Embracing entrepreneurship in family offices
In the latest in a series of articles for CampdenFB, experienced family office professional Giles Graves delves into the importance of fostering an entrepreneurial approach...
The best family offices hire people with entrepreneurial spirit. It is uncommon to find professionals who are also entrepreneurial, but they obviously do exist. I have met several excellent examples during my 20 years working in the family office sector.
Through education we are all taught to think inside the box, to become employees. Professionals have been through the full education system from school to university, and then diplomas or masters or MBAs and training contracts. Throughout the process, they have learned that following set procedures or rules or precedents is the key to success. At no point have they been told that inventing a new version of the method is a good idea. Professional services are (unfortunately) not about experimentation.
When people think of professional firms, indeed family offices, especially multigenerational ones, the overwhelming idea is that these are sturdy rocks, safe houses, secured fortresses, private banks and trusts and the employees are carbon copy meticulous bureaucrats, focused on protection, curation, saving, hoarding, locking the family jewels away from danger.
The truth is no family really wants that and if they do have such a family office, then every time they go there they will feel like the Banks children in Mary Poppins, wanting to spend rather than save their penny.
Yes, they do want to be protected. Yes, they do want their assets to be safe. But without exception, every wealthy individual I have ever met wants to be someone, do something with their wealth, and be proud of themselves.
Often, family offices are naturally leading the way, and doing things that have not been done before. The employees of the family office must, therefore, always roll their sleeves up and put their mind to something new.
It doesn’t matter whether it is a property deal or a special acquisition of arts, or some luxury item like a new yacht or jet. It doesn’t matter whether it is long-term financial planning and tax efficiency, or something more day to day, like an investment or business expansion. In every single case, an employee with an entrepreneurial mind is needed to do something special.
All employees of family offices need to be up-to-date with how things are changing, often whilst at the same time having knowledge and respect for the curation of history.
Entrepreneurship is essential, especially in multigenerational families.
There are countless examples I can give of work I’ve done where this subject is relevant, and countless more examples where I have seen other people put this way of thinking into practice.
Every single person employed by a family will be juggling the old and new. Entrepreneurship is essential, especially in multigenerational families.
Sadly, because of the high proportion of traditional Professionals doing the hiring in the family offices, very often, the longer the family office survives, the more bureaucratic it becomes. It bulks up with lots and lots of employees and it slows down with more and more internal processes and politics.
If I could advise all family offices to do one thing, it would be to embrace entrepreneurship, at least gently, and ensure people employed feel able to voice ideas and think outside of the normal established processes.
At one point in my career, I was encouraged very much in this regard and as a result uncovered things which showed that right at the very top of the organisation, management had not thought about, or cared enough about, improving efficiency. Probably the most high-level example, was in the administration of trusts. What I found ruffled feathers. Essentially, it undermined the lead employee. My idea, although backed with expert tax advice, was buried swiftly and I felt the full force of internal political power. More importantly, this culture had in fact spread down through the ranks in many ways and inefficiencies were, and probably still are, in abundance.
There is often an attempt by historic family offices to tackle entrepreneurial endeavours, and this is often started and inspired by an energetic family member. However, the risk is, and I have seen it more than once, that the traditional professionals are given the job of recruiting and a bureaucrat is then hired to lead the endeavours. A decade goes by where money is drained on vanity projects. The reporting is wonderful and it ticks every politically correct box, but the results are what can be expected from someone with no entrepreneurial ability or experience. This encourages all concerned to believe that it was actually better to trust the traditional professionals all along and the family lets them lock everything away again.
In first-generation family offices, entrepreneurial spirit is often in abundance, and led by the principal, who is a successful entrepreneur. Life in these offices is emotional, hairy, skin of the teeth, daily learning, daily mistakes, and daily repairs. With the right team, really superb results can be achieved but as Daniel Day Lewis showed us… There Will Be Blood.
Somewhere in between these two extremes is the perfect family office. A team of stable, long-term thinking, highly qualified and experienced, meticulous administrators and curators, plenty of whom also have a good sprinkling of entrepreneurial spirit and energy and most importantly, the environment in which to display it.
And no, this does not just mean ‘hire an accountant with a brightly coloured tie.’
