Understanding subcontractors in family office services
Built on Chapter 7 of The Single Family Office by Richard C. Wilson. Full chapter text: FamilyOffices.com.
The firm a family hires may use another organization to perform part of the work. A billionaire family should understand that arrangement before supplying sensitive information or relying on a service for an essential task. Ask who does the work and which firm remains responsible for answering the family's questions.
Chapter 7 describes outsourcing as a way to obtain capability without bringing every function into the office. An outside provider may make a similar choice within its own service. The family does not need to object automatically. It needs the relevant facts assessed by the appropriate professionals and a clear assignment of responsibility.
Ask what happens after the handoff
Have the provider explain which parts of the assignment it performs directly. Ask whether another firm receives records or performs work on its behalf. Keep the discussion connected to the actual service rather than requesting a description of every supplier the provider uses.
A software host and a professional preparing records may have different roles. The family's legal and technology specialists should understand the distinction when assessing the arrangement. The office needs enough information to direct questions to the right people and understand where its records go.
Identify the accountable contact
Ask which firm answers if the subcontracted work is late or incomplete. The family should not discover a dispute about responsibility only after an obligation is missed. Have counsel assess whether the proposed engagement reflects the expected allocation.
Keep the office's ordinary escalation route clear. The provider may prefer to manage its own subcontractor, which can be reasonable within an agreed arrangement. The family still needs a person who owns the response and can obtain the information required to resolve the problem.
Describe the information involved
List the kinds of records the service needs and ask what another organization would receive. Give the relevant specialists enough detail to assess access and confidentiality. Avoid settling the question with a broad assurance that everyone involved is trusted.
The office should know whether a proposed change affects information already supplied or only future work. Have the appropriate professionals assess the terms and proposed process. Record any limits the authorized family representative requires before additional information is sent.
Understand where specialist judgment sits
If the assignment involves professional judgment, ask who makes the assessment and who checks it. A provider may obtain administrative help without transferring the professional responsibility. Another arrangement may use a separate specialist for part of the work.
The family should understand which model is proposed. Bring questions about professional duties or qualification to the relevant qualified advisors. The office's role is to surface the facts and keep the assignment clear, rather than infer responsibility from a firm logo on the final output.
Ask how changes are communicated
A provider may change the organization supporting its service. Ask how the family will learn about changes relevant to its information or the assigned work. Have counsel review the actual terms for notice, consent, or other conditions that may apply.
Keep the office's vendor map current when the arrangement changes. Identify any action required by the family and who can authorize it. An announcement in a general service newsletter may not reach the employee who must update the access record or request a specialist assessment.
Consider an interruption beyond the lead firm
Ask how the service continues if the supporting organization is unavailable. The lead provider should explain the dependency and what the family needs to do if the ordinary route fails. Assess that answer against the importance of the task.
A provider may have a suitable alternative, or the family may need to retain a different option. Record the decision and the facts behind it. The point is to understand the dependency before the office discovers that two apparently separate services rely on the same unavailable organization.
Keep the discussion factual
Subcontracting can provide access to skills the lead firm does not maintain internally. It can also add another handoff the family needs to understand. Evaluate the actual arrangement and its consequences with the appropriate specialists.
Retain the provider's explanation and the office's authorized decision with the engagement record. When the service is reviewed, ask whether that explanation still describes how the work is done. The family can then assess a change using a known starting point instead of relying on an assumption made during the original sales conversation.
What to take from this
- Understand which work another organization performs.
- Keep one clear route for accountability and escalation.
- Assess changes affecting information or service continuity.
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 subcontracting automatically unsuitable? Assess the actual function, accountability, information access, and continuity arrangements.
Who should assess the engagement terms? Qualified counsel and relevant specialists should evaluate the facts and proposed terms.