How to set up a single family office, in the right order

The first hire is usually the first mistake. A family decides it wants an office, and the opening move is to recruit a chief investment officer or rent a floor of an expensive building. The logic feels sound. You have capital, so you hire someone to run it. You need a base, so you take a lease. Then, six months in, nobody can quite say what the office is for, the CIO is investing against a mandate that was never written, and the family is paying rent on a problem it has not yet defined.

Setting up a single family office is a sequencing problem before it is anything else. Get the order right and the rest follows. Get it wrong and you spend years and a great deal of money unwinding decisions you made before you understood the question.

The order, plainly, is purpose, then governance, then structure, then people, then systems. Most families run it backwards.

Start with purpose, then governance

Before a single contract is signed, the family has to agree what the office is for. Not in the abstract. In writing, in terms specific enough to disagree about. Is this about preserving capital across generations, or growing it? Is it about keeping a family business in family hands, or selling it well? Is it about keeping the family together, or simply keeping the money safe while the family goes its separate ways? These are not the same office, and they do not hire the same people.

This is uncomfortable work, because it surfaces disagreements families would rather leave buried. Good. Better to have the argument now, on paper, than to discover in a decade that the office was quietly serving one branch’s view of the purpose while the others assumed something else.

Governance comes straight after, and flows from purpose. Who decides what. Who is told what. How a disagreement between family members gets resolved without a lawsuit. Where the line sits between the family’s wishes and the executives’ judgement. Many families reach for a governance template at this stage, a borrowed constitution from a conference or a consultant, and bolt it on. We would resist that. A governance document that did not come out of your own family’s specific tensions will not hold when those tensions arrive. Build the structure your family actually needs, not the one that looked impressive in a slide deck.

Then structure, then people, then systems

Only once purpose and governance are settled does the structuring question make sense. This is where the entity choices, the jurisdiction questions and the regulatory perimeter get decided: what legal vehicle holds the function, where it sits, and whether the activities it carries out bring it inside any regulatory regime.

We are not going to invent specifics here, and you should be wary of anyone who hands you a structure before they understand your purpose. The right entity, the right jurisdiction and the right regulatory footing depend entirely on the family’s circumstances, residence, asset mix and intentions, and getting them wrong is expensive to reverse. This is a question for proper legal and tax advice, taken in the right sequence, not lifted from an article. The general point is the one that matters: structure serves purpose. If you find yourself choosing a structure because it is fashionable or because another family used it, stop. You are decorating, not building.

People come after structure, not before. Now that the office knows what it is for and how it is constituted, you can hire against a real mandate rather than a hopeful one. And here is the part that runs against instinct: the first version should be small. Far smaller than the family’s wealth might seem to justify.

A young office staffed from trusted external advisers, coordinated by one or two capable people inside, beats a large standing institution built on day one. Outside advisers scale with need. You can add and drop them as the work demands. A payroll cannot. Every full-time hire made before the work clearly requires it becomes a fixed cost that then goes looking for things to do. The discipline is to build the office lean and let it grow into roles only when the work genuinely outgrows the external arrangement.

The corollary is that choosing those external advisers well becomes the most important task of the early office. This is where most of the real quality lives, and most of the real risk. A weak adviser in a key seat does quiet damage for years before anyone notices. Vetting them, cross-checking their standing, and understanding who is genuinely recognised in their field rather than merely well-marketed is work worth doing slowly. Our directory exists for exactly this stage, and the basis on which we judge recognition is set out in our methodology so you can weigh it against your own.

Systems come last, and they come last for a reason. The reporting platform, the consolidation tool, the document vault: these are genuinely useful, and they are genuinely seductive as a place to start, because buying software feels like progress. It is not progress. A system imposed before you know what you are coordinating will encode the wrong assumptions, and you will live with them. Build the systems around the work once the work exists.

The version most families should actually build

Put together, the honest first office is modest. A clear written purpose the family argued its way to. A governance arrangement that fits this family’s specific frictions. A structure chosen on advice, in sequence, to serve that purpose. One or two trusted people inside, holding the picture together. A tight set of external advisers, chosen carefully, doing the specialist work. Systems added only as the coordination demands them.

That office can be stood up without grandeur and without a large payroll, and it will do the four things an office is actually for far better than the institution most families are talked into building. You can always add. It is the subtraction that is painful.

The families who get this right tend to share one trait. They were willing to start smaller than their wealth suggested they could afford to. Spend less on the office than you think you should, at least at the start. The restraint is the strategy.