What type of family office is right for your family, and when is the right time to establish one?
Just like a regular business, company or corporation, a family office needs a robust and transparent structure with clearly defined rules and processes for governance and decision making to run smoothly and fulfil its core function of protecting and growing a family’s wealth. This is true of single and multi-family offices, which, depending on location, can be subject to external regulation. This is especially the case for multi-family offices, which arguably attract more stringent regulatory interest as they are managing external wealth alongside their own. That said, a family has a fair amount of autonomy when it comes to structuring its office, and we observe some variation in the five offices we interviewed.
The Maldonados established their family office, Grupo Económico Maldonado (GEM, or Maldonado Economic Group) in 1995. It served a key strategic role in the family’s migration from their home country of Venezuela to the United States.
First, the family carefully researched where it wanted to base itself and engaged one of Latin America’s top private equity and advisory firms.
"To implement the consultancy’s findings, we realized that we needed a structure to organize the assets that we had and to give us some executing capacity. During our transition our family office was our business," says third-generation family member and Family Council Chair, Alexander Degwitz.
GEM comprises five branches of the Maldonado family, founded by the five second-generation children of wealth creator Iván Darío Maldonado. The family’s wealth originates in cattle and is now focused on three key areas: juices and dairy products, sustainable cattle and buffalo for organic milk and meat production, and real estate.
Comprising the five family branches under the overarching office’s umbrella, GEM currently has over 40 beneficiaries. A family council with a chair for each branch oversees decision making. Structured like a trust, GEM’s operations are based on four committees: audit; investment; education and foundation; nomination and compensation. The business side of GEM has a Board of Directors accountable for our ongoing concerns, whose members are selected by the family council with the support from the family office.
When Patricia Saputo began laying the foundations for the Saputo’s family office, Placements Italcan Inc, in the late 1990s, she didn’t realize there was a term for what she was putting into place.
"I first heard the term ‘family office’ in 2005 or 2006. There weren't very many, or even any formal family offices across Canada, so by default, we’re one of the pioneers in Canada’s family office space," says third-generation family member Patricia Saputo, CEO of Placements Italcan Inc, who describes this period in the office’s history as version 2.0.
Patricia is the daughter of Francesco Saputo, who migrated to Canada from Sicily with his father in 1950, followed by his mother and siblings in 1952. Francesco learned the art of cheesemaking from his mother’s family and co-founded the hugely successful Saputo cheese manufacturing company in Montreal. Some 40 years later, as Patricia applied the skills in tax accountancy and company management that she’d honed at companies like Deloitte to helping her father manage and protect his fortune, she learned that was what she was doing: setting up a family office.
"Version 1.0 started in 1980, when my father created the investment holding company. I came in as a tax accountant in 1998 and created an informal decision-making capacity between my parents and myself as version 2.0," explains Saputo.
Now the family is in version 3.0, where, with her parents blessing, Saputo and her four sisters are in the process of determining a formal governance structure, and how to involve the next generation, so that they can evolve to version 4.0 – the professional version of the Saputo Family Office.
The Fortmuller family founded the Fortmuller Family Office (now the Vesta Family Office) in Calgary, Canada in 2008 to create a governance structure for the fourth and fifth generation’s stewardship of the family wealth.
The Fortmullers are members of Germany’s Bahlsen family, whose wealth creator, Hermann Bahlsen, founded the renowned baked goods business, Bahlsen (then Hannoversche Cakesfabrik H. Bahlsen), in 1889.
Almost 110 years and a different continent later, fourth-generation descendant Dagmar Fortmuller (nee Bahlsen), migrated to Canada and took advantage of a liquidity event. This, along with a desire to empower the next generation to responsibly manage the family wealth, motivated her to establish the family office.
Today Dagmar and her three eldest children, including President, Max Fortmuller, are trustees. In 2011, the office made its first intergenerational wealth transfer to all of Dagmar’s lineal descendants.
In the beginning, the office was managed by a third-party administrator. Since 2018, Fortmuller, a former professional bull rider, has been at the helm. All fifth-generation siblings are involved as owners, but Fortmuller is the driving force.
Over its 15 years in operation, the Vesta Family Office has firmed up and begun to formalize its governance structure. It has formal vision and mission statements (which it reviews from time to time), but no formal constitution – yet. Formalizing one is a goal in the next few years.
In 2019, Fortmuller spearheaded the purchase of an existing multifamily office by Vesta Family Office, which he has transitioned into a successful investment firm, Vesta Wealth Partners.
The Huillinco Family Office was founded in 2012 following the decision of three siblings to buy the shares of their other four siblings in Derco, one of Latin America’s leading vehicle import companies.
The family wealth was created by José Luis Del Río, a multifaceted entrepreneur focused on construction, home improvement products, and automobile importation. He founded Derco in the 1960s.
Today, the Del Río family holds shares in Inchcape, which merged with Derco in 2023. Additionally, the family has successfully ventured into other industries, establishing an insurance and annuity management company, a commercial rental enterprise, and several high-value agricultural businesses. They are an active family with business interests in banking, private equity, private debt, insurance, annuities, real estate development, retail, and a diverse investment portfolio.
Felipe Del Río, together with his son Andrés, a third-generation family member, founded the family office in 2012. Del Río (Andrés) currently serves as director and manager of new business development. Their family office is one of three within a multi-family office that encompasses related branches of the family, all descendants of the original wealth creator.
The Huillinco Family Office is part of the Dercorp holding, shared with Felipe"s siblings. They have integrated the third generation into the decision-making process within the holding’s board of directors. As a group, they are constantly seeking new growth and development opportunities, aiming to contribute to the progress of Chile and Latin America.
The Vermeer Family Office was established in 2014, and is embedded in the Vermeer Corporation, of which many second and third-generation family members are shareholders.
Established in 1948, the Vermeer Corporation is a global leader in the design, manufacture and support of high-quality industrial and agricultural equipment. Nearly 90 per cent of the 80 Vermeer family members are shareholders.
"The family office was a means of creating a governance structure to enable the third generation to step into leadership and take over from the second generation," explains nonfamily member and Senior Family Office Manager Aaron Smith, who has been in his role since November 2022.
From 2012 to 2014 the family group had numerous conversations and worked with consultants guiding them through a formalized constitution. There’s a formal shareholder pledge, and shareholder expectations.
An Ownership Council and Board of Directors govern the Vermeer Corporation. The Ownership Council comprises the different family lines, which have representation based on their ownership percentages. It meets quarterly. Then there’s an Education Committee and a Governance Committee.
“The Education Committee is largely concerned with educating the fourth generation about the operating business,” says Smith. “The Governance Committee dictates policies, and all other family related policies that both the company and the family group agree to.”