"Developing Family Offices with Resilience: A Focus on Governance from G1 to G5"
The Family Office Maturity Model, a framework designed to measure and guide the evolution of family offices, has emerged as an essential tool for families managing significant wealth. Developed by Agreus Group, the model provides a comprehensive understanding of the various stages family offices go through as they mature from informal wealth management to sophisticated investment entities.
In the early stages, family offices are often characterised by a founder-led, instinctive, and relationship-driven approach. This can lead to inefficiencies and future succession challenges. As family offices progress, they enter the Developed phase, where risk management, stakeholder alignment, and building cohesion among family members become key focus areas. In this phase, family offices introduce governance frameworks such as family councils and investment committees.
The Professionalized phase marks a significant transformation, with family offices operating with corporate-level professionalism and witnessing an improvement in investment performance. Values such as impact investing, philanthropy, and sustainability take centre stage in this phase. The maturing of a family office is a significant event, with each generational handover offering an opportunity to reassess talent, governance, and structure.
The leadership approach in family offices often varies by generation, with first generations leading instinctively and later generations bringing global exposure and a desire for structure. As family offices mature, they incorporate modern elements like technology, sustainable investing, and global diversification without losing sight of the family’s legacy and values.
The need for strong governance and skilled people remains constant throughout the evolution of a family office. In the Mature phase, family offices operate independently of day-to-day family involvement and are governed at the board level. Purpose is clearly articulated, and strategy, talent, compensation, and retention are aligned with long-term, multi-generational goals. Cost structures are stabilized, performance is optimized, and the entity is built to last.
The Family Office Maturity Model acts as a strategic tool that fosters the evolution and development of family offices by guiding them through professionalization, governance enhancement, innovation adoption, and strategic growth, thereby ensuring their durability and effectiveness across generations. It provides a roadmap for growth, driving professionalization, balancing tradition with innovation, supporting intergenerational transition, and facilitating strategic decision-making.
With the Family Office Maturity Model, family offices can make informed choices regarding investment strategies, liquidity management, and diversification, including access to global alternative investments and real estate portfolio optimization. By adhering to the principles outlined in this model, family offices can ensure their long-term sustainability and continued success.
- In the early stages of maturity, family offices may lack professionalization in wealth management, but as they progress, they focus on education and self-development to improve their investment strategies, transitioning from a founder-led approach to one that is more corporate-level and governed at the board level.
- As family offices advance through the Professionalized and Mature phases, they increasingly prioritize finance, business, and governance to ensure long-term success, adopting innovative strategies like technology, sustainable investing, and global diversification, while maintaining their family's legacy and values, and clarifying their purpose and aligning it with multi-generational goals.
