Testing whether an existing holding company needs a family office

Built on Chapter 1 of How to Start a Family Office by Richard C. Wilson.

A holding company can own the family's assets without organizing all the work that surrounds those assets. Before adding a family office, I would identify the responsibilities that the existing company already handles well and the responsibilities that nobody has accepted. The useful question is what additional service the family needs.

How to Start a Family Office discusses families formalizing holdings into an office. That does not mean every holding company needs another management layer. For a billionaire family, the decision should come from an examination of actual work, including the demands outside the operating businesses.

Start with a responsibility comparison

Put the holding company's current responsibilities beside the family's unresolved needs. Ownership administration might be well organized while personal reporting remains scattered. The corporate finance team may understand subsidiary debt but have no responsibility for an owner's household liquidity.

Describe the gaps using completed tasks. Someone needs to assemble the personal balance sheet from approved records. Someone needs to coordinate information requested by the family's advisors. Assigning those tasks is more useful than deciding that the family needs something that looks institutional.

Keep existing strengths visible. A holding company's accounting team may provide excellent information about the businesses. The new office can receive that information without taking over the corporate accounting function.

Distinguish owners from the business

Family members may assume that employees of a family-owned company work for them personally. That assumption can create competing instructions. The employee needs to know which requests are part of the corporate role and which require separate authorization.

I would have the relevant leaders identify who employs each person and which entity pays for each assignment. Counsel and the accountants should resolve questions about permitted services and cost treatment. The office design should follow that assessment.

The distinction also affects access. A family office employee coordinating an owner's records does not automatically need access to every subsidiary's confidential information. Define the business information required for the assigned work.

Compare additional coordination with a separate office

Consider whether the missing work requires a dedicated employee, an outside coordinator, or a broader team. A billionaire balance sheet alone does not answer that question. Existing staff capacity and the frequency of unresolved work are more useful starting points.

Ask what would change if the family appointed a coordinator inside the current arrangement. Would advisors exchange information through an accountable contact? Would requests stop reaching the founder unnecessarily? Identify the remaining limitations before committing to a separate organization.

A separate office may still be the appropriate choice. It should have a service description that explains the additional work it accepts and how it will interact with the holding company.

Before the new office begins, list the outstanding assignments moving with it. Include who currently holds the records and which approvals remain necessary. An organizational announcement does not transfer knowledge or grant access.

Give the corporate team a clear route for sending owner-related requests to the office. Give the office an equally clear route for obtaining approved corporate information. Both teams should know where a disagreement goes.

Keep corporate decisions with the authorized corporate decision makers. The family office can coordinate an owner's questions without treating every operating choice as its own responsibility.

Judge the arrangement through completed work

After the new responsibilities have been assigned, examine whether the original gaps have closed. Can the family obtain the information it lacked? Are the accountants receiving what they need? Is the founder still handling the same unanswered requests?

If work remains unresolved, identify the specific handoff or authority problem. Adding another employee before understanding that problem may simply create another person who waits for the same answer.

Preserve the comparison used to make the decision. It becomes a useful reference when relatives later ask why the office exists or why a particular service remains with the holding company.

Questions and answers

Must a holding company become a family office? No. Compare the family's unmet work with the services already provided, then choose an arrangement that can accept the missing responsibilities.

Should the new office control the operating companies? Its authority should follow the actual ownership and governing documents. Coordination of family services does not itself confer corporate authority.

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