Establishing effective governance in your family office

What is family governance?

Family governance is about creating a structure that aligns the family’s values and long-term goals with the management of their wealth. It helps guide how a family office operates, from decision-making processes to day-to-day management, ensuring a shared sense of responsibility, collaboration and purpose across generations.

Whether a family office is embedded within a trading business, set up as a standalone entity, or serving multiple families, effective governance is key to its efficient and sustainable operation.

Professionalism in managing wealth is a common requirement for family offices, and governance plays a central role in this. It guides decision-making, establishes accountability, and maintains the integrity and sustainability of the family office. Governance can take different forms, from informal traditions (‘it’s the way we have always done things’) to formal structures like payment controls, approved suppliers, standard reporting requirements and metrics, and even a family office charter. In this article, we explore why governance is essential, focusing on controls, transparency, access to information, and reporting.

Establishing strong controls to safeguard assets

Effective governance in a family office starts with establishing strong controls to safeguard assets, prevent fraud, and ensure compliance with legal and regulatory requirements. Financial controls are a key part of this, helping to manage the family’s wealth sustainably through budgeting, forecasting, and monitoring expenses, investments, and cash flow.

At the same time, operational controls cover the procedures and policies that govern day-to-day activities, streamlining operations, reducing risks, and enhancing efficiency. Information security is equally important, protecting sensitive data from unauthorised access and maintaining confidentiality and integrity across the family office’s operations.

Building trust through transparency

Transparency builds trust and confidence among family members and stakeholders, bridges communication gaps, and ensures accountability. It involves openly communicating the office's activities, performance, and decisions. Family members and the family office team should be informed about significant developments, policy changes, and the rationale behind major decisions. While transparency doesn’t require revealing the full details of the family’s overall assets, entities and wealth to all parties, it does set clear expectations about what information is available and why. Ultimately, transparency fosters a culture of openness and strengthens the relationship between the family office and its stakeholders.

Access to information for empowered decisions

Access to information is vital for informed decision-making and fundamental to strong governance. As wealth grows and circumstances become more complex, access to information becomes more difficult. Family offices should ensure that information about investments, financial performance, legal matters, and strategic initiatives is readily available. This can be achieved through regular communication, bespoke family office technology, such as RSM’s FamilySight, and comprehensive reports.

Enhancing accountability with effective reporting

Effective reporting practices ensure that the family office can provide clear and accurate information on a timely basis. Reliable reporting allows senior stakeholders and family members to make objective decisions and assess risks, costs, and potential benefits. Regular, structured reporting also allows different parties to assess progress and performance, maintaining accountability.

Next steps to improve your family office governance

Governance is essential for the efficient and sustainable operation of family offices. While its importance is often underestimated or misunderstood, it’s a fundamental component of long-term success. Family offices regularly face common challenges—such as inefficient manual processes or poor decision-making—but these can be addressed through effective governance frameworks.

RSM’s Family office team understands the issues wealthy families and family offices face. While each family is different, the experience and expertise we have gained from our clients allow us to work with any team to develop tailored solutions and governance frameworks that drive first-class efficiency.

To discuss how RSM can help your family office establish effective governance and achieve operational excellence, please get in touch with Gary Heynes or your usual RSM contact.