be the beginning of rectifying the
issue."
The phenomenon is not confined to any part of the world, said
Dwek. “The issue exists all over the world, cultural issues may
exacerbate the issue. But we are starting to feel the impact
where the generational shift of wealth is taking place, in
particular in Europe and the US,” he said.
“Family offices aren’t for everyone, too many do it as a status
symbol or because they are trendy. The founders wield influence
because they take the initiative to create the family office in
their image. But it requires further steps to ensure longevity,”
he said.
Getting the correct model is important not just for the longevity
of an office, but when handling matters such as recruiting
outside professionals: “In most cases family offices are created
by creators of the family wealth with their vision and values as
the driving factor behind hiring the CEO. I have no issue with
that, however the CEO will require guidance to ensure they don’t
fall into the trap that will cause their removal when the power
shifts to the next gen.”
“Creating a methodology of communication and inclusion will
enable the family office to better reflect the entire family and
survive the generational handover. In some cases
professionalising is part of the solution,” he said.