Navigating the Future of Family Offices: Strategic Hubs for Families
An Interview with Peter Vogel, Professor at IMD Business School and Director of the IMD Global Family Business Center
by Alexandra Jequier & Nick Harris
Few people navigate the intersection of family businesses, entrepreneurship, and philanthropy as insightfully as Peter Vogel. As Professor of Family Business and Entrepreneurship at IMD Business School, he holds the Debiopharm Chair for Family Philanthropy and serves as Director of both the Global Family Business Center. Beyond academia, he has built a bridge between research and practice – founding Delta Venture Partners, advising leading families as an Associate Partner at CFEG, and earning accolades such as a spot on Poets & Quants’ “Best 40 under 40” business professors and Family Capital’s Top 100 Family Business Influencers.
His insights help families not just manage their businesses but also navigate the broader family enterprise system – from governance to wealth stewardship. His Family Office Navigator, for instance, is not a conventional book, but a tool designed to empower families as they step into a world filled with complexity, opportunity, and risk.
AvS Advisors: So, what inspired you to create this unique book? How was the experience of writing the Family Office Navigator?
Peter Vogel: Writing the Family Office Navigator was a very collaborative process with a whole group behind it. It is a book and not a book, at the same time. I would describe it as a framework: a very visual hands-on toolkit for Families. It is part of a bigger plan and goes together with the Family Philanthropy Navigator. My co-author Mario Marconi sadly passed away and the Family Office Navigator came out later than expected. The coral reef is a metaphor to illustrate the Family Enterprise system. It is meant to be a fun and simple – not simplistic – guidebook for everybody in the family. The value proposition is to empower families and put them in the driver’s seat. For example, if the Family Business is sold, they are in the press – many people approach them to “help” them with their cash. Many families are quite lost and vulnerable in the process of establishing a Family Office. It is like any big transformation in the life of a human being.
What are the key differences between a Single Family Office and a Multi-Family Office, and how can families determine which is more suitable for their needs?
We can spend hours talking about that. There is a job to be done: the job is to reduce and manage the complexity, to help the family manage the family enterprise ecosystem. When selecting a structure, there are certain dimensions to consider, and it depends on the purpose of the Family Office. Who the family is, what they own, their role in society are key factors. Depending on the role, the range of services may vary: Single Family Office, Multi-Family Office, Hybrid. Are we a small compact family exposed to one jurisdiction and one ecosystem or is this the opposite? We talk about total family wealth which is a broader view than just family wealth.
The objective is to protect and nurture the ecosystem. The Family Office will look different if you are an entrepreneur with a pure investment office or if you are a Family Business where the mandate of the Family Office goes beyond investment and also takes care of Next Gen education. We must look at it in a more nuanced way. The right structure to consider depends on the services needed and the complexities.
Speaking of Next Gen – How can the Family Office contribute to their training and development?
When we think about succession and grooming the Next Gen the Family Office can play a critical role with the administration side of organizing programs. Some Family Offices have fully structured programmes for the different age groups, they help organize family events and Next Gen training in, for instance, legacy, business assets or board training. It is a balance between the I and the WE. The Family Office can play a key role as a confident of the Next Gen, helping them to navigate what role is best for them, their career trajectory, choosing a university, applying for jobs. Communication across generations, helping with succession plans, mediating between generations: there are different roles, and this depends on the skills and responsibilities. Family Officers need to have that role of trusted partner across generations with emotional intelligence, trustful, leadership, relations with different generations.
Do you think it is advisable to employ family members in the Family Office?
It is an interesting question and there are pros and cons to having family members there. Often it is one Family member who takes the lead. It is acceptable if the financial performance is good and if this is the goal of the Family Office. But if things do not work according to plan and the rest of the family is not aligned this would be an issue. The risk profile is important: are we investing separately or together or is it all managed by “cousin Fred”?
This is a challenge, and some families can get frustrated. They trust the family member who seems the most qualified, but this could lead to bigger issues if this person does not have the qualifications to work elsewhere. It is acceptable on the board, on the investment committee, but it becomes risky when you start investing your cousin’s money. The Family Office can be used for traineeship: as a platform to train the Next Gen in a non-conflictual way and learn.
Beyond governance and training, Family Offices can also serve as a vehicle for strategic investments. How do you see their role in impact investing, and what is the best channel to approach it?
It is a big topic; Next Gen driven Family Offices have a full impact strategy. Do we have the right tools in place to measure impact? We are getting smarter and better about it. The challenge is that there are so many products from banks. Risto Väyrynen and The Impact Office are looking behind the curtain to see if there is really impact behind. Families need to develop a better understanding and see what the opportunities in the impact space are. There is a rise of new generation of systemic investors who are trying to transform the landscape with their money. There is still homework to be done to understand the products and what impact really means.
With impact investing playing an increasingly strategic role in Family Offices, ensuring alignment on values and long-term ambitions becomes even more critical. How does a family align on the underlying motivators and ambitions for a Family Office and craft a well-defined purpose?
This is where the process has to start: mapping out the family enterprise ecosystem, the family purpose and cascade this in the Family Office. The Family Office is not the end goal. It is a means to an end and not the end itself. What is the job to be done? What does good look like for you? What is your aspirational future? You somehow lose your family identity as the family gatherings are not in the Family Business anymore, but it is a positive trauma. Many families go from operating company to Family Office and revert back to operating company because they miss the human factor.
Once a family has clarified the purpose and role of their Family Office, the next challenge is translating that vision into a concrete structure. How should a family go about structuring and resourcing a Family Office?
How do you leverage existing capital? It starts with a simple set of questions. The roles depend on what you want the Family Office to do: human capital, social capital, reputational capital and then the skills needed for the Family Office; the roles to be filled will depend on that. What are the gaps and how do you fill the gaps? Once we find the talent, how do we incentivize them? The biggest question on compensation is linked to: do we offer long-term incentive plans? Those are pretty standard things but there are different philosophies when it comes to long term. Some families refuse as they believe it will create a conflict of interest. Others say talent will work better if they have co-investment opportunities. The big question is how you associate this with risk. Even if the CIO invests, the majority of the money belongs to the family and risks need to be managed. If there is a succession on the family side, what is succession on the FO side? Do we introduce new management with the new generation? Those are all important questions to consider.
Finding the right structure is just one piece of the puzzle – ultimately, the success of a Family Office depends on the people running it. What about the level of talent in Family Offices?
We have no data. When a family thinks about a Family Office, the question is who do I get on board? A lawyer, a banker, another trusted advisor? There are pros and cons. Maybe they had a good performance in one ecosystem and not another. A friend of the family might not understand the technicalities. There is a risk to working with sub-optimal individuals. The first people to be hired are often a bad choice because the family does usually not know what they need yet, and the first approach is usually not so good. Larger Family Offices usually have very good talent management.
Hiring the right talent is just one challenge. Equally important is ensuring the Family Office is governed effectively. What are your thoughts on how to establish sound Family Office governance?
It is a big and important topic, it depends on other activities you still have: do you have a foundation, an operating company, a family council, an owner’s council? How are those things interconnected? Here we need to add a fourth circle and it goes back to the purpose standing above all that. Sometimes an individual holds the strings together, but it can be an owner’s council. Is the Family Office linked or not linked to the other activities and the Family Business? There are so many different questions to look at before talking about governance. One can do a parallel with classical business governance, the logic is the same.
When you look at the bigger picture, is there any other aspect you think families should pay more attention to?
Many families are jumping into it not exactly knowing what they want and do not take enough time to think about that, especially if there is a liquidity event. Taking the time collectively at the start of the process is key.
