Paying advisory board members in a billionaire family office
Built on Chapter 8 of The Single Family Office by Richard C. Wilson. Full chapter text: FamilyOffices.com.
Agree on the work before negotiating an advisory board fee. A billionaire family can pay for a prestigious name and still receive little useful preparation. The engagement should describe the contribution the office expects and the conditions under which additional work is paid separately.
Chapter 8 stresses clear expectations when launching an advisory board. It notes that involvement can range from occasional participation to substantial help between meetings. I would use that distinction as the starting point for compensation.
Pay for a contribution you can describe
In conversations with prospective board members, I ask prospective board members to think about the strategic help they can provide, such as opening doors or improving distribution. A title alone does not tell a company why the relationship is useful.
For a family advisory board, I would make the compensation discussion equally specific. If the assignment is assessing operators, name the work expected before a meeting and the conflicts that need disclosure. The family can then evaluate delivery against an agreed responsibility instead of treating attendance as the whole service.
Describe the recurring assignment
Write down the expected meetings and preparation. Explain whether members will review materials in advance, respond to questions between sessions, or help assess prospective partners. Those responsibilities affect the commitment being requested.
Be specific about availability without implying unlimited access. A member may be willing to reserve time for scheduled meetings while being unable to handle urgent requests. The office needs to understand that before it depends on the person during a difficult decision.
Clarify who can request work. If every relative can contact a member separately, the actual assignment may grow far beyond the agreed scope. A designated office contact can coordinate requests and protect confidential information.
Separate board service from project work
A major acquisition review or operating-business assignment may require a different engagement. Define when that happens and who approves the additional scope. The member should not begin substantial paid work on an assumption that the family will accept the bill.
Describe the deliverable for a special assignment. A written assessment of a business process differs from attending a call or making an introduction. Compensation should correspond to the accepted responsibility and the expertise required.
Have the appropriate professionals address any legal or professional obligations created by the separate role. A board appointment alone may not establish the terms needed for specialist services.
Make incentives visible
Ask whether the member receives compensation from managers, vendors, or transactions the office might consider. The family should know about those interests before receiving a recommendation. A disclosed relationship still needs a participation decision.
Consider how a proposed compensation structure could affect judgment. A reward tied to completing a transaction can pull the member toward closing when the office needs an independent assessment of whether to proceed.
The answer is a clear arrangement and suitable conflict controls. Do not describe someone as independent solely because their advisory-board fee comes from the family. Review the other relationships relevant to the assignment.
Compare proposals on the same work
When considering candidates, use a consistent description of responsibilities. Otherwise an apparently lower fee may cover less preparation or fewer calls. Record what the office would actually receive under each proposal.
Include expenses and any administrative support required. Determine whether travel needs advance approval and how project costs will be documented. These details are easier to settle before the first meeting.
Avoid importing old fee figures from another family's arrangement. The work, expertise, and availability can differ substantially. Ask the candidates to price the scope the office has defined and evaluate that proposal on its own terms.
Set a review and renewal process
Discuss the appointment term and the basis for continuation. The family should review whether the member prepares, responds, and contributes to the questions assigned. Attendance alone does not establish that the arrangement is useful.
Give the member a chance to explain when the office's requests exceed the original scope. A compensation dispute may reveal an assignment that changed without a deliberate decision. Resolve the work definition before debating the price again.
Have counsel address termination and the handling of confidential material. If the appointment ends, the office still needs a record of advice already provided and an orderly handoff of unfinished work.
Approve the engagement through the normal route
An influential relative's enthusiasm should not bypass the office's engagement process. Confirm who can authorize the contract and which entity bears the cost. Keep the signed terms where the responsible staff can find them.
Before the first meeting, ask both the office contact and the member to describe the expected work. Differences in their answers are an early opportunity to clarify the arrangement while the relationship is still new.
What to take from this
- Define preparation and availability before price.
- Disclose outside compensation relevant to the advice.
- Review contribution when renewing the appointment.
This page is general information, not legal advice. Family governance documents and dispute processes should be reviewed by a qualified attorney.
Questions and answers
Is there a standard fee to copy? Price the defined assignment. Another family's arrangement may cover different work.
Can project work carry a separate fee? Establish the additional scope and authorization before that work begins.