A fund manager selection scorecard for billionaire families
Built on Chapter 10 of The Single Family Office by Richard C. Wilson. Full chapter text: FamilyOffices.com.
A scorecard should make the manager decision easier to examine. It should preserve the evidence behind a recommendation and expose gaps that a strong presentation might conceal. A high total should never erase a condition that makes the investment unsuitable for the family.
Chapter 10 organizes manager evaluation in stages. I would use a scorecard alongside that process, with the family's mandate established first. The tool should support judgment and make comparisons consistent.
Ask how the manager gets access
On the question of an investor's claimed advantage, I discuss the advantage of seeing opportunities early, exclusively, or on better terms because the investor brings something useful. I ask people to make that claimed advantage visible.
I would give a manager-selection scorecard a place for evidence about access. Ask how a particular investment reached the manager and why the seller chose them. Separate a repeatable sourcing relationship from an opportunity won in an open auction. The family can then examine whether the proposed strategy depends on access the team has demonstrated.
Begin with conditions that cannot be averaged away
Identify the requirements that determine whether the office can consider the fund. These may concern the permitted strategy, liquidity constraints, or necessary documentation. The actual requirements should come from the family policy and qualified assessment.
Record a failure separately from a comparative rating. A candidate outside the mandate should not become acceptable because it scores well on presentation or reported returns. Any exception needs the authorized decision route.
Distinguish missing evidence from an adverse finding. The office may need to obtain information before reaching a conclusion. Keep a blank answer visible until the office has evidence for an assessment.
Use categories tied to the investment assignment
Assess how the strategy would function in the existing portfolio. Identify the relevant exposure and the conditions it depends on. The office should understand what the family gains and which risks it adds.
Evaluate the team and the process supporting the proposed approach. Record who performs the work and where responsibility is concentrated. Verify the work behind a candidate's reputation before assigning a rating.
Include operating arrangements and terms. The manager's investment story may be attractive while access to capital or reporting remains unsuitable. Those issues belong in the decision alongside performance.
Put evidence beside the assessment
Beside each rating, record the claim assessed, the supporting document or conversation, the employee who checked it, and any unanswered question. Keep the source accessible through the controlled diligence file. The committee should be able to examine why a rating was assigned.
State the limits of the evidence. A manager-provided estimate differs from a result independently checked by the appropriate professional. The scorecard should preserve that distinction in language the decision maker can use.
Update conclusions when new information arrives. Keep significant changes identifiable so the review lead can explain why the recommendation changed. A final score without that history can conceal the issue that most affected the decision.
Compare managers on a common basis
Use the same definitions for costs and performance where possible. If the records differ, explain the limitation before ranking candidates. A comparison built on inconsistent inputs can create false confidence.
Match the candidates to the same portfolio role. Two managers may both be capable while serving different purposes. The office should avoid treating them as substitutes merely because they appear under a broad asset-class label.
Keep weighting connected to the family assignment. If liquidity is a binding constraint, the tool should reflect that. Do not import another institution's priorities without examining whether they fit the family.
Give unresolved findings a decision route
Name the person responsible for each material follow-up. State what evidence would resolve it and whether the committee may decide before receiving that answer. The scorecard should help the office manage the work as well as summarize it.
Have the recommendation identify any condition remaining after approval. The employee responsible for execution needs to know who can confirm completion. A committee should not rely on an overall score to imply that every item has been cleared.
Keep a narrative judgment beside the ratings. Explain why the proposed fund fits the assignment and what could change that conclusion. This is the part the accountable review lead should be able to defend.
Preserve the scorecard for monitoring
After commitment, use the original findings to identify what the office should watch. If the investment case depended heavily on a particular team or process, later changes deserve attention.
Review whether the tool helped reveal the important issues. Remove categories that add no useful distinction and clarify those that were interpreted inconsistently. The next selection should benefit from better questions and clearer evidence.
What to take from this
- Keep binding requirements separate from comparisons.
- Put the evidence beside the conclusion.
- Preserve the selection rationale for monitoring.
This page is general information, not legal advice. Family governance documents and dispute processes should be reviewed by a qualified attorney.
Questions and answers
Can a strong total override a failed requirement? Keep binding conditions separate and use the authorized exception process where applicable.
Should every category have a numerical score? Use ratings only where they help. Some findings need a clear factual explanation or an unresolved status.