Family Office Leadership: 5 Archetypes & Key Roles

Video transcript

The family office association was founded in 2007 as a peer network for single family offices. Family office leadership. There are whole courses and books on leadership and staffing. Here we will share a few observations from the perspective of the unique challenges faced by family offices. Some of these points may seem obvious, but you would be amazed how often they are overlooked. When it comes to family office leadership, there are five basic archetypes. The founder who can create something from nothing. The implementer who creates repeatable results for the family office. The improver who is driven to optimize existing systems. The administrator who enforces the rules and ensures the trains run on time. And lastly, the turnaround leader who is called in to rebuild a dysfunctional family office when things break down. Of course, these archetypes are helpful, but if you're writing a job description for your family office, traditional leadership titles will be needed. The CEO, CIO, CFO, and COO are the most common formal positions in a family office. These roles can be occupied either by professionals or family members. Sometimes the role of president is used instead of CEO or there may be a president role that sits above or below the CEO if a family member occupies that position. Defining the compensation philosophy carefully is the best way to ensure success in hiring the right candidates who fit the culture of the family office. In addition to salary and bonus, candidates may ask for co-investment opportunities, carried interest, and other forms of long-term incentive compensation. Long-term incentives are very important if your time frame is generations. Alignment around incentives is critical for the long-term success of the family office. It used to be the case that compensation was lower in family offices because of the perceived lifestyle benefits, but that is not the case anymore. Obviously, the larger and more complex and the more desire for privacy and control within the family office, the larger the internal staff needed. Depending on the size of the family office, the team may include a staff of analysts, strategists, and other support people, as well as a host of third-party service providers to supplement the team. Not surprisingly, a family office role can be either the best job in the world or the worst job in the world. It all depends on the family and family office culture. To quote one of the most famous sentences in literature from Leo Tolstoy's novel Anna Karenina, all happy families are alike. Each unhappy family is unhappy in its own way. A key question to understand therefore is are you treated like staff or like family. Thank you for listening. We hope you have enjoyed this content. Please share with others or visit tfoa.info to learn more.