Handing decisions between strategic and tactical family investment committees

Built on Chapter 11 of How to Start a Family Office by Richard C. Wilson.

A strategic investment committee and a tactical group need an explicit handoff. A billionaire family can approve a broad direction while a smaller team makes implementation decisions, but each group must understand where its authority ends. Otherwise the office can drift through a series of individually modest actions.

Chapter 11 describes strategic and tactical committees as distinct parts of an investment process. I would define their interface through the mandate and the decision record. The practical aim is to keep implementation within the direction actually authorized.

State what the strategic decision establishes

Identify which decisions belong to the strategic committee under the governing arrangements. They may concern portfolio direction or major allocation choices. Have the relevant professionals confirm the actual authority.

Record the approved instruction with enough detail to guide implementation. The tactical group needs to know the constraints and any conditions requiring another decision. A broad expression of enthusiasm is insufficient.

Distinguish an adopted instruction from a subject still under discussion. The smaller group should not begin acting on a proposed change because committee members sounded supportive.

Define the tactical group's assignment

Specify which implementation decisions the tactical group may make. Connect that authority to the operative mandate and actual account permissions. An internal title should not imply powers that have not been granted.

Identify who participates and how decisions are recorded. The process can be compact while still showing who approved an action and the basis on which it fit the instruction.

Keep the assignment understandable to the people executing transactions. They should know whose direction is operative and when additional approval is necessary.

State which changes must return to the strategic committee or another authorized decision maker. Identify the mandate provision requiring another approval and include the proposed action's combined portfolio effect in the escalation request. State the question the strategic decision makers must resolve.

Consider cumulative effects. Several actions within individual limits can together alter the portfolio direction. The tactical group should assess its decisions in the context of the combined portfolio.

Attach the current exposure information and explain which figures would change if the action proceeded. Identify any incomplete information affecting the comparison. The strategic committee can then assess the request against the approved direction.

Keep both groups working from current information

Give the tactical group the adopted strategic instruction and the relevant supporting constraints. If a new strategic decision replaces an earlier one, communicate the change explicitly.

Report implementation back through an agreed process. The strategic group should understand what was done and where a material limitation prevented the intended result.

Avoid flooding the strategic committee with ordinary execution details. It needs information that supports its responsibility, with the underlying records available to authorized reviewers. The tactical group should not conceal a direction change inside a routine activity report.

Establish an authorized route for time-sensitive questions. The office should know who can convene or obtain the necessary decision when the ordinary meeting schedule does not fit.

Do not infer expanded tactical authority from urgency. If an action falls outside the assignment, staff should use the escalation route and explain the timing constraints.

Preserve the decision record after the urgent matter is addressed. The next strategic discussion should be able to assess what occurred using the actual approval and facts.

Test the interface with an example

Walk through a proposed action using the operative instructions. Ask the tactical group to identify its authority and the point at which a change would require escalation.

Then ask the strategic group what it expects to receive afterward. Differences in those answers reveal where the handoff needs clarification. Resolve them through the authorized process before the arrangement is relied upon.

Revisit the interface when the mandate or committee structure changes. The office should keep implementation instructions current with the decisions the family has actually made.

Questions and answers

Does a tactical group have authority to change the investment direction? Only the authority actually granted applies. Direction changes should follow the governing decision process.

Is a larger committee always required for an urgent decision? Use the approved urgent decision route. The arrangement should establish who can act and how the decision is recorded.

This page is general information, not legal advice. Family governance documents and dispute processes should be reviewed by a qualified attorney.