Protecting the family legacy

Doing the groundwork to ensure your family office continues to thrive.

The whole adage of never mixing business and pleasure has long been irrelevant for families with a significant legacy of business acumen and wealth, for whom ‘the family business’ is often mirrored by ‘the business of family’. One cannot exist without the other. We learned that being able to have hard conversations is essential to the long-term viability of a family office, as is a clearly defined ‘rulebook’ in the form of a family constitution, charter, or shareholder’s agreement to define roles, remits, processes and contingency plans for worst case scenarios. Some families manage to facilitate their own communication and decision-making; others find involving external experts such as mediators and therapists helpful.

At Applerigg in the UK, a process of governance involving non-family, non-executive members means that there's always triangulation in any potential confrontation or challenging situation.

“For over 100 years, we've had this process in place, says Founder Alexander Scott.

"We seek advice and input from others, and we trust others to help us be a better family. It's important that we have those people around us, because they can help us make better decisions."

Alexander Scott, Founder, Applerigg

“It takes the emotion out of family situations because there's always a place to go; there's always a place to have that sensitive conversation and a non-family arbiter in case of deadlock. And I think that that's the most difficult thing of all to manage.”

Scott points out the family didn’t plan this element of its business communication, but that it’s been in place for many years, due to the family’s long history in business. Its multi-family office, Sandaire (which was recently divested), was formed in 1996 after Provincial Insurance, formed by Scott’s ancestors in 1903, was sold. Provincial’s nature as an insurance company, which had a fiduciary duty to look after other people's money, meant that professional governance was appropriate from day one.

“There’s a cost, but [it’s] not very much in the context of what it brings us. I think engaging respected professional, successful people who will really say it as it is—they'll hold the mirror up to the family as trusted insiders—has been critical in maintaining our progress and our peace.”

The establishment of a family charter to inform the office’s organization and the roles and responsibilities of family members was prioritized early on at the Tsao Family Office in Singapore.

Back in 2007, when Dr Mary Ann Tsao and her three second-generation siblings started discussing how to take the family business forward, they argued. “We’d get into huge arguments all the time; that's how we realised that we don't know how to talk to each other at all, and that obviously wouldn’t do.”“We decided that, as a family as well as a group of people, we wanted to be able to dedicate some amount of our lives to public good, and that it's beneficial for us to work together."

"We went through about five years of quarterly family therapy to really work through things, to learn how to have a dialogue and ground rules for how we talk to each other, and to clear enough air so that we can actually work together."

Dr Mary Ann Tsao, Council Member, Tsao Family Office

Dr Tsao says the process was consuming, but “the best thing we ever did”. Now every quarter, one of the four siblings organizes a meeting with a dialogue coach and a family therapist. They speak or catch up socially every week and get together once a month to talk business.

“For us it's important that we’re accountable stewards for the family. Any major decision requires consensus from all four of us. No one's left out.”A robust governance structure is key for Maitri Asset Management, which manages the family wealth of Tolaram Group across four generations.

“Our chairman is the second-generation family member, although he's not actively involved with any of the businesses or the family office; his major focus is on philanthropy. Three family members are involved in the family office at the board level, and we have one family member at the committee level,” explains non-family CEO, Manish Tibrewal.
The office was formed in 2016 as part of a broad restructuring of the family’s assets, in part to facilitate the entry of the family’s fourth generation into the family business.

“We have a robust governance structure. It starts from the family council which has a constitution that was developed as part of the restructuring. Then there are various layers of governance below that. There is a board which comprises family members and professionals, as well as independent advisors. There is also an investment committee mostly made up of professionals, and one family member.”

“Getting the decision-making process and the governance right, to which everybody is signed up, is critical. Things also become a lot smoother—if somebody is deviating from the process, it’s just about reminding that person they can’t do that as everything is hardwired in.”