Annual Strategic Planning for Family Offices

As our portfolio companies plan Q4 strategic planning meetings to scale their operations in 2021, I wondered if there was a standard planning process for family offices? The “one size” fits all approach may be challenging since the old saying goes, “if you have met one family office, then you have met one family office.” Meaning; no family office is alike due to each family’s custom needs and their unique goals. Complexity may be the only constant variable this Fall as we enter one of the largest generational wealth transfers in human history. Many age groups are experiencing health anxieties and altered communications due to COVID-19. Add to that a decentralized family unit due to travel restrictions, and this environment could create a challenging family planning process.

In my experience, the way to fight back against complexity is through strong leadership, focused intention, and a clear distillation of strategies. All of these things are rooted in strong communication skills. I have personally led over a hundred annual planning sessions in my career, from small company off-site retreats to extensive organization sessions that align with hundreds of participants. If I were to reverse engineer the outcomes of an effective Q4 planning process for the family office environment, this is what I would design based on what I hear from our limited partners.

Top 5 Planning Outcomes:

1. Alignment of family values and investment goals

2. Year to year asset reallocations for risk, time horizons, and liquidity

3. Legal structures in place for tax efficiency, wealth transfer, and philanthropy

4. Review of real estate holdings and other utilized assets

5. Selection of team members and vendors to carry out the strategies for the family

As multi-generational wealth begins to engage the next generation to be included in the family office dynamic, strong planning structures can ensure positive engagement through aligned values and focus. They can limit potential conflicts or lack of engagement. In an organization, the lack of engagement is the silent killer of culture. It is far more involved in a family due to the emotions, expectations, lack of professional training many family members have around critical conversations. As a family leader, promoting strong communication and cultivating “meaning” is a legacy that can continue for generations to come.

A leader’s ability to cultivate meaning bridges both the family office world and the business world. If this common principle can unlock so much value, then why are planning sessions typically jammed together with a check-the-box agenda?

Below is a strategic day-one agenda that can help create the needed conversations for a family, so the family office team can build a plan to help them achieve their goals. You will notice a lack of tactical topics that link to the list above. Still, this list is for family leaders wanting to cultivate meaning in addition to running an effective family office. I am assuming the day two agenda will be much easier to create on your own to accomplish your objectives.

Planning Agenda Day One: 

• • Pre-reading: (60 Minutes) Select a family member and rotate annually for someone to send out a book, article, or white paper to all family members. This provides an elegant way to allow people to express themselves without the spotlight being on them. It showcases all the values, interests, and point of view of the send. Kick off the meeting with a debrief of why the book was important to the person and how it links to the family.

Planning Techniques:

An ancient tribal technique that works wonders for this type of session is the use of a talking stick. You can grab one from the woods, use a cane, or anything that can be passed quickly. The stick is held by the person speaking, and once complete, they choose who to hand the stick to. If you want to see how a group responds when everyone is fully present and not talking over anyone or having side chatter, then USE a talking stick!

• • Level Set: (60 Minutes) Why is everyone here? What are the roles for the day, and what are we trying to accomplish during our time together?

Planning Techniques:

1. Utilize a large pad of paper or whiteboard.

2. Keep this initial list on the wall for the entire day.

3. Reference it if the meeting goes off track, or you feel that time is slipping away without the big topics being addressed.

4. Assign a moderator for the group whose job is to keep the group centered on this initial list of roles and intended outcomes.

   Individual goals: (60 Minutes) The purpose of this session is to let all people be heard. This is the most crucial meeting of the year. People should not be speaking off the cuff but should be prepared to articulate their personal and professional goals for fellow family members to support each other and eventually assign the financial strategy to help achieve the goals.

Planning Techniques:

Use a templated journal piece of paper and provide it to everyone 15 minutes before a a share-out session. With this quiet time to review and reflect on what they want to share with the family, the overall engagement will be more focused. The journal questions can be developed together as a family or be assigned to one member each year to send as pre-work.

• • Lunch Break: 90 Minutes

    • Be intentional with your nutrition and meal selection. Use it as an opportunity for all family members to discuss their current state of health, challenges, or opportunities they see in the coming year to address and elevate their health. There is no reason to be articulate your wealth planning without strong health values to ensure longevity.

  • 4 Square Exercise: 60 Minutes.

    • During this hour, it is a rapid-fire session for everyone to document how they see the family office strategies and evolve in the next year.

Planning Techniques:

Create a quadrant on a whiteboard or large pad of paper. Have one person take down notes and everyone else rapid-fire items to list in each quadrant. The “more of” and “less of” is an excellent way to give feedback without completely providing negative feedback on a current strategy. I have also experienced that many people are great at listing “stop doing” items, but far fewer are great with instant creativity or innovation for the “start doing” quadrant.

For this reason, once you feel like you have flushed out your list, allow everyone to spend 15 minutes individually brainstorming innovations and then regroup to complete the exercise. Once complete, each family member will put a star next to their top 3 most essential strategies in each quadrant. Once voting is complete, you will have your focus for 2021 to begin building execution plans.

Start Doing More Of

Stop Doing Less Of

• • Wrap Up & Next Steps: 60 Minutes. Plan follow up sessions needed to move your action items forward.

Planning Technique:

Create sub-committees based on areas of interest and skill sets, and determine how each group will communicate back to the larger group throughout the year. This provides the needed guardrails the next generation needs and allows them to use a comfortable structure.

• • Check Out: 30 Minutes. Allow each family member to share how the day went for them and what they’re most excited about for the coming year.

Planning Technique:

1. Revert to using the talking stick for this final session.

2. Ask everyone to come up with a single word they would like to be their theme for the coming year.

3. Have someone write down all of these words and use them throughout the year when circulating family documents or conversations.

Extra credit for those completely aligned families: Merge everyone’s words into one “unifying” mantra for the family for the year.  

Now that your 7-8 hour day one planning session is complete, you may decide to follow up with a half or full day with your professional service providers to address the plan’s core execution components. Be sure to share the meaning that was cultivated on day one with your family. Working for a family that creates meaning is far more rewarding for service providers than just working for the “money.”

You may notice that you receive one more valuable/aligned network introductions, more in-depth care for your next generation, or the extra innovation it takes to be a high performing family office. But remember, a high performing family office starts with intentional planning and should be measured by the meaning it creates in addition to its ROI.