Family offices are increasingly operating like institutional entities, managing financial capital, deploying strategic investments, and interfacing with external stakeholders at scale. Their size can even dwarf listed companies. Yet while a single family office serves only one client – the family itself – anchoring governance in established standards such as the UK Corporate Governance Code 2024 brings discipline, resilience, and long‑term growth (as opposed to short term gains) to the family.
The Code formally applies to listed entities, but its principles‑based structure is universally instructive. Family offices can adapt these principles to enhance strategy, oversight and risk control, with sustainable succession as the key objective. The significant differentiator between listed entities and family offices is that the family office serves the family. As much as we can lean on corporate measures to enhance functionality, it should never be seen as a primary objective; the family always wins.
This first blog in this two part series explores the foundational governance principles that help family offices align their purpose, leadership, and cultural direction.
1. Strategic Leadership & Purpose Alignment
Board Leadership Discipline
Effective governance starts with a clear leadership structure. This includes defining roles such as Chair, non‑executive advisors, and executive management, with documented charters to avoid concentration of authority. Board diversity enhances balanced decision‑making, and careful thought should be given to family representation and the roles they may appropriately hold.
Purpose & Values Statement
Family offices benefit from codifying their purpose, values, and vision. This alignment ensures that decisions support long‑term wealth preservation, inter‑generational goals, and ethical standards, mirroring the Code’s expectation that boards align strategy and culture to purpose. A written statement is particularly helpful for succession planning and preparing future generations to build on what already exists.
Outcomes‑Based Reporting
Governance reporting should focus on decisions and outcomes rather than compliance box‑ticking. Defining measurable metrics—both corporate (investments, productivity) and family‑related (cohesion, progress toward purpose, engagement)—ensures reporting remains relevant and accessible for all family members.
2. Clear Division of Responsibilities
Even where family members hold executive roles, formal separation of governance and management remains essential. Independent or external board advisors (or non-executive directors) can support objective oversight, and the Chair role should remain distinct from executive management. Meetings should stay focused on agenda items without drifting into broader family issues, unless those issues are agenda items.
The contribution of independent non‑executives is crucial in bringing balance to decisions. They constructively challenge on strategy, performance, and controls while keeping focus on the family office’s purpose and vision. Assisting the board navigate family situations (especially the relationship with the family office) is helpful and in some instances needed.
For larger family offices, lightweight committees (risk, audit, nomination) can strengthen oversight without burdening the organisation with unnecessary bureaucracy.
Closing Perspective
Strong governance elevates operational rigor and strengthens long‑term family unity. Establishing leadership clarity, aligning purpose, and ensuring objective oversight all contribute to a future‑proof foundation. In Part 2, we will examine how family offices can put these principles into practice through structured appointments, succession planning, risk governance, and transparent reporting.
References
- UK Corporate Governance Code 2024, Financial Reporting Council (FRC) — full Code document.
- UK Corporate Governance Code overview, FRC.