Family offices act as stewards of significant wealth, and their functions involve a complex operational landscape—often with a lean team.

“We are SMEs with complex needs,” Edoardo Collevecchio asserts, challenging the misconception that substantial wealth equates to expansive operations. Having spent over five years as chief of staff at Oppenheimer Generations, a global investment group focused on building a long-term portfolio of businesses, the WMI faculty member explains that every decision, from infrastructure establishment to cost optimisation, demands careful consideration and planning.

In this exclusive exploration, Edoardo unveils the intricate operational challenges faced by family offices. Despite Singapore’s status as Asia’s family office hub—boasting 1,400 offices and counting—the reality behind the scenes is far from straightforward.

Navigating the Lean Realities of Family Office Operations

“The main hurdle is usually having a lot of things to do and not enough bandwidth or people initially, because usually these things start as a one person or a two-person shop,” he explains. Singapore’s Economic Development Board (EDB) observed that single family offices on the island can range from “two- to three-person outfits to larger set-ups with a headcount of more than 50”.

“You can grow over time, but it never gets to be a massive operation,” he says. “So even with a team of five or six, you’re still constantly optimising for highly efficient and agile talent.”

With such lean resources, family office professionals must meticulously balance cost-effectiveness with the complex systems needed to manage generational wealth.

“We’re always subscale for most services, so we have to optimise the trade-offs, the cost, and complexities in our system,” Edoardo explains. “The biggest hurdle is usually that everything is relevant, but not everything is urgent or critical.”

Developing this ability to prioritise effectively requires professionals to possess a broad range of knowledge, enabling them to filter the family’s needs and create a clear roadmap. Edoardo highlights key questions for this, including:

• What is the family’s vision for the office?
• What tasks are necessary, and by when?
• Is a physical office space needed?
• Is there a need for staff to be certified?

A Long-Term Game: Building for the Future

Unlike traditional businesses with quarterly or annual goals, family offices operate on a much longer time horizon. “If you have two people on the ground working through things, it will take time to set up an operation,” he adds. “After year three, year five, year seven, gradually you start seeing more and more builds on top of that.” Professionals entering the family office sector need to realise that they are in it for the long haul.

This is especially so following the money laundering case linked to six single family office funds, leading to greater scrutiny of new applications and extending timelines. The process from application to approval can be as long as 18 months as of end 2023, compared to 9 to 12 months prior. However, Edoardo sees a positive side to this increased scrutiny: “Families take time to make decisions anyway.”

Effective wealth management strategies for a family manages these long-term goals with considerations for risk tolerance and intergenerational aspirations. He highlights that “unlike being in a large bank or a large corporation, you don’t have entire departments who are experts”, and that even with hired external experts, family office teams must direct them to achieve the required goals.

Given the fluidity, it becomes reasonable to gauge results only a few years in when things have stabilised, especially with a small team. “It’s hard to measure the impact and performance of a family office within a year or two. You need a longer evaluation period,” Edoardo says.

Mastering the Balance in Family Office Operations

“Accuracy and timeliness of reporting is key,” Edoardo says of the operations processes. A well-honed system supported by technology not only expedites compliance across different jurisdictions, but also enables advisors to derive insights from data to facilitate informed decisions for the family. “The key components revolve around things like buying or building. In this day and age, you can buy almost any product in the market to serve your needs.”

But while an advanced tech system is crucial, he stresses the importance of careful consideration: “If I want to have all the bells and whistles in this accounting system or IT system, I can buy it. But is that cost proportionate to my needs? Is it too much, or is it necessary?”

Acknowledging the challenges, Edoardo explains, “I’ll get a lot of noise thrown my way.” He emphasises that effectively resolving operational challenges requires a strategic approach: “It means stepping back to clarify my vision. Once I’m clear on the vision, I can make informed decisions and better manage trade-offs.”

Building Independence and Expertise

Family offices thrive in a lean structure that demands high self-reliance from professionals. Continuous education often requires a self-directed approach, unlike corporate environments with formalised training programs.

“I advise anyone in this space to focus on training and development and adopt an entrepreneurial mindset regarding what that training means for them and their office,” Edoardo explains. “Maybe a finance person can double up as a governance person. If they excel in finance, they might benefit from training in corporate governance or board membership.”

Drawing upon Wealth Management Institute’s Certificate for Family Office Practitioner – Family Office Management and Operations, Edoardo highlights its role in expanding technical skills and competencies. This program comprehensively covers family office perspectives, internal dynamics, structural setup, and operational frameworks. It also offers Environmental, Social, and Governance (ESG) electives.

“The program addresses the unique challenges posed by family dynamics, acknowledging that despite the business functions, the close attachment to family office clients remains crucial,” Edoardo concludes. “Understanding the mechanisms that enable families to make the best possible decisions for the long-term benefit of future generations is key.”

By embracing these insights and strategies, professionals can navigate the complexities of family office operations and contribute to the enduring success of these unique financial institutions.

Learn more about WMI’s Certificate for Family Office Practitioner – Family Office Management and Operations