Family Office – My thoughts on Role of Advisor 

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I have been asked this question quite a few times by some people on the role of an advisor of a family office (just to clarify, I am talking about an individual here and not institutional advisors). This issue has come up a few times in the last few months and it seems to me that quite a few families, whether large or small have expressed the need to set up a family office. While I have already shared a blog on “Thoughts on Family Office Construct-Living Document” (read more), I am sharing my learnings on the role of an advisor after having spent close to 3 decades of working closely with two of the large families in North India i.e., the Munjal family (Hero Group) and Dr Singh at Ranbaxy.

Key Learnings

  • The desire to get an advisor has to be a felt need of the family
  • There must be a DilSe connect among the family members and advisor and complete alignment on objectives, philosophy, values and culture i.e., the softer aspects. The process of alignment among advisor and family, including building trust needs to happen in a few interactions. If the process of alignment and trust building takes longer, one should give it a break or look for someone else
  • The advisor needs to be a clone of the decision maker/s and be a Dost (friend) most of the times, while being a child at other times to learn even from some of the younger members of the family
  • The advisor needs to be acceptable, trusted and respected by most of the family members and should be experienced, independent, unbiased and driven by values. These qualities of an advisor are important as he may need to address some complex issues including being a bridge among the family members in certain tough situations. The goal would always be to create a win-win solution
  • He should have the maturity to understand and interpret both stated and unstated needs, desires, aspirations and expectations of the family members
  • The advisor may be a jack of all but should be a master of some of the functional skills required to achieve the desired outcomes by the family. He should be able to comprehend the magnitude and scale of the issues and use his experience and network to be able to access the right people to drive some of the key projects
  • The family and advisor must agree on the scope, roles, expectations and priorities upfront before formally signing a commercial mandate. The process to finalise the terms of engagement may take a few discussions amongst the advisor and the family. It is good to spend as much time to gain comfort by both parties given that lot of confidential points may be discussed during the engagement, which will almost certainly remain in a very private domain
  • The advisor role is based on one-on-one comfort and therefore the availability and responsiveness of the advisor needs to be ensured. The advisor should not have more than a couple of mandates depending on the maturity, size of the family and the wealth of the family

In conclusion, the advisor needs to be an extension of the family and support the family with a balanced and unbiased view on decision making while keeping in mind their expectations, desires and needs. The key is to ensure that the both the advisor and the family are aligned in terms of their values and together strive towards creating a win-win for all.

Additional blogs on this subject

  • Thoughts on Family Office Construct-Living Document (read more)
  • Rationale for running Family Office as a business (read more)
  • Framework for Investment Office (read more)

October 2021