Although family offices are often focused on stewarding family wealth through generational transitions, guiding family members through transitions is also a critical function — both for the family members themselves and for the future of the family office. New family members, whether they are children reaching adulthood or adults marrying into the family, will be part of the generation that will eventually take over the family office leadership.
For the family of Craig J. Duchossois, chair emeritus of Duchossois Capital Management, this onboarding process starts from an early age with family retreats and annual shareholder meetings.
“At 18, they may become observers at all board meetings,” Duchossois says. “Early leadership opportunities start with the family council and its traditional functions.”
Guidance for family members is not limited to family governance functions. Family members age 18 and above are also assigned mentors and career counselors to help guide them.
Creating structures like these to introduce family members to the possibilities of family office leadership is important not just because of the opportunities it provides for the rising generation of family members, but also because the process of setting up those structures helps the family articulate what family members need to know about family leadership. Similarly, designing a welcome for family members can help the family crystalize what it thinks is important to pass on.
Katherine Dean, chief learning officer of Three Hills Family Office, has spent the past year and a half working with the family on a formal process for welcoming new family members — something that for previous generations had not been done in a consistent way. Three Hills serves almost 30 members of a family with two branches and four living generations (G4 through G7).
When they started the project, members the rising generation were between ages 19 and 31, and some were getting married. Although much of the information they put together was a high-level look at the family’s history and values, the work also included detailed discussions of more tactical issues.
“A big part of this work was figuring out what the family is comfortable sharing at what point in a relationship,” Dean says. This raised some tricky questions, such as how to include people in serious relationships who aren’t married. Should it be based on the number of years they have been together, for example, whether they are living together, or whether they have signed any sort of cohabitation agreement?
“Where you land on those questions is going to be unique to every family,” Dean says. “We decided to adopt a flexible model, knowing we may have to revisit some of these questions down the road.”
The result of the group’s work was a collection of key information about the family that they want to transmit to new family members. They divided the presentation into two meetings with Dean and the head of the private trust company: one meeting for couples who are engaged, and a second after they are married. The first session includes family culture, history, values/vision/mission, an introduction to how the family stewards the five capitals, and a brief overview of what the family does.
They started the process recently, with the first meeting for four recently engaged or married couples.
“We focused on the human capital and family history, building relationships and trying to make people feel welcome. We had a segment asking them to share with us about their family histories and traditions,” Dean says. “What we didn’t do in that first meeting was go into excruciating detail on the businesses and trusts, though we did cover them with broad brush strokes and talked about the family’s philosophy on using wealth.”
Of course, individual family members may choose to disclose more to their partners earlier in the relationship. And some of the specific financial information will come up during discussions of a prenup.
“We can’t control what they are disclosing, nor would we want to,” Dean says. “The committee decided what we want to share with a unified voice with all new family members, even if that means some repetition because some people have already shared the information with their partners.”
The second meeting will be held later this year and will include more details about the family businesses, as well information about how they can participate, for example, on the board of the private trust company or the foundation. It also includes an invitation to attend family meetings.
“We’re trying to give them a lot of support to make sure they feel comfortable engaging from the get-go. We want to make sure they feel supported, heard and patched in,” Dean says.
The first session was received well by attendees.
“One of the most common responses was that it was amazing that the family thought it was this important to be so intentional about communicating,” Dean says.
The information Dean and the family produced became a template that could also work for family members as they come of age or for newly hired staff.
“This is the first time we have pulled all this content across different businesses or functions into one place,” Dean says. “We’re trying to make it accessible.”
