The importance of having the right people in the right roles in your family office
The importance of having the right people in the right roles in your family office.
Family offices are usually formed following years of successful business operations, where having highly skilled, balanced and diverse teams is key. It therefore comes as no surprise to learn that the family offices we spoke to all prioritized finding the right personnel to safeguard their wealth and ensure compliance early on. For some this means recruiting industry leaders into senior roles, for others it’s about identifying external subject area specialists to onboard or engage as needed. Then there’s the challenge of including family members – or not – with a clear set of parameters for governing involvement.
Huillinco Family Office Director, Andrés Del Río, has found involving and employing trusted external people helps mitigate the intensity of the family dynamic.
The Del Río family is large, with all second and third-generation members spread across three lines of descent from the original wealth creator, José Luis Del Río. There are three individual family offices founded by second-generation members, which are integrated into a larger multi-family office.
From the beginning, external individuals, both employees and consultants, have been involved.
"The holding transferred an accountant to me, and I hired an analyst immediately. That's how we started the office. We have separate offices in the same building, but our family holds many joint meetings because most of our major investments are co-investments," says Del Río, who established the office in 2012.
Del Río anticipates that the office will reduce the number of directors on various boards and committees to five: three external people and two family members. Additionally, its focus will shift from generalization to specialization. This will help streamline operations, reduce the number of meetings, facilitate decision-making, and create value.
The office currently employs approximately 20 external individuals, including the CEO, some board members, an accounting team, and analysts. Other key functions, particularly investment advice, are supported by the holding, with assistance from trusted and highly reputable external consultants and firms.
A suite of policies and procedures governs family involvement and employment at the Vermeer Family Office, where merit, not birthright, take priority.
“When the Vermeer Family Office was established in 2014, it was embedded within the Vermeer Corporation. That's to save time and resources. So, I am a full-time employee of the corporation,” explains Senior Family Office Manager Aaron Smith.
“For all intents and purposes, we are a separate entity in the family office. But the family intends to hold the business perpetually, so that was an easy decision for them to make when setting it up 10 years ago.”
Smith is one of five employees in the Vermeer Family Office, each with a "carved out" role and specific area of focus, such as the Vermeer Charitable Foundation, acting as a concierge for senior family members, educational initiatives, committee management and relationship management.
A set of very specific rules and policies govern the office and corporation, including a family employment policy that stipulates there will not be any preferential treatment of family members. These are overseen by a Governance Committee and reviewed every two years.
Vesta Family Office President and Vesta Wealth Partners CEO Max Fortmuller believes relationships built on genuine friendship and trust are important in a family office environment.
In 2017, when fifth generation family member Max Fortmuller was looking for a place to continue working from and for the family while also improving their investment portfolio, he led Vesta Family Office’s purchase of a multifamily office and set about transforming it into Vesta Wealth Partners. He also wanted to enhance his personal career objectives with practical learning and growth.
The multifamily office’s existing CIO took Fortmuller under his wing and remains on today as Vesta Wealth Partner’s CIO, and one of its most trusted advisors.
"I"ve been around long enough to know that you need more than just professional designation in the people you choose to place around you. This person is a genuinely good guy; he’s as sincere as they come," says Fortmuller.
"My family is technically a client of Vesta Wealth Partners, and we have lots of external clients too. For some of those clients I'm the relationship manager and for other clients my CIO keeps me involved to the point that it's needed. I trust him undoubtedly," says Fortmuller.
Vesta Wealth Partners employs approximately 18 employees. It has rebuilt its accounting team, is exploring a target operating model, and has made the decision to outsource its HR operations.
The Vesta Family Office has one full-time bookkeeper and utilizes staff from Vesta Wealth Partners as needed. Fortmuller also draws on a "huge amount" of advisors for direction and support, both within and outside of the family office community.
For decades now, the Saputo’s family office, Placements Italcan Inc, has been managed by the third generation’s middle daughter. But as the office moves into "version 3.0", it is starting to look outwards.
The office is taking a top-down approach to hiring, explains CEO Patricia Saputo.
“It’s in my succession plan that I need to hire, because internally there isn't anybody in the family that can take over from me. In late 2022 I got the green light from my parents and we hired our first employee; our first hire is the new CIO-CFO.”
Saputo is working on building two branches into the family office’s operational and HR structure, with a total of five employees. There will be a financial accounting arm and an investment arm, with a senior and junior person in each team, who report up to the CIO-CFO and then herself as CEO.
As CEO, Saputo will report and answer to a Board of Directors, which is currently made up of herself and her parents but will eventually be made up of herself and her four sisters. There will also be a meritocracy-based investment committee.
"We are working on untangling the investment holding company that does the business of investing, with the family office being the service center that services not only the investments, but the needs of the family members and each of their branches".
A mixture of family and nonfamily members fill the key roles at the Grupo Económico Maldonado (GEM, or Maldonado Economic Group).
The Maldonado’s family office was founded in 1997 and currently has 12 family members actively working in it. Family members started getting paid for their time in 2013.
"In 2013, we created a system that allowed family members to start getting paid for their effort for the first time. This was a big breakthrough, as we had been working without compensation for many years," says third-generation family member and Family Council Chair, Alexander Degwitz.
Degwitz says the family has made and learned from a lot of mistakes over the years. One of its key takeaways concerns the value of installing objectivity in a family business by employing or engaging respected professionals in family office key roles. Roles currently filled by nonfamily employees at GEM include office manager, asset manager, attorneys and accountants.
“You need to respect straight-up management practices in a family office, and to do this, you need to insert objectivity in the family dynamic. You can have a cousin tell you that your performance was subpar – and you'll take it in a very bad way. But you can have a respected professional give you the exact same message, and you will take it in a constructive way and make positive change.”