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A big misconception is that family offices are only about wealth preservation. Obviously, that matters. But a family office ought to be, and can be, much more than that.

The family office needs to evolve. It should not simply be a wealth management option for when a certain level of wealth is attained, but, taking a page out of Google’s Alphabet playbook, should be seen as an umbrella organisation, harnessing the skills of many different strategies and individuals under the same roof.

At present, there are three main types, which often correspond to a certain stage in the evolution of a business family. An adviser with more than 30 years’ experience of working with wealthy families all over the world recently told me that at the first stage, when a family still has a successful company that makes a lot of money, a family office is a “side-effect” of the core business.

Its function is to invest money made by the original business in order to diversify the family’s assets. In many emerging markets, country risk is a big problem, so moving some of the money out is sensible.

Once the original business is sold, however, the family office becomes a “parking lot” for the money, in the words of one adviser. Its aim is to preserve wealth and the family’s job becomes managing money.

This creates problems. For a start, the skills that helped them create a successful business are not the same skills needed to manage a huge portfolio. Some try and, generally, do badly. Others outsource the job and find themselves with nothing to do themselves.

That people often regret becoming a “financial family” was made clear in research published by advisory company Withers last year, which included interviews with family business members. “Selling my operating businesses was the biggest mistake I have made,” said one.

“We are industrialists: my father and his brother created our family business, but we have shifted too much into finance. That was our big mistake . . . We thought business would be a heavy burden for the next generation and that finance would be easier,” said another.

So what comes next is soul-searching; family members must work out what their money is for and who they want to be. That is hard and involves dealing with abstractions such as “culture”, “ethos”, “values” and “purpose”.

What does this mean, practically? One answer comes from Emily Griffiths-Hamilton, whose grandfather made his fortune in tinned dog-food and whose parents ran a media and sports empire. She now advises families and has written a book called Build Your Family Bank, in which she argues that “a family’s wealth is not limited to its financial assets, but includes its arguably most important forms of wealth: its human and intellectual assets”.

Wealth is not just about money, and so it follows that a family office has to deal with more than just money. It has to help a family realise its values and so it has to evolve into what you might call the “full-spectrum” model.

At this stage a family office has to become something complex and subtle, a mixture of venture capitalist, wealth manager and foundation. It might help the family invest in sectors it understands, as well as help the younger generation hone their entrepreneurial skills.

This is the new family office. While Alphabet, Google’s new diversified tech holding company, will allow its founders to step back from the day-to-day running of the search engine, it will also see them develop their ideas and projects in drones, biotech, broadband-broadcasting balloons and other “moonshot” ideas.

True, few share Larry Page and Sergey Brin’s passion for wild ideas, tolerance of failure, or indeed wealth, but the idea of a broad church is one that appeals.

The family office needs to step out from its traditional role and embrace the evolving demands and needs of some of the world’s richest families.

Jeremy Hazlehurst is founder of Business Family

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