Looking at all of the challenges in life it’s difficult to create wealth in the first place let alone generational wealth that demands the need for a family office, which brings up a good question: What is the secret sauce that makes family offices successful? And many times it’s not as complicated as it may seem.
Starting off, as mentioned above, having the ability to create a family office means you’ve already gotten over the hump, performed at a higher level than most people in the world, and can now enjoy the benefits for generations to come if you plan correctly.
Planning correctly/strategically is also very subjective and at the same time highly dependent on the families goals: One family office may be content with the money they made and as long as they can continue living their lifestyle they’ll be happy whereas on the flip side another family may be focused on turning that $1B into $20B.
Secondly, success for family offices can’t be solely judged based on metrics on the surface but instead focusing on free cash flow and how that continues to push your family forward. It could be free cash flow generated from various investments or more long term plays where securing equity and eventually an exit is most valuable – though how does everything shake out in the end?
Lastly, which is something to point out because we have guided family offices on these particular issues: It’s imperative to establish clear responsibilities for family members involved in any capacity and do so upfront along with expectations for the future. This way everything is on the table, clear as day and you do your best to remove financial disputes in the future that many times tear families apart while we should be bringing them together.
Hopefully the above helps and if you have a family office may the force be with you!