Nowhere is the fiduciary duty more visible than in investing. A family office begins not with products, but with your goals, your family’s mission, and the purpose of your wealth — and turns them into a disciplined plan.
The Investment Policy Statement
From those goals — with expected returns and risks — comes the Investment Policy Statement (IPS), the central document every family should have. It lays out the investment committee’s mission, expectations, and what may and may not be invested in. Key components include the purpose and goals of the wealth; target allocation by geography and sector; tax considerations; whether to reduce exposure to businesses like the family’s own; how to remove home-country bias; and cash-flow planning so the family and office can operate independently.
How a Family Office Invests Well
Family offices invest for generations, and that patience lets long-term trends play out — provided staff understand global markets and the behavioral mistakes most investors make. The biggest edge is simply having a plan. Chasing past performance, concentrating to “get rich fast,” or switching funds impatiently are all failure modes of not having an IPS. A fiduciary office also executes cost-effectively, favoring low-cost funds that match or beat pricier ones — and educates the next generation along the way.
Core-Satellite and Alternatives
For a global strategy, offices often use a core-satellite structure: a diversified, low-cost, index-based core (since over long periods most active funds fail to beat their benchmarks), surrounded by satellites — a region, sector, or theme worth overweighting. Family offices also access alternatives — private equity, venture capital, real estate, even art or wine — for return enhancement and returns uncorrelated with public markets, when liquidity allows.
Global, disciplined, and plan-driven. A family-office investment process starts with an IPS and ends with diversified, cost-effective execution — with the next generation learning as it goes.
