Date: Nov 03 2021
Erin Hulse is the Founder of Deviate Consulting, LLC, which focuses on accounting, software consulting and selection for family offices, investment advisors, hedge funds, fund administrators and small businesses throughout the world. Software focus includes multiple investment accounting, portfolio accounting and wealth management suites prominent in the industry.
FOX is back in person! Last week, family members, offices executives, and their advisors joined together to hear and discuss how families have achieved positive chnage and successfully transitioned to future generations throughout 2021. Read below to get a peek into one of the sessions.
The Role of Independent Board Members – Bringing New Insights to the Family Craig Duchossois and Pierre
When starting a family office, it would seem natural for family members to be your advisory board. After all, it is a family office. But in doing so, you surround yourself with people who think like you, lived much of the same experiences as you, and have the same blind spots as you (because we all have blind spots). The long-term effect for your office is more of the same.
But if you want your family office to last across generations, building a foundation on more of the same won’t prepare you for the unknown. And thinking about the upheaval of the last two years, it seems the unknown outweighs the known.
At FOX’s recent Family Forum in Chicago, Craig Duchossois and Pierre duPont talked about the value of having independent board members to guide them.
Both agreed the best place to start when bringing in external advisors is to ensure the values of the family are clear. Ensure they’re documented, embedded in the leadership, and let them trickle down. Hold onto the values and instill them in family members at a young age. When the family lives and breathes those values, incorporating outside advisors becomes easier.
But you don’t want someone who looks at this as a hobby. After all, your family’s future success is guided by these advisors. Duchossois and emphasized that you need engaged people focused on adding value – and not afraid to call you out when you’re wrong. So don’t treat board members as if they’re doing you a favor. This isn’t charity work. Compensate them.
And in turn, it’s likely you’ll be asked to be a member on another family’s board. Take these requests as seriously as you would in extending an offer of your own. Do the same due diligence on the organization as they’ll do on you. Ensure your own engagement, which will benefit the family in the long run, by making sure the organization offers something you can learn from. Be sure you understand the founders’ origin stories; learn their objectives. And if you want your voice to be heard, don’t tell the organization what to do – ask good questions instead.
Some Forum attendees asked the speakers how, if you want external insights, to avoid “group think” when board members have similar values. Duchossois explained you’re looking for someone who can has an independent mindset and the personal courage to present other ideas.
And ultimately, to ensure the success of the family across multiple generations, the work you do to align new board members should also include the family’s children. No, you don’t need to teach five-year- to read balance sheets. But you can include them in age-appropriate activities embodying family values. Duchossois gave the example of a craft activity for the youngest generation of his family, where the children built piggy banks. The children then described how and why they would use their piggy bank.
Young children can be taught in ways they can learn. Start integrating and educating around those values from day one, and the result will be values that are instinctive. That will be the surest way your family selects the appropriate external advisors for the family board, and lives its values across generations.