The biggest risks in a single family office are usually internal, not market risks. They build up quietly when the office grows faster than its rules.
Common trouble spots
- No written governance. Without rules for hiring, spending and investment approvals, decisions depend on who is in the room. See Part 6 on governance.
- Weak financial controls. One person who can both approve and send transfers is a single point of failure. See Part 9 on operational processes.
- The wrong first hire. A star investor hired before the office knows its strategy can pull the family in the wrong direction. See who to hire first.
- Deals with no strike zone. Saying yes to friends' deals is a common way capital leaks out. See the biggest mistakes centimillionaires make.
Most of these are cheap to fix early and expensive to fix later. Part 3 covers the setup decisions that prevent them.
Educational only. Nothing on this site is investment, tax, legal, accounting or other professional advice, or a recommendation on any security, manager, structure or allocation. Speak with qualified professionals before acting.