Family Offices

When a family experiences a liquidity event, such as the sale of the family business, they may feel as if they’re entering an uncertain phase of life.

The transition results in new wealth, but also a loss of business infrastructure, increased complexity of assets and a desire to maintain privacy. Family members will need to be educated about stewardship of the wealth.

Consider this example: Julie took over from her father as CEO of the family’s successful data analytics business. She and her husband, Steve, grew the business for another 30 years. They received offers for the business but always ignored them, until they received one that was too good to refuse. They closed the deal 120 days later and received a very large amount in cash.

After coming up for air, Julie and Steve realized they had no one to help them. Their estate plan and financial architecture were fairly complicated. Their professional office staff had helped with most of their personal finance and legal activities.

What’s more, Julie carried some guilt about selling the business her father started and the impact on the family legacy. Julie and Steve were private people. They doubted a local wealth manager would be able to provide the attention and depth of expertise they needed. They realized that a family office would be the best avenue for them.

Whether you have sold your business or have accumulated significant wealth outside the family firm, a family office might be the best option for you. Here are some signs that your family may be ready to engage with a family office:

You’ve “lost” key personnel. You have just sold your business and no longer have access to support from key office personnel you’ve relied on for years to help with your personal affairs (CFO, bookkeeper, executive assistant). You realize how dependent you have been on those people. Who’s going to help you keep your new family enterprise running smoothly? You realize it’s more than you and your immediate family can handle; you need an expert team and proper infrastructure. You may need such a team to establish legal entities. More important, you need them to help you develop processes, procedures and a governance structure for making decisions.

Things have gotten really complex. You might have a number of trusts, entities such as LLCs or partnerships, and other complex assets, like real estate and operating businesses.

When a family business undergoes a liquidity event, the family may require new financial strategies that can be extremely confusing. Financial structures often include the use of family investment partnerships with features such as preferred/common classes of interest and separate pools for investment allocation purposes. There also might be an assortment of family trusts, and the family might need to establish strategies and policies for intrafamily transactions such as gifting and family loans. Alternative investments and other entities can add further complexity. Many families find themselves unable to understand all the nuances.

For families who still have an operating company, a family office begins to make sense when they start to accumulate wealth outside their business. At that point, they need a coordinated approach to management of the wealth that is separate from the business. Families with extensive trust and estate structures, significant educational needs for younger generations, personal accounting and bill-paying needs, several properties and household employees or large private foundations should also consider family office options.

Your family office team should include well-rounded professionals from different disciplines with specialized areas of expertise.

You’ve got a big family … and it’s getting bigger. Maybe it used to be just you, or perhaps you and a few other family members, creating and managing the family assets. But today multiple households — and several generations — are acting as business partners, investing together and sharing assets as a family. How do you ensure they are all aligned on a vision for the wealth? Do they all have a voice? What does the governance structure look like?

Particularly for families who are geographically dispersed, a family office can help by coordinating and centralizing information, planning and facilitating family meetings, and providing services to all households.

You are attempting to operate as a family enterprise. Overseeing the family’s assets can be just as complex as running a business. You need to develop and implement an investment strategy, monitor investment performance and generate financial reports.

The skills required to be a successful investor are different from those needed to be a successful entrepreneur. Many families realize they need the infrastructure and expertise a family office can provide.

You value your privacy. With the accumulation of wealth come increased security risks. You are keenly aware of that and highly value privacy and confidentiality. You don’t want to involve too many outside advisers. You desire a “one-stop shop” where all your needs can be met by professionals you know and trust, and who know and trust each other.

The upcoming generations need guidance. Poor family communication and inadequate preparation of heirs can lead to an erosion of family wealth. Education and leadership development for your rising generations can help your family avoid that fate.

Family offices can create a wealth education program that’s tailored to your family’s circumstances. Multifamily offices provide synergies between “softer” services and investing and financial services. For example, it can be beneficial for the financial adviser and CFO to attend and contribute to family education meetings.

Family office professionals can also help facilitate succession conversations and help with planning for transition to the next family leader.

Your family legacy is important to you. In addition to financial capital, you want to pass your family’s social capital to future generations. You plan to develop a philanthropic strategy to support the causes and communities you care about and to ensure your values and legacy are perpetuated. How do you define that vision? Does your next generation consider themselves to be stewards of that legacy? Do they feel like they have a voice in building the legacy? Remember, the younger generations will “own” that legacy going forward and will be responsible for continuing it.

You’re a control freak (in a good way). For ultra-high-net-worth families who require a team of advisers to work exclusively for them, a single-family office could be a better option than contracting with a multifamily office or other wealth manager. Having a single-family office guarantees privacy and offers assurance that your family’s interests are paramount.

You’ve accumulated substantial wealth. As your wealth increases, so do a variety of complications. If you have more than $50 million in assets, you’ve probably experienced the complexities described above. A family office can help manage financial issues and guide the family toward good governance.

The choice of a single-family office or a multifamily office isn’t determined by net worth alone. Other factors, such as degree of control, costs and services offered, are key components in determining the right family office solution.

Running a single-family office isn’t cheap. Costs can vary widely, depending on the services provided, but one Family Office Exchange study (“FOX Guide to the Professional Family Office”) found that the median annual cost of a single-family office is about 1% of the family’s net worth. If that sounds expensive when weighed against the benefits listed above, a multifamily office or other wealth manager may be more appropriate.

You must consider your family’s unique set of needs and circumstances in order to determine the right family office solution for you. It’s important for the option you select to be aligned with your family’s values and goals.

Dan Terlep, CPA, is senior managing director of financial and tax strategy for Cresset Family Office. Investment advisory, family office and other services are provided through Cresset Asset Management LLC, an investment adviser registered with the U.S. Securities and Exchange Commission (

Copyright 2019 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact                                                        


Five years after her entrepreneur husband died in 2000, Michele Rollins decided her children needed to be brought in on the family’s financial arrangements.

The late John W. Rollins Sr. had built an empire of companies involved in trucking, environmental services and pest control. He also owned racetracks and hospitality complexes.

“The kids needed to know more,” explains Rollins, the chairman of Rollins Jamaica Ltd., the holding company for the island nation’s Rose Hall Developments Ltd.

To accomplish that, Rollins, who holds a law degree and a master’s degree in taxation, created a small family office. When Rollins was chosen by the Delaware GOP to run for the state’s congressional seat in 2010, her family fortune was reported to be as much as $350 million.

For help, Rollins reached out to a separate family office created by the family of her late husband’s brother — the billionaire branch of the Rollins clan in Atlanta that is behind the pest control empire anchored by Orkin. (Michele Rollins’ branch is not part of that family office.)

Rollins describes the creation process as gradual; her family office eventually grew to include investment management, taxes, bill payments and day-to-day administrative matters.

“It wasn’t a conscious decision to have a family office. It just evolved. We kept adding more and more things,” she says.

Family office nuts and bolts
A family office can be an amorphous concept. Even some successful family business owners confess to not knowing what the term means.

Weighing your family office options

•  Begin the process by having a family meeting to determine your family’s goals. This should be memorialized in a mission statement and family constitution. It might be helpful to bring in an outside facilitator to work through the process. The cost for a facilitator could be $1,000 to $10,000, depending on the amount of work done.

•  Decide whether the family wants to contract for professional services with various individuals or prefers to have most of the services coordinated under one umbrella. You may find the services you need don’t require a family office but can be handled by private banking or other methods.

•  Ask other high-net-worth families what they have done.

•  When looking for a multi-family office, do your due diligence about the organization and the professionals with whom you’ll be entrusting your family’s affairs. Check with other families who have used the services.

•  If you’re thinking about joining a multi-family office, be clear about the services you want the organization to perform for you.

“A lot of times you say ‘family office’ and people say, ‘Huh?’” says Judy Lau, founder of Lau Associates, a multi-family office that is an independently operated subsidiary of Bryn Mawr Bank Corporation.

That’s a testament to how little publicity these entities have received. But over the past eight years or so, family offices have been emerging from obscurity.

The concept gained more notice in 2010, when the New York Times reported that Oprah Winfrey was starting a family office. Over the past year or so, the names of family offices — and the families whose assets they manage — have started to appear in the business press, as more of them have begun to invest directly in businesses (often those owned by other families).

Briefly, a family office is a private vehicle to help high-net-worth families manage their money and other family affairs by bundling some functions, such as legal, accounting and financial advisory services, under one umbrella. Some families, however, have family offices that focus only on functions such as family education, charitable donations and shareholder communications but not on investing and tax services (see sidebar).

Family office services can help families navigate diverse holdings and advice from an array of professionals.

“Most of the people that come to us as potential clients already have an investment manager, an attorney and an accountant. They have the basis of a family office there. What they don’t have is connectivity, coordination and communication,” Lau says. “A lot of people, when they come in as potential clients, say: ‘My attorney’s telling me one thing. My accountant’s telling me another thing. What am I supposed to do?’ ”

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The concept of a family office dates back to the 18th century, when “merchants would hire a trusted adviser to manage their wealth,” according to a study by the World Economic Forum and J.P. Morgan. The House of Morgan, created by J.P. Morgan in 1838, and John D. Rockefeller’s family office, formed in 1882, are two examples from the Industrial Revolution. The family office sector today appears to have grown out of the accounting world, as firms expanded services, says Lucinda Peterson, CFO of Lau Associates.

For families with an operating company, a family office removes the responsibilities of managing the family’s assets and other needs from the family business staff, enabling them to concentrate on the needs of the business. For families who have sold their companies, a family office can help the extended family maintain shared assets and family governance.

Family office pros and cons

•  A family office can provide governance and management structures to address the complexities of the family’s assets, promoting family cohesion and preventing family conflicts.

•  Advisers’ interests are better aligned with the family’s interests in a family office setting than they are when multiple advisers work with multiple households.

•  Centralization and professionalization of wealth management services generally leads to higher returns or lower risk and enables family members to aggregate and leverage their wealth for investing and delivery of services such as insurance and technology.

•  A family office can help separate the family business from the family’s other assets.

•  A family that uses a family office controls how services are delivered.

•  A family office ensures discretion and confidentiality regarding the family’s wealth.

•  Families with a family office can make direct investments without going through private equity funds or hedge funds.

•  Family members or family branches must sacrifice autonomy and independence to invest and work together.

•  Structuring and operating a family office can be complicated, time-consuming and expensive.

•  Family members’ expectations for increasing returns and more services may grow over time, resulting in “scope creep.”

•  The greater the number of family members whose affairs are managed by the family office, the higher the potential for conflict.

Sources: PwC / Family Business Magazine webinar, “Is a Family Office Right for You?,” April 25, 2018; Ernst & Young, “EY Family Office Guide.”

Most family offices today are classified as either single-family offices, which handle the affairs of one family, or multi-family offices, which provide services to a number of unrelated families.

Ernst & Young’s “Family Office Guide” notes that most multi-family offices are commercial, meaning they sell their services to client families. Others operate as private multi-family offices, open exclusively to a few families. Most multi-family offices started out as single-family offices that grew to include other families to achieve greater economies of scale.

Among the advantages of a family office are protecting the family’s privacy, reducing administrative burdens stemming from the holdings of multiple family branches, and providing financial advantages (cost savings and investment opportunities) due to the aggregation of wealth from multiple households.

Services handled by a family office can include wealth management, estate planning, tax preparation, insurance, philanthropy, family governance, NextGen education, risk management, bill paying and record keeping. A family office might also handle lifestyle (or “concierge”) services, such as managing family travel arrangements and supervising household services.

Single-family offices can be embedded within the family operating company or organized as a separate entity.
Many families develop their family offices over time, beginning with one employee administering the family’s affairs, says Raphael Amit, the Marie and Joseph Melone Professor and a professor of management at the University of Pennsylvania’s Wharton School.

“Some start in a small room in the company owned by the family,” Amit says.

These small operations can draw from the family business staff for assistance. Eventually, a small family office might grow into a private company — often an LLC — that manages the family’s affairs. Some single-family offices have 20 or more employees, according to Charlie Carr, U.S. family enterprise advisory leader at PwC.

Another option is a virtual family office, which outsources many family office services. At the opposite end of the complexity spectrum is a private trust company, which acts as a permanent trustee for family trusts.
Like family-owned operating companies, family offices vary in management and structure from family to family.

“It’s not one-size-fits all,” says Amit.

How to begin
Generally, the process of creating a family office starts when the family leaders recognize their lives have gotten very complex, says Todd Ganos of Reno, Nev., who started an office for his own family and then developed it into a multi-family office. Ganos’ entrepreneur grandfather owned a hotel, restaurant and supermarket in California.
“You realize you have a lot of things going on and you’re starting to outgrow your CPA,” says Ganos, principal adviser with IWC Family Offices. “You realize your business accountant is not going to have the skill set to do the personal planning.”

Sam Fratoni of Portland, Maine, joined Lau Associates to help build a portfolio about 20 years ago. Over time, he began using more of Lau’s services.

A family office alternative: Clemens’ shareholder services office

John C. Clemens surely would be proud to see how his descendants have carried on the family business he started in 1895. The company, based in Hatfield, Pa., with operations in Pennsylvania and Coldwater, Mich., today has four business units: Hatfield Quality Meats, Clemens Development, Country View Family Farms and PV Transport. The enterprise now generates annual revenues of more than $1 billion.

The Clemens family, now in its sixth generation, has grown to include an eye-popping 740 members. About 337 of these are shareholders in The Clemens Family Corporation. With that many business owners, things can get complicated.

As the shareholder group expanded into the fifth and sixth generations and households began to move outside the family’s Pennsylvania home base, managing their affairs “became more complex than it had in the past,” says Tara Bahn, a fifth-generation Clemens family member and director of shareholder services.

To coordinate professional services and facilitate an understanding of these services, two years ago the company began exploring the creation of a shareholder services function. Bahn, who previously was the family company’s corporate counsel, worked as a corporate lawyer at the Kirkland & Ellis law firm in Washington, D.C., and a trial attorney in the U.S. Department of Justice before joining the family business.

The purpose of Clemens’ shareholder services office is to act as a liaison between the company and the shareholders. The primary goals of the office are the sustainability of the business and having an informed ownership, Bahn says.

“It serves as a clearinghouse” of information and advice from the company to the shareholders as well as information from the shareholders to the company, explains Bahn.

Unlike a family office, Clemens’ shareholder services office doesn’t handle investments or tax preparation. Bahn says this stems from the company’s status as a C corporation, which means the enterprise is a distinct legal organization and tax-paying entity that is separate from the owners.

The shareholder services office works with shareholders’ professional service providers. For example, the office might coordinate with an attorney representing a family member who wants to create a trust for her grandchildren.

Bahn says the office combines and centralizes services and functions so they are performed by one person, thus improving the delivery of these services and facilitating communication. “Our purpose is not to have any surprises,” she says.

The office also handles day-to-day stock ledger functions, which include transfers from one generation to the next, dividends, payments and redemptions.

The shareholder services office currently does not handle education for NextGen members or other shareholders, but that function is “something we’re looking to start,” Bahn says.

Bahn says the transition to a shareholder services office was “very easy.”

One reason is that a third-party accountant who used to handle the day-to-day stock ledger still serves as a trustee on a number of trusts.

“It made the transition easier for shareholders,” Bahn says.

Before setting up the office, Bahn — along with John Reininger, who serves as Clemens’ chief relationship officer, plus the former CFO — interviewed several different family businesses to see how they handled the function.
Bahn notes there’s no one model that’s right for every business.

“We wished we could have found something and said ‘Oh, that’s exactly what we need,’” she says. “But with family business, they’re all different.”

She recalls a conversation with a member of another business family who cautioned against handling a particular function in a certain way. “We would absolutely recommend you never do that,” the person advised.

“I said, ‘Oh, we do that. It’s something that works for our family,’ ” Bahn says.

Bahn points out that Clemens’ shareholder services office is still evolving.

“Everything could change,” she says.

Bahn suggests that business families looking to create a shareholder liaison function talk to other families to learn what they do. The intelligence you gather will help you develop a model that works best for your family, she says.

“And we would always welcome any feedback from others,” she adds.

— Maureen Milford

Fratoni, an angel investor who was an executive in a high-growth biotech company, says it was important to have the family affairs in order “if something should happen to me.”

Advisers suggest that families considering a family office first sit down and develop a mission statement. “I ask people to flash forward 40 years and [envision that] Forbes is doing a story on your family. What do you want the headline to be?” says Ken Ude, director of the Marshall Family Business Program at the University of Southern California.

Amit says what stands out in mission statements he’s seen is the desire to manage assets in a way that fosters family unity, harmony, happiness and health. It’s vital that families decide the best way to manage their investments to accomplish those goals.

Single-family or multi-family?
Families with liquid assets of about $10 million or more might find a multi-family office more practical than the use of investment managers or wealth managers because of the additional services that fall under the multi-family office umbrella (tax compliance services, philanthropic advisory, family governance, etc.). Each multi-family office has its own unique menu of services and pricing, and each client family selects the services they want. The decision boils down to a cost-benefit analysis.

There is varying advice on how great a family’s net worth should be to make a single-family office worthwhile. Some advisers say a family should have at least $200 million to start a single-family office. But there are no hard and fast rules, says Carr.

An advantage of a single-family office is that it can be tailored to your family’s needs. It also offers control, privacy and confidentiality. The downside is that it’s expensive. The annual cost to operate a single-family office has been estimated at $1.5 million or more, depending on the scope of the operation. Advisers also warn that those handling the affairs of a single family may lack the insights that come with working with many families. Another problem could be the loyalty by the office staff to one generation, says Lau Associates’ Peterson.

Other criteria besides wealth should be considered to determine if a single-family office is right for you.

“There’s a big difference between wealth creation and wealth management. Are you interested — and skilled — in managing money, and is that something you want to do?” asks George Isaac, who runs a virtual family office for his family, which owned an industrial-grade metals recycling operation.

Typically, a multi-family office costs half of what it would cost to run your own single-family office, Carr says. Pricing structures vary but can include fees based on assets and additional hourly or fixed charges for other services. The downside, Carr notes, is that your family is just one of many multi-family office clients, so the services offered might be less personal.

Fratoni says families should determine in advance what services they want a family office to handle. “There should be clarity around what you want them to do and not do,” he says.

Whether you choose the single-family or multi-family office option, you must trust the professionals you work with.

“Trust is as valued as talent,” the J.P. Morgan study notes. 

Maureen Milford is a business writer based in Wilmington, Del.

Copyright 2018 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact


Private equity and strategic buyers aren’t the only suitors pursuing family businesses today.

Family offices, those low-key organizations formed to manage the wealth of ultra-high-net-worth families, are discreetly wooing business families who might be interested in selling a stake.

“Families that have built and grown successful businesses are increasingly looking for opportunities to invest in [other] family-owned businesses,” says Irene Mello, director of the Direct Investing Network at Family Office Exchange (FOX), a network for wealthy families and their family offices.

This relatively recent development is part of a growing trend by family investment firms to allocate a portion of their assets to investments in operating businesses. The past 24 months have seen a big uptick in this “direct investment” by the family office sector, notes Russ D’Argento, CEO of Fintrx, which provides data and research on the family office sector to the private capital markets.

In FOX’s 2017 Global Investment Survey, 57% of family offices reported being involved, in some fashion, in direct investing in operating businesses. It’s safe to assume at least some of those investments are in family businesses. Most family offices are looking for deals under $1 billion. Almost all companies bought by family investment firms are private businesses, observers say.

To facilitate direct investing, the family office sector is beefing up its staffing. According to the FOX investment survey, 81% of family offices employ at least one full-time staffer to source and evaluate direct investments.

There are several reasons for the increase in direct investment. To begin with, family investment firms today are very sophisticated and have hired top-tier talent, D’Argento says. As savvy financial investors, they’ve become increasingly dissatisfied with the “2-and-20” fee model used by private equity funds — a 2% management charge and a 20% performance fee — says Angelo Robles, founder and CEO of the Family Office Association, a global membership community of successful families and single-family offices.

Family companies provide great cash flows and growth opportunities, explains Bobby Stover, Ernst & Young’s Americas family office leader. Because public markets are extremely efficient today, it’s harder to find growth opportunities there, he says.

A growing sector
Finally, there are just more family investment firms seeking opportunities nowadays. In 2016, there were at least 10,000 single-family offices worldwide, with at least half started within the previous 15 years, according to Ernst & Young’s “Family Office Guide.”

“Family offices are arguably the fastest-growing investment vehicles in the world today.… The increasing concentration of wealth held by very wealthy families and rising globalization are fueling their growth,” the EY guide states.

This appears to be an opportune time for family business owners to consider family investment firms as a way to raise capital.

Special Section: The quest for liquidity

The ABCs of PE

Private equity pros and cons

Creating shareholder liquidity: A checklist before going public

Succession plans must incorporate liquidity planning for the family

“It is becoming well known that families are looking to invest in private companies at the same time many family-owned companies are looking for capital from private investors to help solve their own transition issues,” says Sara Hamilton, FOX's founder and CEO.

In the past, family businesses generally had two choices — selling to a strategic acquirer (often a competitor) or to a private equity fund, says Paul Carbone, managing partner of Pritzker Group Private Capital, a family investment firm.

Family office represents a third option, Carbone says.

For family business owners, a family investment group could provide flexible capital with an investment tailored to their individual situation, Carbone says. He says Pritzker likes to think of it as pulling on the oars together.
For example, many wealthy families have run businesses themselves.

“These families have real-life operating experience and therefore special insight into what it’s like to run a family business and what’s needed to drive strong performance,” Mello says. “This perspective gives them a real edge as investors, as they understand the needs of family businesses, relate to the challenges they face and can provide advice and support that’s value-add and action-oriented,” Mello says.

Family offices sometimes want a controlling stake to influence the direction of the company, but many are open to minority investments where “they can back a strong management team with a proven track record and provide growth capital to accelerate a strategic plan,” Mello says.

Since family investment groups place a lot of importance on evaluating management teams, they’re showing greater flexibility around deal structures and a higher interest in growth capital, Mello notes.

Aligned interests
In addition, family offices tend to understand the culture of the families they do business with, Stover says. For a family office, the term “long term” means generations, not seven to 10 years, he points out.

“It’s sticky capital,” says D’Argento. “They hold and keep investments until it’s appropriate to exit them. There’s less of an institutional feel, and it’s a bit more personal.”

Take Vincent Mai, who spent more than 20 years in private equity. Mai says he found it frustrating “to be selling really good businesses I didn’t want to sell, and I saw the need for an alternative structure.” In 2012, he founded The Cranemere Group, a private holding company backed by family offices that acquires and holds family businesses for the long term.

Lansing Crane, former chairman and CEO of Crane Currency, which partnered with private equity in 2008, thinks family offices provide distinct advantages. “I think they’re a great solution,” he says.

But 10 years ago, family office wasn’t an option for his family business, Crane says.

“Most of the time, a strategic single-family office is much better than private equity because there’s an alignment of interests,” says Robles.

But because the family office sector is so discreet, finding a partner can take work, say those in the field.
“It’s a fragmented, cloudy world,” D’Argento says.

Patricia M. Soldano, a consultant with GenSpring Family Offices, suggests that family business owners join a network and attend conferences to learn what the various family offices do.

“It’s hard. There’s no list [of family offices seeking investments],” Soldano acknowledges.

Stover agrees most connections between family enterprises and family office happen through networking. 

“It’s known as ‘quiet capital,’” he says.      

Maureen Milford is a business writer based in Wilmington, Del.

Copyright 2018 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact



There's the American Dream, and then there's the spectacular success achieved by immigrant brothers David and Paul Merage. Born in Iran, they came to the U.S. in the 1960s as students and settled in California. A decade later, they made an astute observation that would change their lives.

Attentive to shifts in American culture, they noted two coalescing trends: Sales of microwave ovens were increasing as more women entered the workplace. Spotting an opportunity, they set out to develop a nutritious frozen-food product that women and their families could pop into a microwave oven for a quick meal or snack. In 1977, David and Paul introduced Hot Pockets, frozen handheld sandwiches with a variety of fillings. Sales took off, generating new varieties of "pockets." By 2002, their company, Chef America Inc., was one of the most profitable privately held food companies in the world; the brothers sold it to Nestlé for $2.6 billion.

Financially set for life, David could have enjoyed a grand retirement, but the concept is contrary to his nature. "Retirement? I never considered it for one minute," he says. "I come from a family of entrepreneurs and trendsetters. Setting new challenges and mapping new territories is what I do."

Today, David, 66, is principal of Consolidated Investment Group in Denver, the firm he started in 2002. For the past 13 years, he has divided his time equally between building his business and actively guiding his philanthropy.

Entrepreneurial background

David was the fourth of five children born to Andre and Katherine Merage. David, who grew up in Tehran, remembers everyone in the family—including the women—taking a keen interest in business. "My father used to tell us stories about successful family businesses," David says. "He instilled in us the belief that family members working together were stronger than any one of us could be working alone."

Iran was not a promising country for entrepreneurs when Andre was starting out. In the 1920s, he moved to France, where he ran a successful business importing and exporting high-end antiques. When the Nazis invaded Paris in 1940, he fled to Iran and resumed his life there.

Having raised his sons with dreams of excelling in business, Andre sent them abroad to be educated. At 15, David attended secondary school in England. His older brother, Paul, had graduated from the University of California at Berkeley. In 1968, David joined Paul in California.

"California felt like home," says David. "I felt an immediate connection with the people and the culture. I knew I was destined to become an entrepreneur and it would happen here."

In 1971, Andre and Katherine also moved to California. After graduating from Sacramento State University with a degree in marketing, David began investing in real estate with his father and demonstrated a keen eye for identifying and capitalizing on market trends. Meanwhile, Paul, who had had ten years of management experience working with major packaged food companies, suggested that he and David start a business importing and marketing consumer products from Europe and Japan.

On one European trip, the brothers discovered Belgian waffles. Paul—referred to by David as a marketing genius—was convinced that there was a big market for them in the States. Although the brothers had no experience in developing food products or designing machinery, they were undeterred. "For months we spent every night in our mother's kitchen cooking up recipes," says David. "After a year and a half of testing, we developed the first generation of frozen waffles. There was nothing like them."

In 1974, David and Paul formed a company in Southern California, which they originally called General American Foods. They soon learned there was already a big corporation called General Foods, and they changed the name to Chef America Inc. Andre was an investor and an adviser to the business.

Success breeds more success

Working six and a half days a week, the Merages marketed their frozen waffles to coffee shops and restaurants. In just three years, Chef America became the No. 1 company in the world mass-producing frozen Belgian waffles. In 1977, annual sales topped $12 million, but the brothers recognized that they would have to expand beyond the breakfast market for the business to keep growing. "We couldn't compete against the lunch and dinner market," says David, "so we started thinking about satisfying snacks that kids could make in a microwave oven without cutting or burning themselves and that adults could eat on the run."

Once again, the brothers were back in the kitchen experimenting with recipes. After two years of trial and error, they developed a frozen sandwich that tasted good and didn't get soggy when heated. They called the sandwiches Hot Pockets and, in 1983, started marketing them to vending machines, catering businesses and schools. The business really took off in 1985 when Chef America started selling Hot Pockets in retail supermarkets nationwide. Later, it introduced two other popular lines, Lean Pockets and Croissant Pockets.

Chef America wanted a more central location between its California and Kentucky manufacturing operations. In the mid-1990s, it relocated its headquarters to Englewood, Colo. David's family and the entire executive team made the move.

As a mark of their business acumen, David and Paul never raised the original price of Hot Pockets, even though they improved the quality and increased the varieties over the years. How did they do it? "When the prices of ingredients went up, we asked our research and development team to find ways to offset them," says David, "and we looked for ways to be even more efficient."

Feeling tremendous pressure to keep the business growing at a rate of 15% a year, David and Paul talked about selling the company and spending more time on their philanthropy. They decided to quietly market the business, but they knew it wouldn't be easy. "Only four food companies were in a position to buy a business the size of Chef America," says David. "And we wanted to sell to an operating company that would retain our management team and other employees."

At its peak, Chef America was manufacturing 30 different pocket products, and each production line was turning out 800 to 900 Hot Pockets a minute. When Nestlé bought Chef America, the company had sales of $750 million a year, employed 1,800 people and generated 6,000 jobs through its supply chain.

New venture

After the sale of Chef America, the brothers pursued separate projects. Paul set up an in investment firm in Southern California, and David started Consolidated Investment Group (CIG), an investment management company in Denver that invests for a select group of clients. After having all of his wealth in one basket in Chef America, David sought to build a diversified portfolio for CIG. The firm has four areas of operation: private equities, public equities, commercial real estate and philanthropy. It invests domestically and internationally and mostly for the long term. Its investment portfolio is currently valued in excess of $2 billion.

At Chef America, David's strong suit was creating the company culture that contributed so much to the business's success. He has worked to re-create that culture at CIG. "I bring together a team of the most creative and committed people I can find and set high expectations and goals," David says. "CIG is driven by excellence. We compare how we're doing in each of our operations to the 5% best companies in the U.S."

CIG currently has a staff of 74, including David's daughter, Sabrina, 29; his wife's nephew Ben Levy, 34; and Rob Nelson, one of six former managers from the Chef America team. Nelson has worked with David for 30 years, as vice president of food services, sales and marketing at Chef America and, since 2005, as a member of CIG's executive team. "David's recruiting process is incredibly rigorous," says Nelson. "He surrounds himself with exceptionally capable people and then gives everyone opportunities to learn, contribute and succeed. That, plus a culture of respect and honesty in everything we do, makes CIG an exciting environment in which to work."

Capitalizing on David's expertise in the food business, CIG began actively seeking investments in American-owned companies in the food and beverage industry that are promising or in distress, or those whose sales have plateaued but still have potential for substantial growth.

In 2012, CIG made its first investment in a Minneapolis-based company, Funky Chunky, which makes artisanal chocolate caramel popcorn and gourmet snacks. Why was this company an attractive investment to CIG? "The management shared the same culture as Chef America [and] had a high-quality product and room for growth," says David.

CIG does not just write a check. It considers itself a resource to the companies it invests in, drawing on its decades of experience in the food industry. It has advised Funky Chunky on matters such as designing equipment, redistribution channels and human resources. In just one year, the company's sales increased by double digits.

CIG is in the process of buying another food company, which David declines to identify because the deal has not yet closed. CIG has set an ambitious goal of closing one or two deals a year.

David's nephew Ben Levy started working with CIG in 2011 as a private equities manager. He spends a lot of his time on the road looking for investment prospects and assessing businesses. "What I've learned from working with David," he says, " is that product quality is king. It doesn't matter what it is; it has to be superb. David is a discerning investor who's always looking for what others haven't thought of. He approaches opportunities by asking not only what assets can we unlock but also whether we are the right fit in terms of corporate culture. That's very important to him."

Philanthropic projects

Philanthropy is the fourth CIG operation and, David stresses, is equal to the firm's other operations. "The role of CIG is to support our non-profit activities," he says. "We run our philanthropy with the same discipline and high expectations as we do our business."

CIG supports five family foundations: the David and Laura Merage Foundation, the Andre and Katherine Merage Foundation, Early Learning Ventures, the Jonathan Merage Foundation and the Sabrina Merage Foundation. Their primary funding interests include early childhood education, economic development in Israel, weather research, and educational programs for young people that promote tolerance and diversity. The family believes in hands-on philanthropy; all of the foundations have family boards and are overseen by executive director Sue Renner.

David's wife, Laura, also born in Iran, is an artist who has a strong presence in the Denver art community. She founded RedLine, a non-profit gallery that offers educational programs, art activities for people in the community, and gallery exhibition space for emerging and established local artists. David and Laura's 33-year-old son, Jonathan, has forged his own path as a storm chaser interested in extreme weather and its consequences. His sister, Sabrina Merage, has been vice president of corporate strategy at CIG and a core member of the business team since 2012. "My dad and I work together and talk about corporate strategy every day," she says.

Last year, Sabrina launched her own investment company, Echo Capital Group, an offshoot of CIG. Sabrina is the principal; her cousin Ben Levy is the vice president. Like CIG, Echo invests in food and beverage companies. The difference is that Echo targets new companies started by millennial entrepreneurs. Echo's venture capital comes from CIG, which also offers its resources and operational expertise to the companies in Echo's investment portfolio. So far, Echo has invested in Boomerang Pies, a company in Austin, Texas, that sells frozen, handheld, all-natural, minced meat and kidney pies, adapted from Australian recipes. Echo has also invested in Stacked Wines, based in Southern California, which sells individually packaged, sealed wine glasses filled with quality wines, suitable for picnics or occasions when people don't want to open a bottle of wine.

"We're not passive investors," Sabrina says. "We think both of these products will appeal to millennials on the go, and we'll use all of our resources to make their manufacturing and operations more efficient."

Sabrina was a teenager when her father and uncle sold Chef America, but she says she was unfazed by the publicity or comments from kids at school. "It just rolled off my shoulders," she says, "because my family was never fixated on money but on values. My parents told us that the money wasn't to be used to change our lives, but to change the world around us."

Andre Merage died in 2001. To kindle the younger generation's interest in philanthropy, their grandmother, Katherine Merage, gave each of her 13 grandchildren the gift of a foundation and the freedom to make their own decisions about how to give away the money. At the time, Sabrina was just graduating from college and thinking more about her career. "Initially the money felt like a burden," she says, "but once I came up with a mission, I realized what an amazing gift my grandmother had given me." Now enthusiastic about philanthropy, she sits on several non-profit boards and attends conferences on philanthropy. Katherine remains active in her philanthropic endeavors.

David and Laura, who came to the U.S. as teenagers, recognize that America has been very good to them. "I don't know of any other country where people can succeed through their best efforts as they can here," David says. "I've been fortunate to do what I love for the past 40 years and derive such joy from my work. Every morning I wake up and say to myself, 'This is the start of another good day.' " 

Deanne Stone is a business writer based in Berkeley, Calif.

Copyright 2015 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact

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Dan Agnew and his brother-in-law, Dick Lytle, were partners in Mt. Hood Beverage Co., a beer distributor in the Pacific Northwest. Through a series of acquisitions in the 1990s, the business prospered. Dick's two sons were already working in the business, and three of Dan's children would soon be graduating from college. Dan understood that for a family business to succeed over the generations, younger family members had to be prepared to work together as a family and a business. But he didn't have a plan for educating them.

In 2004, he hired a consultant to work with the extended family. Over the next eight years, they met twice annually to build a cohesive and supportive family—one in which family members were knowledgeable about financial matters and comfortable talking candidly with one another. Then, in 2012, the family received an unsolicited and irresistible offer to sell the business, which it accepted.

Dan wasn't ready to give up on his desire to have the family work together over the generations. He proposed that the family pool the proceeds from the sale and set up a family office to invest their money jointly. The family agreed, and The Agnew Company was born.

Steve Lytle, 47, a fourth-generation family member who serves on The Agnew Company's board, says the family segued smoothly from business owners to an investor group because their work with the consultant helped lay a solid foundation. "We were running on parallel tracks, concurrently taking care of the family business and the business of the family," Steve says. "The family systems and family processes we had been developing during that time made the smooth transition possible. We couldn't have done it without them."

Starting on the right path

The impetus for hiring a consultant came from an article Dan had read about family businesses. The article said that most family companies failed before the third generation, but those that had formal governance, family meetings and transparency had a better record of surviving. "That rang true to me," recalls Dan, 70, who is CEO of The Agnew Company. "I wanted to get our family started on that path."

Dan knew from personal experience what can happen when younger family members are excluded. His grandfather, Sam Agnew, founded the Agnew Lumber Company, a manufacturer of lumber products near Centralia, Wash. Over two decades, Sam acquired large tracts of timber in Oregon, California and Canada as well as a plywood factory. He also owned and operated a commercial cattle ranch operation in Washington, managed by his son and only child, Jay.

After Sam died, Jay ran the business. When Jay died in 1980 at age 59, Dan and his sister, Zan, were in for a shock. They knew little about their father's businesses and never imagined he would leave his estate in such a mess. It took the family the better part of a decade to sort it out with the IRS.

"My grandfather hid everything about his businesses from his son, and my father did the same with us," says Dan. "Only when he was very ill did he start talking, but by then there was little time left, and his directions for passing on authority to me and my brother-in-law were muddled."

Dan was determined to avoid mistakes like this. In 2003, he was introduced to Lee Hausner, a clinical psychologist and business consultant. Hausner is senior vice president of Family Enterprise, a division of First Foundation Inc., in Los Angeles. After a lengthy conversation with Hausner, Dan was optimistic that his family could accomplish what he wanted it to do. In 2004, Hausner organized the first meeting of the Agnew family. She and the extended Agnew family have continued meeting twice a year ever since.

"What's important about the Agnew family's story," says Hausner, "is that they recognized from the start that this was an ongoing process. Businesses and families change over time. Healthy families know that to be viable, they have to keep thinking and talking about what they want to be, and that takes a lot of work."

Getting the family on board

The fourth generation consists of Dan's four children and Dick and Zan's two sons. When Dan presented the idea of working with a consultant, his three youngest children were still in college and skeptical that this was another of "Dad's crazy ideas."

"Dad said that he wanted the family to be transparent about money, but we really didn't grasp what it was all about," says Sam Agnew, 35, a fourth-generation family member who serves on the board and on the family council.

When the fourth generation was growing up, their families lived simply. Dan was a ranch manager and Dick Lytle ran a mill operation in a small town in Oregon. In 1977, Dick bought a small wine and beer distributorship in Oregon that represented Lucky and Gallo brands. Riding the early wave of consolidations in the industry, he continued acquiring mini-distributorships, merging them under the name Gold River Distributing. Then, in 1990, Dick, Dan and Zan bought a larger distributorship that represented Coors, Pabst Brewing and other breweries in Portland; they named the distributorship Mt. Hood Beverage. The family also had investments in timber, real estate and private equity, in addition to a commercial cattle ranch. When Dan and Zan's grandfather Sam Agnew died in 1963, he left his heirs timber holdings of more than 70,000 acres and land with an undeveloped coal resource.

At the first family meeting, Dan reiterated that he didn't want to keep any secrets about the businesses from the family. In the first demonstration of full disclosure, Hausner wrote down the amount of the family's wealth for everyone to see. "The kids just about dropped off their chairs," she says. "They knew the family had money, but not great wealth."

Hausner is a proponent of treating wealthy families as businesses. "Most have shared assets," she says, "so family members should be held accountable as they would be in [a] business." Hausner steered the Agnew family through the process of writing a mission statement and developing a constitution, considered a living document subject to amendments.

Her work with the family centers on an educational approach she calls FISH: developing the financial, intellectual, social and human capital of every family member. Dan, who has become an advocate for FISH, says, "I'm a firm believer that families that don't invest in all of the components of FISH won't be able to sustain financial capital over the generations."

Hausner also guided the Agnews in establishing a family assembly, a gathering of the entire family. The family assembly began meeting twice a year in 2004. Each family meeting includes education on one component of FISH, often presented by an outside expert. Aspects of financial education covered at the meetings have included reading financial reports, money management, estate planning and talking about money. Education on improving communication is ongoing.

Sam remembers the first family meetings as intense and emotional. "Lots of tears were shed as family members starting opening up about conflicts with parents, problems with kids, miscarriages and divorces," he recalls. "Since then, we've had a lot of education on communication, managing conflict and parenting. Now we're comfortable talking about any personal stuff, and we go all in. Everyone walks away from these meetings feeling good about the family and with something that they can take back to their work or family that will help them. We've created a really cool family culture."

One of the first obstacles the family encountered was the younger generation's resistance to the requirement that any family member who becomes engaged must have a prenuptial agreement. "At first the young people were offended and protested against what they argued was a lack of trust," says Zan. "It took years before everyone got comfortable with it and understood why it was necessary."

In 2007, the family established the Agnew Family Foundation with a gift from Zan and Dan. Zan, 68, is the foundation's president. Currently, there are ten women family members on the board. Why only women? "Because the women in the family came up with the idea," says Zan. "We've invited men in the family, but they're too busy with work." The foundation supports programs for children in the communities where family members live. For now, it accepts only eight proposals a year so that it can do proper due diligence. It also has a junior board of eight fifth-generation members who serve as observers.

Forming the family office

In 2008, Dan and Dick merged their two distributorships, Gold River and Mt. Hood, with another family-owned beverage company to form Columbia Distributing. It became the largest beverage distributor on the West Coast. Dick and Zan's sons, Steve and Andy Lytle, worked in the business; Steve succeeded his father as Mt. Hood's president and CEO. Dan's son Sam Agnew joined in 2005.

In 2012, the Agnew family received the offer to buy Columbia Distributing. The terms of the deal were not disclosed, but some in the industry estimated the sale price to be in excess of $500 million. The family was at turning point. Third- and fourth-generation family members could either go their own way or pool their assets to invest together in a large family office. Dan made the case for investing together. Besides more opportunities for large-scale purchases and breaks on fees, he argued, they would have fun learning and investing as a family.

The years of working together to educate the family about finances and build an open and trusting environment paid off. The family unanimously recognized the benefits of investing together and of continuing to meet as a family. Every adult household voted to pool their money; 90% of the after-tax proceeds of the sale was returned to the family office to be invested together.

The Agnew Company, the family office, manages the family's collective assets held in two holding companies. Only blood descendants can be shareholders. Dan and Zan opted out because they want the family office to benefit future generations so, for now, the shareholders are the six members of the fourth generation. Dan and his son-in-law, Darrin Kasteler, are the only family employees.

With the establishment of the family office, the family formalized its board, bringing on two independent directors. Its goal is to eventually have 50% independent directors. Simultaneously, the family set up a family council, which works with the board. While only blood descendants serve on the board, the extended family is invited to attend family assembly meetings.

The family has had five divorces among the third and fourth generations. It credits the work it's done on interpersonal relations to help family members heal and move on. After Zan and Dick divorced, they recognized the benefits of remaining business partners. Zan is now remarried to Jack Peat. He and his children attend family assembly meetings, and Dan, Dick and Jack frequently play golf together. "The difference between where the family was when we began and where we are now is like night and day," says Zan.

A few years ago, Dan and Zan bought a vacation house in Eastern Oregon, which they gave to the fourth generation to encourage them to work together collaboratively. According to the agreement, the six would have to decide how to decorate and maintain the house and determine who got to use it when and how often. "They embraced the idea," says Dan, "and figured out in a supportive and trusting way a system for use that included spouses and stepkids."

Planning for the future

The family experiment Dan launched in 2003 has brought the family closer, multiplied opportunities for investing and learning, and increased their enjoyment in being together—by all measures a great success. "It hasn't been all sunshine and lollipops," says Steve, "but the moments of tension and stress have all been manageable." In fact, Steve was so impressed by his family's experience that, after the sale of the business, he became a professional adviser to multigenerational family businesses.

Hausner, who wrote a book about children of affluence, is alert to the negative effects great wealth can have on children. The Agnew family, she says, doesn't have any slackers. "No one is sitting around on trust funds," Hausner observes. "Everyone is working and productive. Everyone is committed to having a healthy family that does good with its wealth for the family and for others."

Dan is the acknowledged patriarch of the family whose vision of a successful multigenerational family brought the family to where it is today. After leading the family and business for more than 30 years, he will likely retire as CEO of The Agnew Company in the coming years, an event the family is planning for. "We're knee-deep in discussions now," says Steve. "All the work we've done over the years is building toward a smooth succession. Governance is a decision-making process, and the end game is a successful transition of leadership and wealth." 

Deanne Stone is a business writer based in Berkeley, Calif. 

Copyright 2015 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact

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The decision to sell your business was a difficult one. Yet the timing was right, you found the right steward to buy your company and negotiated an exit that met the needs of your family. Now it's time to look ahead so you can enjoy the fruits of your labor in a way that makes the next chapter of life as rewarding as the prior one.

Redirecting the family's focus from the business to another meaningful pursuit is a high priority for many sellers. Numerous options exist to smooth the transition.

Adjusting to a liquidity event

A significant liquidity event need not be destabilizing. The business owner and his or her family often retain ongoing leadership roles at the company, particularly when they maintain a meaningful ownership stake in the business. This is best accomplished by selling your company to a buyer who values your involvement and encourages you to maintain ownership.

The family should acclimate to its newly liquid wealth over time to prevent the kind of radical changes in lifestyle that can occur with sudden wealth. This usually involves restricting access by younger family members to the sale proceeds. One way to do this is by contributing the sale proceeds to family investment partnerships with redemption restrictions. Another strategy is to keep proceeds in the legal entity and make distributions over time.

In a situation in which proceeds are distributed at the time of a sale, many families find it is better to put the pieces back together by creating a family office. This will allow the shareholders to jointly reinvest the proceeds in an organized and cohesive manner. A family office can also be a vehicle to pursue business and philanthropic activities and provide support to family members.

Running a family office

Family offices come in all shapes and sizes, and no single solution is best for everyone. Identifying the right type of family office depends on factors including the magnitude of the sale proceeds, the number of family members and trusts established for their benefit, and the willingness of the business owner to manage the people and resources necessary to form a family office.

Families may choose to form their own captive family office, known as a "single family office." It generally is cost-effective to do so when liquidity exceeds around $500 million or more. A single family office is usually a distinct legal entity formed to serve the needs of a single family as well as trusts established for their benefit.

Using a multi-family office may be a better solution when the cost of forming a single family office is not justified, or when the family simply does not want the hassle of hiring employees and managing a captive organization. Multi-family offices usually offer lower infrastructure costs by sharing resources. The tradeoff, of course, is just that. Resources are shared and so are not dedicated to a single family or family member. It is usually a good idea to figure out what services are going to be provided by the family office, and to whom, before deciding whether to form your own office or rely on a multi-family office instead.

Functions of a family office

Overseeing the investment of a family's assets is the most important function of a family office. The logical first responsibility of a newly formed family office is to create an investment strategy for family members and entities served by the office, usually embodied by the development of investment policy statements that dictate asset allocation. Once this is done, the next step is identifying and gaining access to best-in-class investment managers. Options to be considered include hiring external third-party investment managers and creating an internal team to direct the family's investments.

The choice of whether to bring investment expertise in-house or to use outside managers is often determined based on the size of the family's asset pool. Families with less than $500 million of assets or those wishing to maintain a simple family office structure typically outsource the investment management function. This is the most straightforward option, as outside managers already have the infrastructure, investment discipline, and policies and procedures in place for this purpose.

Some families with a sizeable asset base prefer to establish a captive, internal investment effort. This requires a significant financial commitment from the family, in part because high-quality investment professionals command a high salary, including a portion of their compensation based on portfolio performance. The advantages of an internal investment management function include added flexibility and a highly customizable approach to investing that is carefully tailored to fit the risk profile of each investor.

In addition to implementing an investment strategy and monitoring investment performance, many family offices oversee the family's philanthropic efforts. Creation and administration of a private family foundation—frequently embedded within a family office—is a wonderful way to jump-start your post-sale career and give back to the community. A private family foundation is often formed with a specific purpose or objective in mind, using the collective resources of the family to effect real change by supporting a handful of specific causes.

Aside from investments, family offices usually oversee tax and legal services for the family, plan estates and manage personal real estate. They also frequently perform concierge services such as arranging travel, maintaining personal assets, managing household help and paying bills.

On to new business—the family bank

Many family business owners have motivated children who aspire to be entrepreneurs themselves. An additional feature of the family office is to establish and oversee a "family bank," which provides funding for new business ventures without simply throwing a pile of cash at a new business.

A family bank is a legal entity formed to lend money to family members for appropriate business opportunities. The family bank usually requires creation of a thoroughly vetted business plan before initial or subsequent funds are advanced. Such a structure enables the business owner to encourage entrepreneurial behavior but also dissuades younger family members from diving headfirst into a business venture without sufficient planning and preparation. While a family bank will typically advance funds on more favorable terms than a commercial lender and without the usual collateral requirements, the mere fact that the funds are loaned results in family members giving new business ventures their undivided attention.

Key decisions

The establishment of a successful family office requires forethought and planning. Thinking through in advance whom the office will serve and what services will be provided will allow the family to properly size and staff the office. Giving top priority to the investment function will allow the family to create a value proposition for the office predicated on the economies of scale of investing together.

From there, the family should focus on the desired level of service and how to deliver it in the most efficient manner. When establishing a family office, you must determine up front what services will and will not be provided by the office as well as how the family office will be funded. This helps prevent any one family member from monopolizing the limited resources of the office. Charging family members and family entities based on their use of the family office is one effective way to control this. It is usually a good idea to start small, with just a few key employees, and then expand the office gradually as more services are brought in house.

In time, the successful family office will address ownership, governance and succession issues. When done right, this will enable the office to survive the founder and serve future generations of the family. Good governance usually starts by encouraging younger family members to take an active role in managing the office and participating in major decisions. This can evolve into the creation of a board of directors including multiple generations and representatives from various branches of the family. Ownership of the office, which almost always starts in the hands of the business owner, should also be transitioned over time to the next generation as their responsibilities increase and they mature.

Planning for the future

The sale of the family business should be the ultimate fulfillment of the owners' dream. But for this to be true, careful planning is required, both before and after the sale, to ensure that the legacy of the business and the owner continue in a meaningful way. Creation and use of a family office is one way to achieve this goal, as it can keep the keep the family's assets together and serve as a mechanism to redirect the family's efforts after the business is sold.

Steve Thorne is a retired partner of Deloitte Tax and former head of Deloitte's Family Wealth Planning and Family Office practices in the Chicago office (

Copyright 2015 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact

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When Dave and Julie Power's four children were growing up, the family bonded around the kitchen table while folding J.D. Power and Associates' automobile quality questionnaires.

"You would try to pick the job you liked best: stuffing envelopes, putting on stamps or address labels," recalls Susan Curtin, 43, the youngest of the children. A common job for younger kids was taping quarters (an incentive for people to complete the surveys) to the questionnaires, making sure the "heads" side was facing up.

The children felt very much a part of the company—and because they were paid for their work, they learned early on about the value of money. "Money could be used to get something you really want—that's a luxury—but there's also a responsibility to use it to better other people's circumstances," says Jonathan Power, 46, the third child.

The Power family's emphasis on working together and using money responsibly continued as the company grew. And when J.D. Power and Associates was sold in 2005, these values guided family members as they charted a new path, working together to achieve their investment and philanthropic goals.

They also commissioned a history of the company and a second book about Dave Power's 50 years in the auto industry. Retelling these stories, family members say, helped them cope with the emotional highs and lows of selling their business and clarify their priorities and goals going forward.

Modest beginnings

J.D. Power and Associates, which grew to be an internationally recognized leader in customer satisfaction research, had modest beginnings. In January 1968, Dave Power—whose full name is J. David Power III—was 37 years old and had three young children at home. One night, after working at his job with McCulloch, a California-based company that manufactured chainsaws, Dave had dinner with three fellow business school graduates who were about to quit their jobs and start their own company. Dave thought the idea sounded risky.

As Dave recalls it, one person in the group said, "You've got to understand, most people with an MBAs and engineering degrees get stuck in a company and work their way up, with little promotions here and there. Before they know it, they're captives of the company. That's more dangerous than quitting now."

Dave wondered if he was on that same path. He had moved from Ford Motor Co. in Detroit to an advertising agency, McCann Erickson, to McCulloch. But he was still chafing at the feeling that top management wasn't paying attention to his market research. He went home and told his wife about his dinner conversation. "She said, 'You should quit,'" he recalls.

So Dave started J.D. Power and Associates "literally at the kitchen table in our small tract home in the suburbs of Los Angeles," says their son Jamey Power, 51, the oldest of the four children. Dave Power's boss at McCullough was upset to have him leave but offered to be his first client.

"When we started the company, we had no intention of doing automotive market research, even though that was my whole career," says Dave, now 82. "Because here we were in Los Angeles, and we didn't have any car companies here."

But he heard from a former colleague about a Japanese car company that was re-entering the U.S. market. Dave called Toyota's office in Torrance, Calif., but was rebuffed. He wrote a letter but got no reply. He stopped by the office and was told that the person in charge did not want to see him.

As he turned to leave, he noticed sales brochures about the company's forklift trucks. He convinced the person running that project to pay him $600 for an overview of the U.S forklift market. He was able to parlay that report into an introduction to Toyota's U.S. automotive executive, Tatsuro Toyoda, the son of the company's founder.

"There was a lot of experimentation and adjusting and adapting" of the business model early on, Jamey Power says. In the early 1970s, Power surveyed owners of Mazda's new rotary engine cars. When analyzing the data, Dave saw a pattern of engine failure. He sold the report to several car companies, and someone leaked it to the Wall Street Journal, which ran a front-page story about the issue—and about J.D. Power and Associates.

Although Mazda at first said Power was wrong, ultimately "my father's integrity was vindicated, and Mazda became a very good client of my father's," Jamey says. The press covering the auto industry also came to recognize Power's surveys.

About a decade later, J.D. Power and Associates introduced a customer satisfaction survey that pitted all the brands against each other. Subaru, which ranked second in the survey after Mercedes Benz, built an advertising campaign around that fact. "That really put J.D. Power on the map with the mainstream consumer market," says Jamey.

For Dave and Julie Power's children, the business was "the fabric of our family," Curtin says. "My earliest memories as a child include accompanying my dad to the office on weekends and running through the office with the family dog."

Company picnics were held in the park across the street from the family's house, Curtin says, and holiday dinners often included employees who had nowhere else to go.

Julie Power was heavily involved in the company, especially in helping recruit employees. "If there was any level of interest, she would invite the potential employee and their spouse or significant other over to the house," says Linda Hirneise, who retired in 2008 as a partner from J.D. Power and Associates. Hirneise, the company's 33rd employee, had been teaching business classes at the local high school and was recruited by Dave and Julie Power, whose children were her students. Julie Power wanted to make sure the prospective hire and the company would be a good fit for each other, Hirneise explains.

In addition to working for the family business while they were growing up, three of the Power children worked there for a time after college as well. Jamey Power and his sister Mary, 48, had long-term careers at the company, and Jonathan Power worked in the research department for about seven years before going into clinical psychology.

Dave Power's main focus was always on building the business, which meant an emphasis on investing the company's profits into new initiatives, products and services. The company's long-term future—whether it would be sold or passed on to his children—was not clearly defined.

"He never formed his company, really, to make money," Curtin reflects. "I think he wanted to provide for his family, but he was really set on this idea that he could change the thinking in market research."

Turning point

A turning point came in 2002, when Julie Power, who had had multiple sclerosis for more than 20 years, died at the age of 64. "While she was in declining health, we were not expecting her to die suddenly. That really shook the family and my father," Jamey Power says.

The family faced some challenging opportunities with the business. Dave was over 70 years old. He had been working over the years to make the company less dependent solely on him and had recruited and retained experienced senior executives by giving them stock ownership. These stockholders expected that at some point there would be a financial exit for them. In addition, investment bankers and potential acquirers were asking Dave about selling or merging the business. And the business had evolved quite a bit from its roots as a "mom and pop" family business. It needed a way to fund further growth.

After exploring different options, "I decided that what we needed to do was sell the whole thing, stay on for a work-out period, and get on with it and do other things," says Dave. He and his children were all interested in philanthropy, especially in what they could do to help find a cure for MS.

After making the decision to pursue a sale, they started to "put the pieces in place to make the company more attractive and valuable," says Jamey. The company was sold to the McGraw-Hill Companies in 2005; terms of the sale were not disclosed. Jamey and Dave Power stayed with the company until 2009, and Mary Power stayed until 2010.

Jamey notes that in the time leading up to the decision to sell, the family had a lot of informal conversations. "It was after the sale, when we had a different family asset to manage, that we started to get more formalized around family governance," he explains.

The wealth generated by the sale was divided up into a combination of trusts and a family limited partnership with the four siblings as managing partners. Some of the trusts are for individual family members and some are held collectively.

The sale meant that "the four of us were sort of brought back together from a business standpoint," Curtin says. "Something my father did that was brilliant was that he included all of us in this process. He really handed it over to the four siblings and said, 'I want you to figure this out; it's going to be yours.' "

The family's transition

Now the family no longer runs a business. Instead, the siblings and their father meet formally three or four times a year (sometimes all in person and sometimes with Curtin, the only one who lives outside California, on the phone) to receive updates from their advisers on their investments and to evaluate new investment opportunities. (They have frequent informal conversations as well.) They also use these meetings to guide their family foundation's grant making.

The Powers use a multifamily office, the Threshold Group, with offices in Gig Harbor, Wash., to help with the administrative and investment work. Threshold Group offers advice on investments and tax planning, helps educate the younger generation and provides assistance with the family's philanthropic activities.

Why work together to invest and donate money instead of simply dividing the proceeds from the sale among the family members? One reason is that the family chose to pool its assets to provide scale and efficiency. The other, says Dave, was that he wanted to create a structure in which the family would continue to work together.

"They're very loyal to each other and supportive of each other," says Kristen Powers Bauer, the Threshold Group's senior managing director for the Western region and senior relationship manager, who has been working with the family since 2005. "They wanted to raise the third generation to be connected to each other and thoughtful community members. They really are a tightly connected family."

The family foundation, founded in 2005, is called the Kenrose Kitchen Table Foundation in honor of the company's origins and the street where the family lived. Its two main focuses are medical research and education. Curtin is the lead director running the foundation, though all four siblings, some spouses, and Dave Power are involved in decisions and relationships with grantees. The foundation does not have any outside staff.

The family supports research into advances in therapies for multiple sclerosis and works closely with the National Multiple Sclerosis Society. The family foundation also helped create a program at Boston Children's Hospital to research and treat the developmental outcomes of children with complex cardiac disease.

In education, the family has created a need-based scholarship program at the College of the Holy Cross in Worcester, Mass., which Dave Power and Curtin attended, as did Dave's father and uncle. One of Dave's grandchildren is soon to graduate from the school as well. They have also developed entrepreneurial internships at Holy Cross and at the University of San Diego.

In addition, each sibling's household has a small pool of funding to use for community-based grants based on their own interests. Jonathan's family, for example, has supported a summer camp program for kids with cancer and their siblings.

Family members serve on boards and otherwise help the organizations the foundation supports. "We try to use our minds as well, not just our finances," says Mary.

The family has made the transition from running a company to philanthropy fairly smoothly.

"I see a lot of entrepreneurs who struggle with not going into an office every day after selling a business," Bauer says. The Power family has "really done a nice job of transitioning and finding value and purpose in their lives when they're not operating a company. The wealth does not define them. They live really the same lives that they did, trying to be good community members and good parents and good mentors."

The sale of the company has given the family time to work on two book projects. One, A Life of Satisfaction, is a privately published volume that tells the history of the family and the company. The book is not for sale, but the family has given copies to former and current employees, key clients and family friends. They have also saved copies for future generations.

"It was a great joy for us all to work on," especially after the emotionally charged years of their mother's death and the sale of the company, says Jamey. "It helped us turn the page on that chapter of our lives."

Dave, who remarried in 2003, to Joan Heiler, also worked with two writers on a business profile called Power: How J.D. Power III Became the Auto Industry's Adviser, Confessor, and Eyewitness to History. That book, which came out in September 2013, focuses on his experiences with the auto industry. It also tells the story of how he built such a successful company from nothing.

"It was a capstone project for my dad's career and allowed more business stories to be told," Jamey says.

"I think when my folks started the company, nobody in their wildest dreams would have thought it would be this internationally recognized firm," says Mary.

The family's long-term philanthropic goals are still evolving, as is the siblings' partnership.

"We've evolved as a sibling group since the sale of the company in how we work together," Curtin says. "It's really important to realize that it's fluid and things change. We are looking at it as an opportunity not only to give back, but as a tool to bring the next generation up and keep the family history alive.

Margaret Steen is a freelance writer based in Los Altos, Calif.


Copyright 2014 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact

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Over the past few years, several environmental factors have forced business-owning families—many for the first time—to think about the management of their personal wealth as a separate issue from the family business. For some families, basic demographics are the impetus. As the older generation prepares for retirement, financial planning and estate planning take on new importance and focus. In other families, the recent economic crisis served as a wake-up call, heightening family members’ awareness of their dependence on income from the business and the reliability, or lack thereof, of other investment and financial resources. In many cases, families are dealing with both of these issues. Regardless of the key motivating factor, business-owning families are entering a new era in which current practices for managing personal assets must be revisited and reexamined.

But revisiting this issue is more easily said than done. For many reasons, the balance between managing business assets and managing personal assets is often far over-weighted on the business side. To a large degree, this dominating, almost obsessive focus on the family business is a key factor in the enterprise’s success. The core business serves as both the financial and the emotional hub of the family, and the day-to-day responsibilities of running the business loom so large that they can quickly eclipse all other areas of family life. In some families there may even be a sense of guilt about spending time and efforts on non-business issues. With this drive and dedication to the business, it is easy to see how families often put management of personal assets on the back burner.

Unfortunately, a driving focus on the success of the business, no matter how justified, does not make it any easier to handle the repercussions of procrastination in addressing personal financial affairs. Adding to the complications, many families have done some financial or estate planning inside the family business but usually not in a comprehensive or integrated fashion.

Regardless of what has been done in the past, the ability to preserve wealth (liquid or illiquid) across future generations is a complex and challenging goal. To understand how private wealth management decisions are made by a family who owns and operates a thriving business, Family Office Exchange (FOX)—a membership-based firm that provides research, education, and advice to ultra-affluent families and their advisers—initiated a study that examines how these families manage their personal assets and the key motivators that influence their decisions.

Typical, but risky

Interestingly, there are some clear similarities across families when it comes to personal wealth management. Interviews with more than 40 business owners from throughout the country revealed that most families followed a typical three-stage pattern. (See Exhibit 1.)

• Stage 1: The family leans on a trusted executive inside the company.

• Stage 2: A formal department is organized within the business to handle the family’s personal financial affairs.

• Stage 3: The family separates management of all personal matters from the business.

This is a natural pattern and can evolve over generations or in a very short time frame, depending on a variety of external factors and influences. However, while natural, it is not ideal. The personal and legal risks involved with intermingling the management of personal and business affairs can be extremely detrimental. Concerns in Stages 1 and 2 range from basic worries about privacy, to wealth being managed by employees who lack specific wealth management expertise, on up to potential violations of federal tax codes and SEC regulations.

In an ideal situation, Stages 1 and 2 would be avoided altogether and a family would instead determine to keep business and personal management separate from the very start. The sooner a family makes this decision, the more they will reap the benefits of an independent and integrated approach to wealth management and avoid some of the risk associated with co-mingling business and personal affairs.

A review of the options

What options are available to families interested in independent, integrated wealth management? Put simply, there are two main choices: do it yourself or contract out. Said another way, a family can decide to take a more hands-on approach to the structure and day-to-day management decisions by opening their own dedicated family office; or they can hire a multi-family office or other wealth advisory firm to take on these responsibilities. The desirability of each choice depends largely on the family members’ personal preference about control and level of direct involvement.

The first thing a family must decide before evaluating any wealth management options is whether they want to hold wealth together as a family in the future. A family who shares assets has far greater buying power. They will have access to more investment opportunities, and they will receive better pricing for services than individual family members could obtain if they sought out options and services independently. However, the emotional aspects of sharing wealth as a family must also be considered. It requires multiple generations to be able to make decisions together and a willingness to recognize and appreciate the needs of other family members or branches.

Single family offices

A private family office provides the highest degree of customization for a family and can be a cornerstone structure that binds the family together with a sole focus on their specific financial, family and philanthropic goals.

Exhibits 2 and 3 highlight the average costs for running a single family office and the typical service menu of an office. While these averages can vary dramatically depending on a wide range of factors, the data, taken from the FOX benchmarking research of more than 100 single family offices, illustrate that a family office manages a family’s financial capital as well as its human capital. This combination of concrete and more abstract (emotional) management responsibilities has cost implications. Finding the talent and skill sets to fulfill both responsibilities can be difficult, and the costs involved can fluctuate.

Furthermore, the data seem to suggest that as the amount of wealth overseen increases, so do costs. This is not surprising, since many families with large asset pools have a lot of entities as well as multiple family members and households. They are simply more complex on both the financial and human capital side, and the costs reflect this complexity.

Beyond cost considerations, starting a private family office requires a significant commitment in time from the family. Creating an office is starting a new business and requires the same level of discipline in terms of planning and structuring. When a family fails to apply the same level of stringency to their personal financial affairs that they do to their operating company, the goals of that business are put at risk, and the effectiveness of the office is hampered.

Wealth adviser options

Over the past several years both the number and quality of wealth adviser options have grown. Whether a family is seeking a small, boutique multi-family office or is more interested in having all the resources of a large financial firm, there are many possibilities for outsourcing the management of family wealth.

Exhibits 4 and 5 highlight the typical costs and service offering for wealth adviser firms by level of assets under management. Exhibit 4, based on data from FOX wealth adviser members, provides a fee baseline for clients with varying wealth, notwithstanding the variance in pricing methodologies and the prevalence of customized fees. For a typical client with assets of $100 million, the median fee starts at approximately 40 basis points. Fee data represent the following:

• The median basis points fee charged by firms that primarily use a bundled, asset-based fee for most services. To facilitate comparison, fees for firms that levy an asset-based fee and retainer are excluded.

• The fee for a core set of wealth management services. This set typically includes investment management services such as manager research and selection but does not include third-party fees paid to outside managers or fees for internal asset management.

Importantly, each of these data points represents the low end of the range used by multi-family offices. Clients who have complex situations or receive a broad set of services are likely to pay significantly higher fees.

Determining fee levels for firms that use both an asset-based fee and a retainer fee is more difficult since, for many reasons, retainer fees are almost always customized. FOX members estimate a typical retainer fee for a client with assets of $100 million and “average” complexity ranges from $200,000 to $275,000 for a variety of services. Most of these services are non-investment management services and typically include many of the following: planning services (estate, financial and tax), insurance, cash flow management and bill payment. In addition to the retainer fee, clients pay an asset-based fee for investment management services. Assuming total client revenues of $400,000 to $500,000, the incremental fee for investment management services can range from 15 to 30 basis points.

Long-term benefits

Regardless of the family’s current situation, it is likely that some event or catalyst will eventually motivate them to separate the management of their business from management of their personal finances. The sooner they reach this stage, the more the family will reap the benefits of an independent and integrated approach to wealth management. Whether a family chooses to create a private family office or work with a multi-family office or other integrated wealth adviser, the objective is the same: a dedicated focus on family members’ personal financial needs. The decision to organize the management of family assets in a separate entity from the business will provide benefits for generations to come.

Anna Nichols is managing director, content, at Family Office Exchange in Chicago (

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Today’s business-owning families will eventually have to make some difficult decisions related to their business transition and family wealth management. The opportunities and threats have never been greater than they currently are. The decision tree for many of these families offers three options:

• Hold on to the company.

• Transition the company.

• Sell the company.

The biggest pitfalls regarding this decision tree that I have seen families encounter are:

• Holding on to the business for too long.

• The family’s love for the business (considered tantamount to another child in the family) is too strong.

• No true planning for any of the options above.

Often, a business-owning family will struggle with the question, “How do we start the decision tree discussion?” This may be followed by statements about the many reasons they cannot move forward, including, “We can’t discuss financial matters,” “We’re too busy putting out daily fires” and “The timing is not right for us now.”

Getting started is frequently the hardest part of the process. It is helpful for family business owners to remember that even though technical structures, legal advice and good financial planning tools will be useful, the decision-making process is often emotional rather than rational. The most important components of the process are many times indirect and involve the intangible relationships of people, things and events.

A business owner who elects to monetize the family business often comes to the stark realization that once the company has been sold, the infrastructure that previously was available to manage the business assets is now gone. The transition then becomes a question of managing the liquidity from the sale of the business. Many family office structures fulfill that investment management need only.

For family members who elect to hold on to their company, however, a family office can provide an integrated family and business management platform for decision making about the future of the business.

Why family business owners use family offices

Many perceptive family business owners prefer to think in terms of not only “best practices” but also “next practices.” They desire imaginative scenario planning, active debate and suggestions to move their family and their business forward. These families often consider a family office structure for the following reasons:

1. Control and oversight of decision making about family and business matters.

2. Continuity of family unity and sustainability.

3. Access to the expertise of professionals who can offer a variety of options for facing complex challenges.

4. Integration of strategies and actions to maximize family benefits.

5. Services customized to meet the family’s particular situation.

6. Confidentiality and privacy.

7. Education of family members and other key shareholders to prepare them to make better life decisions.

Family office structures

Three family office structures are available today.

1. Multi-family office (MFO): A defined number of multigenerational families and their businesses.

2. Single family office (SFO): A single multigenerational family and its businesses.

3. Hybrid family office (HFO): Components of both an MFO and a SFO, including joint ventures.

Each structure offers advantages and disadvantages. Due diligence and analysis are warranted in determining which structure fits your needs, budget and desired level of involvement.

Key questions to consider

Family sustainability and continuity are critical concerns for the family business owner and should be factored into the decision to transition to a family office structure. There are ten essential questions you should ask as you investigate family office services.

1. What is the central reason that we are considering a family office structure?

2. What will be the primary mission of the office?

3. What will be the governance structure? Who will be the decision makers, and how will decisions be made?

4. Which responsibilities will the family or family business staff retain, and which will be delegated?

5. Do family members want to organize and manage the office structure?

6. What is the scope of services that will be provided to family members?

7. What back-office support systems (technology) will be needed?

8. How important will “integrated” business, family investment, tax and estate planning be?

9. How will services be paid for on an ongoing basis?

10. How will the family measure the success of the office or the services received?

How to measure success

The value of the family office services should be assessed in an annual review. Items to consider in your success analysis should include:

• Control and reduction of costs and complexity.

• The family’s purchasing power sustained through multiple generations.

• Improved quality and quantity of decisions.

• Preparation of future generations for the responsibility of managing wealth for continuity.

While only about 30% of families in business who attempt to transition wealth often succeed, it should be noted that the failure rate generally is not a result of bad legal, estate, tax or investment advice. It is, however, directly correlated to a lack of planning and the inability of family members to either grow or thrive in the family structures set up to assist them. Creating a family office environment that provides family members an opportunity for meaningful, fulfilling involvement may improve your odds for success.

Thomas E. Meilinger is managing director at Vogel Consulting, a multi-family office ( More than half of its client base consists of active business owners.

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Of the many challenges facing families and family offices, none is more important than the concept of sustainability to ensure that the family’s resources are both preserved and augmented as the family enterprise passes from one generation to the next. According to Rodney Goldstein, chairman and managing director of Frontenac Company, a Chicago private investment firm, “A majority of family-owned businesses don’t have a succession plan or a long-term strategic plan, and two-thirds have not chosen a successor.” Similarly, most families lack a plan for transitioning their wealth structure across generations.

One key to a successful transition rests with the ability of the patriarch or matriarch to delegate responsibility and control to the next generation of leaders. This often means treading a thin line between preserving his or her vision for the family and inviting those who come after to participate in the creation of a shared vision. As a single family office that evolved into a multi-family office, Pitcairn is sometimes called in to advise a single family office in a specific area of expertise, like investments or administrative and trust work, only to end up consulting on non-financial issues that affect the family’s ability to reach financial decisions. I remember one example, in which Pitcairn was retained for advice regarding investment decisions and cost management. It wasn’t long before we realized that generational transition issues were hindering the family office’s ability to develop an investment strategy.

In many ways, it reminded me of my early efforts to get my husband to collaborate with me in the kitchen. I would ask him to be a full partner in the preparation and creation of the meal when I had already set the full menu. There wasn’t a lot of room for him to add his creativity. I needed to learn to give up control of the menu and let him participate from the get-go. I also needed to learn to hold my tongue when he decided to crush the garlic instead of mincing it (the way I did). I should have celebrated the different ways to make good food.

Seeking next-generation involvement

The Gregg single family office was run by Mark, the former CFO of the company, which had been founded by the family’s 70-year old patriarch, Robert. (Names and details have been changed.) Mark had a 25-year relationship with Robert and was accustomed to advising him and implementing his decisions. At this stage of his life, Robert wanted his two children to take leadership roles in the management of the family office, particularly with regard to the family’s investment strategy. Ironically, however, this patriarch controlled the relationships and processes that would enable them to do so.

Although Robert’s “kids” were now 38 and 40 and both married with children (and even though one had an MBA), Robert had continued to roll their personal assets into new trusts and to make all of the decisions about the family office in conjunction with Mark. Neither of the children received any distributions from the family wealth structures, nor were they compensated for their time or travel to meetings. Now, with the family’s second liquidity event following the sale of their business, Robert became intent upon having his children take an active role in managing the family’s wealth. After all, he reminded them, he would not live forever.

To this end, Robert held quarterly meetings with Mark and his adult children to provide them with a venue for participating in the decision-making process surrounding the family office and the investments. He expected that his kids would come to the meetings well prepared and generate suggestions that reflected their interest in the management of the family office. Instead, they showed up begrudgingly and were not as prepared or participatory as Robert had expected. In fact, nothing changed. Robert and Mark continued to make decisions without the next-generation members, moved ahead with projects and reported on what they had done.

In truth, there was no incentive for the second generation to step up to the plate. The menu was set long before they were invited into the kitchen. Although Robert genuinely wanted his offspring to participate fully in setting the investment strategy, he had Mark design an investment program and a plan for hiring staff to implement that strategy. He had even contributed novel ingredients in the form of the family’s new liquidity. The problem was Robert had done so at a time when the food was already in the oven. And while any new flavors added by his kids might have made the dish taste even better, there was no way for the ingredients to be added at this stage of the process. Robert wanted his kids to help refine the strategy he had already created without their consultation. He wanted them to endorse and ultimately implement his vision for the family office, a vision in which they had little interest and certainly no stake.

Getting ‘unstuck’

This family was stuck, in more ways than one. Decisions needed to be made around a pool of assets that combined shared family and individual household money. There was a plan on the table to increase the staffing and costs of the family office, a long-term strategy that would ultimately be paid for by family members from their individual assets. It is easy to see why the kids were not eager to spend more money and time on the family office when they were not part of the decision-making process. Progress had been stalled by the family dynamics. The more the father demanded, the less he got.

We helped the family and its family office to develop a plan—not only for the assets, but also one that defined roles and helped the family establish new patterns of working inter- and intra-generationally. The first step was to separate the shared assets and the household assets so that everyone could understand what resources were available to them. We worked with the CFO and the family to set an investment policy for the shared assets and then with each household individually to develop personalized financial plans and investment strategies. Gradually, the father began to understand that he should terminate the trusts and provide a distribution from the shared assets, to give his children a tangible stake.

The kids did some soul-searching of their own. They first had to determine how they wanted to be involved with the family office and management of the assets. They had to figure out how to integrate their ownership of the wealth with their visions of themselves. Once their father truly invited them in, they had to determine if they wanted to step up to their new roles in an entity that they viewed as “Dad’s.” In other words, they had to decide if they wanted to complain about not being asked to participate or if they wanted to actually participate.

The next generation has helped to define specific roles and responsibilities for themselves. Robert holds himself accountable for bringing them into strategy development and decision-making early in the process. While the conversations in this family are ongoing and fluid, they no longer affect the family’s ability to make decisions. At the same time, they underscore the complex and demanding challenges facing multigenerational families as they grapple with issues surrounding sustainability.

Single family offices can benefit from partnering with advisers who have the resources and expertise to customize their services in ways that honor the family’s heritage, while leveraging their human capital and financial assets in a new way. Generational transitions are always challenging. Families that develop a long-term plan with specific actions and timeframes manage those challenges with much greater success.

Rebecca A. Meyer is managing director of client strategy at Pitcairn, a family office helping families protect and grow their substantial assets and unique heritage across multiple generations (

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