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Family Offices: Incorporating Wealth Governance Rules in Family Business Dynamics

Yannis Sardis, PhD    |    22nd  May 2023

‘Strive not to be a success, but rather to be of value.’
Albert Einstein, Theoretical Physicist (1879-1955)

Family Business Advisory

Accredited Family Business advisors can guide family members to identify best practices of concurrently dealing with complex business, ownership and family affairs, via self-assessment diagnostics, education, increased awareness and the provision of suitable tailored solutions. Such advisory services aim to assess a family’s capability to act efficiently across a plethora of operational dimensions, such as succession and governance, strategic growth and assessment of risks, as well as human capital resourcing.

The advisory cycle can often include online assessment tools, in order to produce a most accurate and bias-free set of diagnostics. As a module of such an assessment, one could include a high level view of the family’s collective financial investments, across asset classes, investment types and allocation instruments.

The investment element of the Family Business advisory services should not necessarily be contained to items such as a dividend distribution policy, but ideally include a complete and timely picture of the family wealth. This way, a family can collectively make efficient asset allocation decisions, based on quantifiable data sets and not on emotional biases, especially as the needs of its members emerge and change over time.

Family Wealth Governance

A Family Office operation is an entity (preferably separate from the Family Business, in both operational management and purpose) established by a family or a group of families (either with or without aligned objectives) to manage their financial and investment affairs, aiming to preserve and incrementally increase wealth for the current and future generations.

The extend and depth that a family wishes to reach for creating a family office operation depend on various factors, such as its complexity, total assets and available budget. Irrespectively of its size, any family office scheme should however be based in a centralised and systematised information hub that can be available to its family members and (internal or outsourced) investment advisors.

As such, a family wealth governance process could be facilitated via the utilization of centralized software tools that can produce targeted individual or summary reports, via which the family members can grasp a unified view of their financial strength and consequently quantify and attribute any strategic gaps in the way its collective investment capital can be efficiently and transparently allocated.

Areas that could benefit from such a systematisation process could indicatively contain:

  • Manual processes and cumbersome Reporting
    The data collection and calculation processes followed in a family business/office are often manual, thus time-consuming and error-prone. When data from internal and external sources become voluminous, the introduction of systematic processes via specialized software solutions enhance the family’s ability to centralize its collective intelligence and consequently derive valuable insights.
  • Multi-Asset class and multi-Currency capabilities
    The global nature of today’s businesses naturally leads to investment portfolios of various asset types (such as equities, bonds, commodities, cash, hedge funds, private equity/credit, real estate), and more than one currencies (than the reference currency of the family business or its expenditure). A portfolio management system should aim to have a full mix of all assets in one platform.
  • Managed Services
    When the family does not wish to incur the often high cost of establishing a full investment family office, or where there is an unfulfilled need for internal operational expertise, the use of a comprehensive investment platform can allow the outsourcing of certain commoditized operations, which in addition to cost savings can guarantee a 24/7 monitoring and support cycle.
  • Performance Measurement and Attribution
    Once all information has been incorporated in a single safe data depository, the family can use the functionality of the investment platform to decompose the various sources of performance and switch the allocation of capital accordingly in an aggregate fashion. Consequently, the investment portfolios can be pro-actively utilized as collateral for individual or collective borrowing that the family may wish to deploy for personal or business objectives.
  • Risk Management and Analytics
    The chosen system-hub can be used to quantify the investment risks across all the family portfolios and thus analyse the sources of credit and market risk that can be potentially mitigated. This way the family can rebalance its asset allocation weights to these parts of the portfolio that will improve its overall risk/return profile.
  • Single Access point
    The use of a unified platform allows its users to have their own self-customized dashboards, for monitoring the overall family investment reporting, thus including an accurate and transparent allocation of profits and losses to each family member.


For family businesses that cannot or do not wish to establish a full family office operation, but still want to assess their aggregate market-related risks, the use of a portfolio and risk management software platform can allow the identification of any strategic gaps in the way its collective investment capital is allocated and continuously managed. The aim of having readily available a selected spectrum of investment risk analytics is to enable the members-investors within a family to systematize and tailor their decision-making process.

* Elements of the aforementioned topic were presented in the recent 8th Family Business Forum – ‘United We Thrive’, organised by KPMG-Greece.

FINVENT Software Solutions is a producer and distributor of financial software applications and custom engineering services for the investment management sector. The firm serves financial institutions in European and African countries, including asset managers, family offices, investment banks, pension funds and hedge funds. Its award-winning KlarityRisk platform specializes in multi-dimensional investment risk analytics, stress-testing simulation scenarios, risk limits management, and fixed income performance attribution reporting.

Nothing contained in the aforementioned references constitutes an investment solicitation or recommendation.