Keeping the family compass consistent with signed instructions

Built on Chapter 2 of How to Start a Family Office by Richard C. Wilson.

The family compass should agree with the instructions that employees are expected to follow. A values document can describe a preference for shared decisions while an account mandate gives one person authority to act. Staff need to understand the difference before a disagreement reaches their desks.

Chapter 2 brings the family compass together with governance and investment instructions. My application here is to document consistency. The family should know which materials express its intentions and which documents the relevant professionals must rely on for a particular action.

Identify the documents governing the task

Take one recurring decision, such as approving an investment commitment. Identify the mandate and the entity records relevant to that decision. Then identify the compass passages or internal policies that describe the family's desired process.

Have counsel explain the authority established by the governing documents. The office should not decide precedence from a document's title or from the confidence of the person presenting it. A recently circulated family statement may still require formal implementation.

Keep the result usable for staff. They need to know which approval route applies and whom to ask when instructions conflict. They do not need an informal legal opinion from another employee.

Record the gap between intention and implementation

A family may agree that a change should happen before the documents have been amended. Record that implementation status separately from the family's discussion. Avoid presenting an approved principle as an authority already available to act.

Ask the responsible professional what must occur before the new instruction can take effect. That might involve a formal approval or a change at an external institution. Assign the next action and preserve the existing operative instruction until properly replaced.

Explain the interim arrangement to affected employees. Otherwise one team may follow the new preference while another continues under the prior authorization.

Use a controlled location for the instructions staff must consult. Each operative document should be identifiable without comparing several email attachments. Preserve prior versions through the office's records policy.

State who can authorize a revision and who distributes it. A helpful edit by an advisor should not quietly become a new instruction to the investment team. Distinguish suggested wording from an adopted document.

When a change affects an outside provider, obtain confirmation that its implementation requirements have been met. Sending a revised policy does not establish that the provider has changed an account permission.

Resolve conflicting directions before acting

If an employee receives conflicting instructions, give that person a route to pause the affected action and seek an authorized answer. The employee should describe the conflict factually and identify the pending deadline.

Avoid settling the issue through a family member's assertion that everyone understands the founder's wishes. A sensitive instruction deserves verification through the process appropriate to the asset and entity involved.

The office lead can coordinate the answer while qualified professionals assess the authority question. Keep unrelated work moving when that can be done safely within existing permissions.

When an amendment becomes operative, explain its practical effect to the people using it. State which decisions now follow a different route and whether existing assignments are affected.

A short implementation conversation is often more useful than distributing the entire compass again. Ask the employee to walk through the next relevant action. That reveals whether the new instruction can actually be followed.

Update the forms or approval records used in ordinary work. If the policy changes but the working form retains the former approver, the old process can continue without anyone intending it.

Reconcile documents after a material change

Ownership changes and leadership transitions can affect several instructions at once. Ask the office lead to coordinate a focused consistency check with the relevant professionals. Identify the decisions affected before requesting a broad rewrite of everything.

Close each discrepancy when the operative documents and actual permissions agree. Keep evidence of the resolution where the next employee can find it. The office should be able to explain why it followed a particular instruction without relying on someone's memory.

Questions and answers

Can the compass itself change account authority? Have counsel and the relevant institution establish what is required. An expression of family preference should not be assumed to change existing permissions.

Should employees interpret conflicting documents? They should identify the conflict and use the authorized escalation route before taking the affected action.

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