A monitoring cadence for family office fund managers
Built on Chapter 10 of The Single Family Office by Richard C. Wilson. Full chapter text: FamilyOffices.com.
Monitoring should follow the reasons the family selected the manager. A billionaire office needs to know when those reasons change, as well as whether the latest return met expectations. A reporting calendar that collects figures without assessing them leaves that responsibility unfinished.
Before commitment, identify the information required, who reviews it, and which findings need a decision.
Use the answers to choose the next question
In diligence demonstrations at our events, I suggest sending an initial set of questions before arranging another conversation. Weak answers can expose a problem early. Useful answers can also reveal the next issue to examine.
I would apply that method to ongoing manager monitoring. Do not let the next meeting automatically repeat the previous questionnaire. If the manager reports a change in financing, ask what it does to the holdings and the family's expected cash receipts. Keep the answer attached to the issue until the office has assessed it.
Preserve the original investment case
Keep the selection recommendation and material diligence findings accessible. The monitoring employee should understand what the family expected the manager to contribute. Otherwise the office can drift into evaluating a different assignment.
Identify the assumptions on which approval depended. These may concern the team, strategy, or terms relevant to the family. Turn them into matters the office can review using available evidence.
Record any conditions that remained after approval. Assign responsibility for confirming completion and retaining the support. A condition should not disappear when the investment moves from the deal team to the reporting team.
Set routine reviews to fit the investment
Match the schedule to the strategy and the information actually available. A fund with delayed private valuations presents different reporting issues from a liquid mandate. The office should avoid creating false precision by demanding figures the underlying process cannot support.
Agree on the basis of performance measurement. State the relevant period and cost treatment. Chapter 10 warns against changing measures to favor the result, so preserve a consistent comparison.
Include cash movements and remaining commitments where relevant. The family needs to understand both reported performance and the effect on its funding capacity. A return figure alone cannot answer that question.
Define changes that require immediate attention
Material changes in people or strategy may matter before a performance problem appears. Identify which notices the office expects and who receives them. The monitoring plan should connect those events to the original investment case.
Review significant changes in operating arrangements or terms. A new provider or revised access condition may alter a fact the family relied on. Have the appropriate specialist assess the issue when necessary.
Keep the escalation process separate from the routine calendar. Staff should not wait for the next scheduled meeting when the established process calls for an earlier decision. Define who can request that review.
Assign a reviewer and a substitute
Name the employee responsible for reading reports and documenting the assessment. Receiving a file in a shared inbox does not establish that someone reviewed it. The office needs an accountable role.
Identify a substitute route when that person is unavailable. Monitoring should continue through staffing changes and absences. Keep access to records and contacts within the office's controlled process.
Clarify the role of outside advisors. If a consultant reviews performance or operational changes, state what their assessment covers and what remains with the family-office team. Avoid overlapping assumptions about responsibility.
Connect findings to an action
A review should state whether the investment case remains supported and what further work is needed. If performance disappoints, compare it with the risks the family accepted. Then identify whether the cause reflects expected conditions or a material departure.
Give unanswered questions an owner. The office may need evidence from the manager or specialist interpretation of a change. Record the decision that the answer is intended to support.
Bring significant findings to the committee with a recommendation. The team should explain the available choices under the actual terms. A request for a manager's explanation should not be confused with a decision to terminate.
Review the monitoring process itself
Check whether important information arrives and whether reviews happen as assigned. Repeated late or incomplete reporting can affect the office's ability to oversee the commitment. Address the issue through the appropriate relationship and decision route.
Adjust the process when the mandate changes. Keep the current assignment identifiable so staff know what to monitor. The family should receive a concise account of material findings and the decisions still required.
What to take from this
- Carry the original investment case into oversight.
- Separate routine reviews from material-event escalation.
- Assign a reviewer who turns information into an assessment.
This page is general information, not legal advice. Family governance documents and dispute processes should be reviewed by a qualified attorney.
Questions and answers
Should all funds use the same schedule? Match routine reviews to the strategy, terms, and available information.
Does monitoring stop at performance? It should also assess material changes to the conditions supporting selection.