My Thoughts on the Relevance and Timing of setting up a Family Office

Share :

This note is based on my three decades of experience working with Munjal family of Hero Group and Dr Parvinder Singh of Ranbaxy.

Family office as an institution, is the identity of the family. The institution defines the legacy we want to leave behind and is a conscience keeper.

A. The Principles of foundation of the family office could be based on:

  • Purpose: Role of family and leaving a legacy
  • Reputation: Building reputation in line with the purpose basis internal and external interactions. There should never be any compromise that could harm the reputation both personally or professionally.
  • Core Human Values: Define core human values which have a ‘Dil-Se’ connect [e.g., Humility, Respect, Transparency and Being Fair, Integrity, Patience and Tolerance, Devotion, Gratitude, Forgive and Seek Forgiveness, Giving, Compassion, Love.]
  • Responsible Citizen: Ensure we follow the smell test and spirit of law as a responsible citizen

B. Internalizing the principles of foundations helps in:

  • driving the conduct, interactions and communications both amongst the family and with the other stakeholders and society at large, and
  • how we make decisions both in personal and professional life while staying within the contours of Foundational Principles

C. Define Objectives of the Family which could be:

  • Ensure family harmony, love and affection at all times
  • Protect and enhance the family brand and reputation
  • Protect and grow family wealth and seamless transfer and succession planning of wealth and businesses

While the engagement of the family in institutionalizing the family office is very deep, but fortunately requires much less time than running an operating business given the fewer moving parts.

D. Decision Making 

  • Once the objectives and principles are defined, the process of decision making becomes very seamless and the bonding and harmony amongst the family increases because of transparency and frequent communication. As far as possible, decisions should be unanimous. Since all decisions are not always going to be favourable, it must be ensured all decisions are joint decisions and it should be a joint responsibility of the decision-making body and not of the person who initiated the discussions.

The process of setting up the family office must be an inclusive exercise, where all the adult members share their perspectives.

There should be a healthy and open discussion.

E. Timing

  • The best time to initiate the process of setting up of family office is when the going is good and there is lot of love, affection, trust and respect amongst the family members.

The family office construct is a living document, with changing times, some of the features may need to change.

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)
  • Family Office – My thoughts on Role of Advisor (read more)

October 2022