A policy manual for protecting family capital
Built on Chapter 4 of The Single Family Office by Richard C. Wilson. Full chapter text: FamilyOffices.com.
The policy manual should tell an employee what to do when a payment request, investment proposal, or family exception reaches their desk. If the answer lives only in the founder's head, the office has an avoidable dependency. At billionaire scale, that dependency can affect several entities at once.
Chapter 4 lists the policies a family office needs, from hiring criteria to record access. I would organize them around actual decisions. A useful manual lets someone locate the applicable rule and identify the person who can approve the next step.
Start with authority and ownership
Put the office's purpose and service boundaries near the front. State which family members and entities it serves. Identify the governing bodies and the authority delegated to each executive. Attach a current approval schedule, with a person responsible for maintaining it.
Do not let the manual pretend to replace the underlying documents. Trust instruments, company agreements, and employment contracts can impose obligations that a policy summary cannot change. Counsel should resolve discrepancies before employees rely on the summary.
Keep a record of who approved each policy and when it became effective. Staff need to distinguish the operative version from an older copy saved in an email attachment.
Cover the movement of money
The payments section should explain account access, independent verification of new instructions, approval limits, and reconciliation. Include changes to beneficiary bank details and the procedure for an urgent request. Urgency should trigger the emergency procedure already agreed upon.
The investment section should identify required diligence, approval rights, and the records retained before funding. Include commitments, guarantees, borrowing, and changes to investment policy. An office can obey its check-signing rules and still take an unauthorized obligation through a contract.
When explaining diligence standards for a policy manual, I remind attendees to conduct full diligence even when someone says we have done business together. That same principle belongs in the manual. A familiar introduction should start a documented assessment; it should not close one.
Write separate rules for people and conduct
An employee handbook deals with employment terms and workplace expectations. The ethics policy addresses conduct involving the family's assets and relationships. Chapter 4 treats these as separate documents for a reason.
Cover hiring relatives, compensation decisions, personal investing, gifts, and conflicts. Explain who receives a concern when the normal supervisor is involved in it. A rule that requires reporting a problem only to the person causing it will leave the office exposed.
Family members working in the office need clear job responsibilities and performance expectations. Put exceptions in the proper approval record. Quiet exceptions teach everyone else that the written policy is optional.
Protect records and continuity
Document who can see bank records, personal documents, deal files, and beneficiary information. State how access is granted and removed. A departing employee's permissions should be addressed as part of the departure process.
Include backup responsibilities for each critical task. Payment approval and reporting should continue when the primary employee is unavailable. The backup needs usable access and instructions; a name on an organization chart will not complete the work.
Keep incident instructions accessible to the people who need them. The response to a suspected fraudulent wire should identify the bank contact and internal decision maker without requiring a search through unrelated policies.
Make maintenance part of someone's job
Assign an owner to each section. Ask that person to check the instructions against actual work and report gaps. When a bank changes its approval system or the family adds an entity, the affected instructions need attention.
Test the manual with a new employee or a qualified colleague who does not normally perform the task. Have them explain the steps back. Confusion often points to an assumption the regular operator has never written down.
A familiar face still needs diligence
In my recorded event remarks, I tell investors to conduct full diligence on anyone they meet, even someone who says they know our organization. Being in the room does not settle the question. I would carry that instruction into the policy manual with a required diligence record for every proposed counterparty. A referral explains how the relationship began. It does not supply missing evidence about authority, assets, or past conduct. Give the employee doing the checking permission to ask the same questions of a founder's contact that they would ask of a stranger.
What to take from this
- Organize the manual around decisions employees actually face.
- Connect every approval rule to a real source of authority.
- Include emergency procedures and backup operators.
- Keep one controlled copy with named section owners.
Start with the procedures that can lose money fastest. Payment changes and unauthorized commitments deserve attention before cosmetic work on the binder.
This page is general information, not legal advice. Family governance documents and dispute processes should be reviewed by a qualified attorney.
Questions and answers
How long should the policy manual be? Long enough to cover the actual work, with short procedures employees can find and follow. Length alone says little about usefulness.
Does an employee handbook cover governance? It covers employment matters. Investment authority, ethics, and owner decisions need their own treatment.
Who keeps it current? Assign section owners and one coordinator who maintains the approved version and revision record.