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Catherine Grum: Culture has a strong bearing on reputation

In this month's edition of The Lede, Catherine Grum, Head of Family Office Services at BDO, writes about the importance of reputation for family offices and the common practices that unite them all.

family offices differences and similarities catherine grum

This month’s comment comes from Catherine Grum. Catherine is head of Family Office Services at BDO. She advises families and family offices around family office establishment, family governance and philanthropy. Catherine has previously been named as one of EPrivate Client’s 50 Most Influential and is one of Family Capital’s Top 100 Family Influencers 2020.

Everyone knows by now the adage ‘when you have seen one family office, you have seen one family office’. Steps taken to replicate what one family has in place for another family are rarely if ever successful, even if the families seem quite similar on paper. 

The common threads

However, there are some practices that I see time and again working with successful multi-generational single-family offices. These include:

  1. That they know the purpose the family office serves for their family and their strategy is aligned with this;
  2. They understand the value of a strong culture;
  3. Everyone is clear what roles the family play and who decides what;
  4. They tailor their approach with the rising generation in mind;
  5. They proactively manage their key risks.

For example, in relation to purpose and strategy, one family office might be created to help the family diversify their interests away from a central business and another might be created to support a serial entrepreneur who is very much in wealth creation mode. While both family offices might invest in private equity as part of their approach, their objectives are likely to be different. Those family offices that recognise this and set their strategy accordingly are likely to enjoy greater success in the long-term. This is because they have understood both the financial and non-financial expectations of their stakeholders and are therefore more likely to be meeting them. 

It also helps them in the market as they can send a much clearer message. With a lot of capital looking for opportunities to invest, strong businesses have the luxury of choice. They are generally reluctant to have their sensitive commercial information dispersed far and wide and expect to be introduced to a short-list of focused potential investors.

The importance of culture

You hear a lot about the importance of culture in large companies but I would argue that it’s even more critical for family offices. Supporting a family is a weighty responsibility as are often guardians not only of their financial wellbeing but also of their reputation and legacy. At an operational level, a strong culture can help recruit and retain talent as well as manage risk. The culture of a family office should align with the family they serve and be authentic.

The successful family offices that I have worked with understand this value and are deliberate in the steps they take to preserve and enhance it. In practical terms this can range from briefing recruiters on the family’s culture and values to creating forums for the family to share their family history. From a risk-management perspective, having the right culture does as much if not more to manage risk than having great piles of heavily documented policies and procedures.

Controlling the narrative 

Culture has a strong bearing on the reputation of both the family office and the family themselves. While few families seek out self-promotion, an increasing profile is almost inevitable for wealthy families in 2020. Recognising this and allowing a certain amount of information to be shared puts families in control. Importantly it also helps to mitigate any fall-out if an issue emerges and hits the press. Where there is a vacuum of information, it’s much easier for bad news to define the family. Avoiding this situation is one of the reasons I’m seeing increasing numbers of family offices start to pay attention to their messaging and branding and pre-thinking what shocks or unexpected events might affect them.

Culture also has a knock-on effect on the family office’s investments. A positive culture can really help to differentiate them as investors and is one of the reasons why family office capital is becoming increasingly sought after. 

Catherine Grum is Head of Family Office Services at BDO. She advises families and family offices around family office establishment, family governance and philanthropy. She believes that when families understand their values and the purpose of their wealth, they can build on much stronger foundations and, by aligning their structures and activities with this, create sustainable long-term solutions.

Transmission Private publishes a monthly newsletter that tracks the future of reputation management for private clients.

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Transmission Private publishes a monthly newsletter that tracks the future of reputation management for private clients.