What a billionaire family should ask a fund manager first
Built on Chapter 10 of The Single Family Office by Richard C. Wilson. Full chapter text: FamilyOffices.com.
The first manager conversation should establish whether the opportunity deserves more work. I would ask for enough detail to understand the strategy and the proposed relationship before the office arranges a long meeting. A billionaire family's attention is valuable, and an unclear introduction should not become an open-ended diligence assignment.
Chapter 10 describes a selection process that becomes more demanding as a manager advances. Early questions should support that progression. They should expose a mismatch without pretending that an initial conversation can establish every fact needed for approval.
Locate the trust gap
For families beginning manager conversations, I describe how unfamiliarity with the leadership team, the industry, and the location can each make an investment harder to assess. A clear presentation still has to address what the investor does not understand or cannot readily inspect.
I would use that observation to choose the first questions. If the office knows the asset type but has never met the team, begin with responsibility and access to the people doing the work. If the strategy is unfamiliar, start with how the asset produces cash and how it can lose money.
Ask for the strategy in operating terms
Have the manager explain what it buys, why those investments become available, and what work changes the outcome after purchase. Ask which opportunities it rejects. The answer should be understandable without relying on promotional labels.
A manager unable to describe its boundaries may be offering an unrestricted search for returns. That may be intentional, but the family needs to know. Staff cannot assess whether a future investment fits the mandate if the mandate has never been made clear.
Identify the person who makes the decisions
Ask who has final investment authority and who will handle the assets after closing. Establish whether the founder presenting the fund is also the person available when a portfolio company or property needs help.
Clarify the role of outside specialists. A firm may use strong contractors, but the office needs to understand who directs them and who remains accountable. Ask how the team covers an absence before treating one person's availability as a durable operating plan.
Find the first plausible loss
Invite the manager to describe a realistic way the investment could disappoint. Follow up on what happens to cash flow and who must act. The office should hear a concrete account that connects the asset to the terms.
A generic statement that all investments carry risk gives the team little to assess. If the proposal depends on selling or refinancing, ask what happens if neither can occur on schedule. A credible manager should be able to discuss the constraint without treating the question as hostility.
Ask what the family is committing to do
An initial investment may bring follow-on obligations, reporting requirements, or decisions about later capital. Ask which commitments are mandatory, which are optional, and when the family would receive notice. Counsel will need to verify the documents later.
The office should also ask what information it will receive during ownership. A strategy that requires close supervision needs a reporting relationship the family can support. A manager cannot promise active partnership while withholding the records needed for that partnership to function.
Establish the next evidence request
End the first exchange by naming the records and people needed for the next stage. A useful request might concern the strategy's complete investment history or the current operating team. Explain why the information is necessary.
Set an internal owner for assessing the response. If the manager sends a large collection of documents, staff should still know which question those records are supposed to answer. Volume alone does not move the manager closer to approval.
The initial note can be short. Explain whether the strategy fits a need, what remains uncertain, and whether the team recommends further work. Keep enthusiasm about a relationship separate from evidence about the investment.
If the answer is no, retain the reason. A family that declines because it cannot supervise an unfamiliar strategy may revisit it after building the capability. A record of that decision is more useful than a vague description of the meeting as interesting.
What to take from this
- Choose early questions around what the family cannot yet assess.
- Establish strategy boundaries and actual decision authority.
This page is general information, not legal advice. Family governance documents and dispute processes should be reviewed by a qualified attorney.
Questions and answers
Should the first call cover every diligence question? It should establish fit and determine what evidence the next stage requires.
What if the manager cannot explain the loss case? Treat the missing explanation as an issue to resolve before advancing.